Global stock markets seem shaky on the first trading day of the year and still under the influence of the sell-off which we experienced in 2018. Investors are clearly concerned about the growth in 2019 and the lack of confidence is keeping them on the sidelines or they are feeling safer by parking their capital in risk-off assets.
The Chinese Caixin manufacturing number released today made investors more concerned about this as the number dipped below the critical point which differentiates the difference between contraction and expansion. The number came in at 49.7, any number below 50 shows that the economy is shrinking and any number above 50 shows growth. On the back of this number, investors followed one particular theme which spread from Hong Kong to Syndey- press the sell button only. Basically, for traders as long as the issues around the trade war between the US and China aren’t resolved, they cannot think of a situation which can promote growth.
Looking at the European markets and US futures, it appears investors aren’t showing any confidence despite the fact that Donald Trump has shown some indication that he may be finally willing to strike a deal to end the current government shutdown. President has invited the top congressional leaders from both parties to open the dialogue again.
It has been nearly two weeks (11 days to be precise) that we have seen a partial shutdown of the government entities over in the US. Donald Trump needs the government money to build the wall along the US and Mexico border and the politicians have simply refused to do so. The jury is still out if he can actually offer an olive branch to those who oppose his views on the wall however he has also made it clear that his opinion on the border security is still the same and he is not willing to stand off anytime soon.
S&P500 index which finished 2018 as the worst year since 2008, basically breaking the longest bull rally in the history, is poised to open lower today. The Index’s futures reversed all the gains and the only dominant trend is the downtrend.
As for the gold market, it has kicked off the year on a much positive note. The precious metal is the favourite choice among those investors who do not favour riskier assets. Gold prices are likely to break above the 1300 mark in the coming days and the year-end rally could really lead the price to cross the 1300 mark. Having said this, it is important to keep in mind that some daily technical indicators are flashing some warning signs after the massive rally we have seen in the gold price
