Conciliatory trade comments soothe market nerves

It remains all about trade as President Donald Trump’s comments on the matter had once again been the primary driver for markets at the start of the week.

Even though the sentiment had taken a positive turn on the latest update, uncertainty nevertheless persists to warrant a more cautious stance.

Doubts persist on US-China trade

Following the sudden escalation in the tit-for-tat tariffs war, it had perhaps once again been a surprise for markets seeing President Donald Trump’s latest conciliatory remarks with regards to US-China trade. The President noted that China had wanted a deal very badly and that the two countries had a call last night to ‘get back to the table’ on trade talk.

While the risk sentiment evidently improved on the back of this development, making a return from the dire state post Friday’s tariffs escalation, there remains doubts with regards to how concrete the latest turn is. Firstly, the lack of confirmation from China had been apparent and China’s state press had also noted discrepancy with regards to phone calls between the two sides. Secondly, in the twists and turns of the US-China trade issue, few may be expecting a straight road towards a deal of late regardless of the type of conciliatory remarks. Lastly, the impact on the economy and thus recession woes remain a function of the time between the present and resolution of the trade conflict and it does appear that the matter may continue to drag. Altogether, this should keep the cautious stance going in the market.

As far as the S&P 500 index’s put-to-call ratio suggests, as highlighted yesterday, the 20-day moving average smoothened line continues to suggest the increase in put protection interests. Prices may have found support once again at the 2819.5 level for the S&P 500 index, but there remains the likelihood that this downtrend would continue. Watch the likes of data this week for leads as well with the preliminary August conference board consumer confidence reading due in the US session for insights into consumption performance.

Source: IG Charts

Asia open

While the abovementioned concerns persist, Asia markets are nevertheless set to find some relief alongside Wall Street. Early movers in the region including the ASX 200 and the Nikkei 225 were both seen in green in the early hours. Look to the rest of the region to see some support in the day, though keeping an eye on US-China trade news flows. Alongside the abovementioned sentiment indicator, the limited reaction in the US bond market whereby US 10-year yields picked up a mere 7 basis points and likewise for USD/Asians continue to paint the picture of caution. USD/CNH, perhaps is one of the most trade-sensitive currency pair at present, notably remained little change around $7.16 levels overnight. Watch also China’s July industrial profits due in the morning.

Yesterday: S&P 500 +1.10%; DJIA +1.05%; DAX +0.40%; FTSE -0.47%

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Take a position on indices

Deal on the world’s major stock indices today.

  • Trade the lowest Wall Street spreads on the market
  • 1-point spread on the FTSE 100 and Germany 40
  • The only provider to offer 24-hour pricing

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.