Equities ease as China says more talks needed

US indices gave back a small bit of the previous two days’ gains yesterday as China said more talks are needed to hammer out the details of the Phase 1 trade deal before President Xi Jinping would sign it. Turkey is facing US sanctions over Syria advance. Hong Kong violence escalates. A UK Brexit deal may be getting closer.

US30USD Daily Chart

Source: OANDA fxTrade

• The US30 index slid slightly, falling for the first time in four days, after China diffused the near-term euphoria about a mini trade deal

• The index remains capped by the 78.6% Fibonacci retracement of the drop from September 12 to October 3 at 26,974. The 100-day moving average is at 26,491

• US Treasury Secretary Mnuchin said the US had a “fundamental agreement” with China, subject to documentation. He confirmed that more meetings are scheduled, adding that the signing of the deal prevent a further escalation in tariffs. There are no major US data releases scheduled for today.

DE30EUR Daily Chart

Source: OANDA fxTrade

• The Germany30 index held on to gains made in the previous three sessions yesterday as the UK’s Telegraph reported progress being made in Brexit negotiations

• The index consolidated below Friday’s high, which was the highest since July 25. The 100-day moving average is at 12,138

• ZEW surveys on economic sentiment for both Germany and the Euro-zone are expected to fall in October, according to the latest surveys of economists. Germany’s is seen dropping to -27.3 from -22.5 while the Euro-zone’s is expected to decline to -33.0 from -22.4.

UK100GBP Daily Chart

Source: OANDA fxTrade

• The UK100 index had a muted response to reports in the UK’s Telegraph that a Brexit deal may be crystallising

• The index was little changed from Friday, holding below the 55-day moving average at 7,267. That moving average is below the 200-day moving average today, the first time since April 15. This is often interpreted as a medium-term bearish signal

• UK’s jobless claims are seen improving to 27.9k in September from 28.2k the previous month, according to analysts’ estimates. BOE’s Vlieghe is due to speak today.