US stocks pause as trade optimism ebbs

March 5, 2019

By IFCMarkets

Dollar strengthens despite falling construction spending

US stock market pulled back on Monday as optimism about possible US-China trade deal by the end of month receded. Washington delayed the raising of tariffs on $200 billion in Chinese goods initially set to increase to $25% from 10% on the March 2 deadline with reports indicating US and China were close to a deal which would end most US tariffs on imports from China in exchange for the latter following up on its own promises to allow in more US exports. The S&P 500 lost 0.4% to 2792.62. Dow Jones industrial dropped 0.8% to 25819.65. The Nasdaq composite slid 0.2% to 7577.57. The dollar strengthening continued despite data showing above expected 0.6% drop in construction spending in December: the live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, rose 0.2% to 96.636 and is higher currently. Futures on US stock indexes point to lower openings today.

SP500 tests resistance above MA(200)    03/05/2019 Market Overview IFC Markets chart

DAX 30 slips while other European indices rise

European stocks ended marginally higher on Monday. Both EUR/USD and GBP/USD continued falling with both pairs retreating currently. The Stoxx Europe 600 index added 0.2%. The DAX 30 however slid 0.1% to 11592.66 after 0.8% gain Friday, the biggest advance among European indices. France’s CAC 40 rose 0.4% and UK’s FTSE 100 gained 0.4% to 7134.39.

Shanghai Composite leads Asian indices

Asian stock indices are mixed today with traders impatient for more details on US-China trade talk progress amid reports a formal agreement could be reached at a summit between President Donald Trump and Chinese President Xi Jinping around March 27. Nikkei slid 0.4% to 21726.28 with yen resuming its slide against the dollar. Markets in China are higher as Chinese Premier Li Keqiang announced a growth target in a range of 6% to 6.5%, promising higher spending on technology development: the Shanghai Composite Index is up 0.9% and Hong Kong’s Hang Seng Index is 0.1% higher. Australia’s All Ordinaries Index fell 0.3% erasing most of previous session gain as the Reserve Bank of Australia kept its rate steady at 1.5%. The Australian dollar resumed sliding against the greenback.

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Brent down

Brent futures prices are lower today while still supported by OPEC supply cuts. Prices inched higher yesterday: April Brent crude rose 0.9% to $65.67 a barrel on Monday.

Market Analysis provided by IFCMarkets

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