Equities advance amid progress on trade negotiations

Reports of agreement for a “mini” trade deal between the US and China sent Wall Street higher for a third straight day on Friday. EU says Boris Johnson’s latest ideas for a Brexit deal are nowhere near complete. Singapore’s MAS reduces slightly the rate of appreciation of the SGD NEER, an effective easing. Japan, the US and Canada have public holidays today.

 

US30USD Daily Chart

Source: OANDA fxTrade

• The US30 index rose on Friday after Trump announced the Phase 1 China deal, and futures markets are implying gains for the fourth day, the longest stretch since early-September. It touched the highest since October 1

• The index paused near the 78.6% Fibonacci retracement of the drop from September 12 to October 3 at 26,974

• As part of the Phase 1 deal, China is to scale up purchases of US agricultural products over next two years to reach $40-50 billion per year. The planned hike in tariffs to 30% on October 15 is cancelled. The deal is expected to be signed in the next few weeks.

 

DE30EUR Daily Chart

Source: OANDA fxTrade

• The Germany30 index jumped the most in more than nine months on Friday amid euphoria over the first steps in a trade deal between the US and China

• The index touched the highest since July 25, pushing away from the 100-day moving average at 12,133. The 200-day moving average has risen to 11,863

• Euro-zone industrial production is expected to contract for a 10th consecutive month in August, the latest survey of economists suggests. ECB’s De Guindos is scheduled to speak.

 

CN50USD Daily Chart

Source: OANDA fxTrade

• China shares rose the most in two months on Friday after the mini trade deal was announced

• The index advanced for a fourth day, reaching the highest since September 13

• China’s trade data for September are due today. Imports are seen falling 5.2% y/y, the fifth consecutive month of contraction, while exports probably fell 3.0% y/y. The resultant trade surplus is seen narrowing to $33.3b from $34.8b.