Wednesday November 13th

13-11-2019

The Dow is set to open lower by 100 points as investors wait for Fed Chair Powell’s testimony

U.S. stock index futures were lower Wednesday as investors looked ahead to testimony from the highest-ranking Federal Reserve official while digesting mixed news around U.S.-China trade talks. At 7 a.m. ET, Dow Jones Industrial Average futures fell 114 points, indicating a negative open of more than 104 points. S&P 500 and Nasdaq 100 futures also pointed to losses at the open. Fed Chair Jerome Powell said will address the Congressional Joint Economic Committee later in the day. Powell’s testimony comes after the Fed cut rates in October for the third time this year. After that meeting, Powell raised the bar for further cuts, but hinted the Fed was a long way off from raising rates. The Fed’s most-recent rate cut helped the major averages reach record highs recently. In fact, the S&P 500 and Nasdaq Composite posted fresh intraday records on Wednesday. But uncertainty around U.S.-China trade has kept the rally in check over the past few days as investors seek out clues about the state of those negotiations. The U.S. and China are reportedly at loggerheads over tariffs as they seek to conclude phase one of their trade deal. The Wall Street Journal reported Tuesday night, citing people familiar with the talks, that the impasse is on whether the U.S. should remove existing tariffs or would only cancel duties that are set to take effect on Dec. 15. The report comes after President Donald Trump told the Economic Club of New York that China was “dying” to make a trade deal. However, Trump offered no detail about how talks have evolved. Trump also blamed previous U.S. administrations for letting China “cheat” on trade. On the data front, there will be CPI numbers at 8:30 a.m. ET and Federal Budget figures released at 2 p.m. ET. Hong Kong stocks declined on Wednesday as a recent escalation in violence amid ongoing protests weighed on investor sentiment. Hong Kong’s Hang Seng index led losses in the region as it fell 1.82% to close at 26,571.46. Elsewhere, major Asian stock markets mostly slipped in the afternoon as investors awaited clarity on the first phase of an agreement between the U.S. and China that would ease some tariffs. Mainland Chinese stocks were mixed on the day, with the Shanghai composite down 0.33% to around 2,905.24 and the Shenzhen component up 0.18% to 9,687.85. The Shenzhen composite was largely flat at approximately 1,614.30. Japan’s Nikkei 225 declined 0.85% to close at 23,319.87 as shares of index heavyweight Fast Retailing fell 1.83%. The Topix index also shed 0.55% to end its trading day at 1,700.33. Shares in South Korea also saw declines, as the Kospi slipped 0.86% to finish its trading day at 2,122.45. Oil prices fell on Wednesday as prospects for a trade deal between the United States and China faded, weighing on the outlook for the global economy and energy demand. U.S. President Donald Trump said on Tuesday the two countries were close to finalising a trade deal, but he fell short of providing a date or venue for the signing ceremony, disappointing investors. Brent crude futures fell 58 cents to $61.47 a barrel, while U.S. West Texas Intermediate crude was at $56.43, down 37 cents or 0.6%. Gold prices gained on Wednesday on lack of clarity on the U.S.-China trade negotiations, keeping markets wary about the tariff war’s toll on the health of the global economy. Spot gold rose 0.5% to $1,464.80 per ounce. U.S. gold futures inched 0.8% higher to $1,465.60.