If you’re following what analysts say, you can’t really make heads or tails of what’s going on! One analyst says that Trump is going to be going to the negotiation table to avert a trade war. Others take a dooms-day approach. And yet others see the market growing regardless of how the trade war plays out. Nobody, though, is willing to altogether discount the short-term effect of the geopolitical developments at play. Canada, too, had just upped the ante, afraid of a spillover of steel once destined for the U.S. Canada, essentially, follows on the heels of similar European actions – and complements Canadian counter-tariffs on U.S. aluminum, steel and other products set to begin in just a few days’ time on July 1st.
Sean Donnelly, CEO of ArcelorMittal Dofasco, the Canadian unit of ArcelorMittal of Luxembourg, commented, “We must be able to operate in an un-distorted, market-based competitive environment,” noting, “Canada’s response to past and future threats from unfairly traded and diverted offshore imports is critical.”
Though China is a small-fry compared to the U.S., the EU, or China, the above quote signifies the isolationist or protectionist stance that comes to the fore when each country tries to calculate how can best milk the next for all its worth. All of the analysts, indeed are conveying this very same message. Take Keith Parker, the chief U.S. equity strategist at UBS, who stated: “Uncertainty around trade has risen with recent actions and rhetoric,” expounding that “the unintended consequences of trade actions are having large impacts.” His caveat, though, is that he feels that the Oval Office is more likely to avert a trade war. In his words, it is “more likely that the Trump administration would negotiate trade deals that benefit U.S. industry and not engage in a trade war, though the path remains bumpy/risky.”
What does that mean for you as a day trader? Live trading is expected to be volatile, but then again, volatility doesn’t do much good for live trading when it is directionless, erratic and unpredictable. Every stock trading room yesterday did have its eyes trained on oil, which has hit new highs. Each and every stocks trading room couldn’t help but watch the meteoric rise of the black gold, which continues to see the benefits of OPEC policies. As supply threats abounded, oil hit its highest level in 3 years. In addition, there was also a drop in crude stockpiles, supporting price movement. Exxon Mobil (XOM) tacked on 1.3%, Chevron (CVX) up 1.5%. Marathon (MRO) surged 2.4%, Chesapeake seeing stellar gains of 2.6%.
On the trade level, the goods deficit contracted 3.7% in May to $64.8 billion. In other economic news, the U.S. pending home sales reading fell 0.5% to 105.9 in May.
Economic Calendar: Both weekly jobless claims and the GDP revision will be released today at 8:30, followed by the speech of James Bullard at 10:45.
Market Summary: All of the major indexes fell on the day, the blue-chip Dow falling 0.68%, the S&P 500 shedding 0.86% and the NASDAQ tumbling 1.54%. Only 3 of the sectors on the S&P 500 ended higher, after all of them had traded up earlier in the day’s session. Of note was also the financial sector which experienced its 13th straight day of declines.
It’s worth, also, honing in on the views shared by Janney Montgomery Scott research director, Dan Wantrobski, who, accentuating the trading range we’ve seen now for months, singled in on the prospect of future volatility. “To a certain degree, investors are looking for something to be worried about. Stocks aren’t far from all-time highs, and for a lot of people that’s hard to justify,” adding, “however, I think volatility is returning to the U.S. market and that we could see another correction cycle. I’m not calling for a structural downturn, but tariffs and trade wars could exacerbate the weakness.”
IPOs: BJ, BV
Hot Stocks: MSG, RAD, PRGS, BBBY, PIR
Have a great trading day!