European and US stocks remain supported on trade optimism as the final posturing by both the Chinese and Americans seem to be reasonable requests. China wants the US to rollback tariffs on as much as $360 billion in imports in exchange for the rollback of Chinese tariffs on American agricultural goods. The White House has hinted that they were considering curtailing $112 billion in tariffs that were announced in on September 1st.
Markets remain confident we won’t see a repeat of what happened in May when talks completely fell apart. The Trump administration is in election mode and they will likely take a Phase-One deal in any form. Any major demands on structural issues could be saved for the next phase of talks.
All the rhetoric continues to point that a deal will get done soon and the bullish outlook for stocks remains firmly in place. This morning the dollar is mixed against its major trading partners.
Oil prices continue to benefit from trade optimism, shrugging off the OPEC medium-term outlook that highlighted that global oil demand would drop by 7% over the next four years. The OPEC report reminded markets that oil prices will struggle for significant gains as US production is expected to reach 17 million bpd by 2025. OPEC didn’t break any major news as the downgrades in their demand forecasts and falling OPEC market share are well know by energy traders.
Gold continues to consolidate ahead of the $1,500 an ounce level as stocks enter bull markets. Risk appetite is running high, but risks in 2020 will likely keep gold supported. Gold will be supported as concerns for global growth will remain, 2020 election uncertainty, and the lackluster effects of the wrath of worldwide easing we have seen to the financial markets.
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