Wall Street weakens on tariff war escalation
US indices are weaker in early trading this morning after a weekend escalation in the tariff spat. China laid the blame for the breakdown of talks on US President Trump, adding that it is willing to recommence negotiations, but will not be beaten into concessions. Trump potentially opened another trade war front with India by removing its developing nation status. Safe haven flows have accelerated, pushing 10-year US yields to a 2-year low.
US30USD Daily Chart
The US30 index fell the most in 2-1/2 weeks on Friday, confirming the biggest monthly decline in five months
The index is testing the 38.2% Fibonacci retracement of the December to May rally at 24,668
The US ISM manufacturing PMI is expected to improve to 53.3 in May from 52.8 in June, the latest survey of economists shows.
DE30EUR Daily Chart
The Germany30 fell the most since May 13 of Friday and has extended losses in early trading today, touching the lowest since April 1
The index is testing the 200-day moving average at 11,622, which has supported prices on a closing basis since April 1. The 38.2% Fibonacci retracement of the 2019 rally is at 11,621
The May final Markit PMI readings for both Germany and the Euro-zone are not expected to be revised from the initial readings of 44.3 and 47.7, respectively.
XAU/USD Daily Chart
Gold prices jumped the most in four months on Friday as tariff/growth concerns increased. Additional gains this morning have taken the yellow metal to the highest since April 10 versus the US dollar
Prices moved above the 50% retracement of the February-April drop at 1,306.56 this morning. The 61.8% Fibonacci retracement is at 1,316.04
A deterioration in China’s manufacturing PMI in May, worsening trade relations and a damping of global growth expectations have improved safe haven flows. Gold has once again started to benefit along with US Treasuries, with 10-year US yields hitting a 2-year low.
