The Week Ahead: US-China Trade Still in Focus
In the week ahead, US-China trade conflicts and negotiations will continue to be in focus for the markets as earnings season begins to wind down.
Markets Hit by Trade Uncertainty
As for the past week in the markets, it was essentially a wash. If you take a look at the S&P 500, as represented by the SPDR S&P 500 ETF (SPY), the stock market ended the week around where it began. SPY opened last week at 270.11 and closed at 270.47. In the interim, the S&P 500 attempted to extend the strong rally that has been in place since the volatile late-December lows. The 200-day moving average, however, had different ideas. The moving average helped stop the S&P 500 in its tracks. It served as strong resistance that helped lead to a turn back to the downside. (See also our recent analysis: Stocks (S&P 500) Retreat from 200-Day Moving Average.)
Last week began with an earnest attempt by the S&P 500 to rally further than it already has year to date. But stocks dropped sharply after reports surfaced that US President Trump would not be meeting Chinese President Xi Jinping before the March deadline when the US-China trade war “ceasefire” is scheduled to end. Though stocks staged a bit of a rebound on Friday, trade concerns continued to weigh.
The Week Ahead
From a technical perspective, the week ahead still hinges upon whether the market can break above key resistance around the 200-day moving average. Any break above would be a strong bullish signal for the S&P 500. A turn down, though, could confirm a continued market consolidation.
As noted, earnings season begins to wind down soon, though there are still several major earnings releases on the horizon. The week ahead will feature some highly anticipated earnings events from key Chinese companies (ADRs) including BIDU, WB, and VIPS. Also of major significance will be earnings releases from CSCO, KO, NVDA, DE, PEP, KHC, HLT, MGM, TAP, and DISH.
Additionally, economic events that may be potential market movers include a scheduled speech on Tuesday by U.S. Federal Reserve Chair Jerome Powell. Also on tap will be key inflation indicators like the U.S. Consumer Price Index (CPI) on Wednesday and the U.S. Producer Price Index (PPI) on Thursday. Check out our Market Events & Earnings Calendar for more.
IMPORTANT: The information above should not be construed as investment advice and should not be considered as a solicitation to buy or sell securities. Trading and investing in the financial markets involves substantial risk of loss, and may not be suitable for all investors.
Disclosure: At the time of this article’s publication, we have no position in any security or trade/investment mentioned, nor do we have any business relationship with any company whose stock may be mentioned.
Senior Market Analyst at The Technicals
A veteran global macro trader/analyst, Bart focuses on major market moves in currencies, commodities, fixed income, and global equity indexes. Bart stresses inter-market correlations and dynamics while keeping a close eye on risk. He has published countless market analysis pieces and has been a guest expert for a variety of major financial media. Contact Bart