News

US-Sino Tensions Drive US Stock-Index Futures Lower

Equities

Major US stock index futures extended losses amid growing tensions between China and the United States. Trump stated that he had "no deadline" for a trade deal, which negatively affected investors' risk appetite. The US House voted to impose sanctions on Chinese officials over human rights. China's Foreign Ministry responded by stating that the US will "pay the price" over Hong Kong and Xinjiang bills, the recent developments will affect cooperation in important areas, and a trade deal can only be reached based on equality and mutual respect. The Dow Jones Industrial Average futures dropped to a one-month low of 27312, the S&P500 futures tumbled to 3082, and Nasdaq futures declined 8168.

USD

The dollar index, which measures the greenback against a basket of major currencies, fell to a one-month low of 97.64 weighed down by the rising tensions between China and the United States. The recent developments forced investors to jump into safer assets such as the US bonds, Japanese yen, Swiss franc, and gold. The US 10-year treasury yields dropped sharply to a five-week low of 1.694%. The CME Fed Watch tool showed a heightened probability that the fed would cut interest rates in the fourth quarter of 2020. The USDJPY declined to a two-week low of 108.42, and the USDCHF logged a low of 0.9857. Market participants are looking forward to the economic indicators to be released today to assess the economic outlook, especially after the disappointment in the November ISM manufacturing PMI on Monday.

Metals

Gold prices edged higher as investors rushed to safety. The recent tensions between China and the United States supported capital flow into safer assets. The price of a gold ounce rose to a one-month high of $1484, the price of a silver ounce soared to $17.30, and palladium extended gains rising to a fresh record high of $1867.

Oil

Oil prices traded in a tight range as investors await the OPEC and OPEC+ meetings later this week. Oil-producing countries are meeting in Vienna to discuss whether to deepen or extend their supply cuts. On the other hand, the American Petroleum Institute reported a drop of 3.720 million barrels in US crude oil stock last week. The US Energy Information Administration will publish the official figures later today. The West Texas Intermediate crude futures held steady near $56.50, and the Brent futures hovered above $61.

Major Economic Events

GMT Country Event Expectation Previous

9:00

EU

Services PMI (Nov)

51.5

52.2

9:30

UK

Services PMI (Nov)

48.6

50.0

13:15

US

ADP Nonfarm Employment Change (Nov)

140

125

15:00

US

ISM Non-Manufacturing PMI (Nov)

54.5

54.7

15:00

CA

BoC Interest Rate Decision

1.75%

1.75%

15:30

US

Crude Oil Inventories

-1.743

1.572


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