Wall Street rebounds on hopes for trade talk progress

US indices closed higher yesterday amid reports that US negotiators would head to Beijing next week for the first face-to-face meetings since the G-20 summit. Tensions are still high in the Gulf while the results of the UK Conservative Party leadership race should be announced today.

US30USD Daily Chart

Source: OANDA fxTrade

• The US30 index rebounded yesterday, fueled by hopes for advances in the trade talks and calls from Fed board nominee Shelton for a 50bps cut at next week’s meeting

• The 100-day moving average at 26,169 and the 55-day average at 26,245 continue to track each other higher

• US existing home sales probably rose 0.2% m/m in June, the latest survey of economists suggests. House prices are seen up 0.3% m/m in May, a slower increase than April’s +0.3%.

DE30EUR Daily Chart

Source: OANDA fxTrade

• The Germany30 rose for the first time in four sessions yesterday, lifted by the better mood on Wall Street and after ratings agency Fitch affirmed Germany’s AAA rating with a stable outlook

• The index has held above the 55-day moving average at 12,203, which has supported prices on a closing basis since June 3

• Markets are preparing for the ECB meeting on Thursday, which is widely expected to have a dovish bias but without any change in benchmark rates.

UK100GBP Daily Chart

Source: OANDA fxTrade

• The UK100 index looks set for a third day of gains today after early trading as we await the outcome of the Tory Party leadership contest. Boris Johnson, a well-known hard-Brexiteer, is expected to be victorious, though his ability to push through a no-deal exit has been curtailed by recent voting in Parliament

• The index has traded above the 55-day moving average, which is at 7,384 today, since June 18

• Aside from the leadership rules, we have the CBI industrial trends orders index and a speech from BOE’s Haldane on tap.