Global equity markets rallied yesterday as China sounded upbeat about its trade talks with the United States. This calmed investors unnerved by the prospect of a recession. According to China’s commerce ministry spokesman Gao Feng, the US and China are engaged in effective contact, and they are discussing the upcoming talks scheduled for September.  Chinese officials are considering going to the US for further negotiations. This action could encourage US officials to consider canceling the planned additional tariffs to avoid an escalation. This news supported the bullish sentiment driving global financial markets higher.

Link: Reuters Article

The Nasdaq 100 rallied 1.65% higher. They key trading level is at 7,600, the 20-day moving average (DMA). The initial upside is capped by resistance at 7,740 (50 DMA). A confirmed breakout higher could target additional resistance at 7,780 which is the 13 August intraday high. Alternatively, a confirmed loss of the 7,600 support and an end of day close lower could target additional downside support at 7,500-7,460.

The day ahead

We have another busy day for data releases today starting with Japan’s consumer price index, retail trade, industrial production, and the unemployment rate for July.  We are also due to get the Eurozone preliminary consumer price index for August and the unemployment rate for July which is forecast to stay unchanged at 7.5%. In the UK, we should be on the lookout for August’s GfK consumer confidence and July consumer credit numbers, mortgage approvals, and money supply data. In the US we will see July personal income and spending data along with August’s MNI Chicago’s purchasing managers index (PMI) and the final data on consumer sentiment from the University of Michigan survey.  Over the weekend we should be on the lookout for China’s manufacturing PMI data which is due to be released at 02.00am BST on Saturday 31st Aug.

Traditional markets

Abercrombie & Fitch (ANF) – The apparel retailer lost 48 cents per share for its latest quarter, less than the 53 cents that analysts had projected. Revenue, however, fell short of estimates, and comparable-store sales were flat compared to a consensus estimate of up 0.6%.

Best Buy (BBY) – The electronics retailer reported an adjusted quarterly profit of $1.08 per share, 9 cents above estimates, and the company also raised its full-year earnings forecast. However, revenue and comparable-store sales did fall below estimates for the most recent quarter.

Dollar Tree (DLTR)– The dollar store chain operator fell 5 cents short of consensus with quarterly earnings of 76 cents per share, while revenue beat estimates. Comparable store sales rose 2.4%, beating the Refinitiv consensus estimate of up 1.9%.

The DLTR stock price is up trending in the daily timeframe, creating higher highs and higher lows.  Key support to the downside is at 95.00 which is the 20 DMA. The initial resistance on the upside is at 101.60.  A confirmed breakout above 101.60 could appear bullish targeting additional upside resistances at 104.00 followed by 106.70 and 110.00. Alternatively, a confirmed loss of the current daily support at 95.00 could support a bearish outlook targeting additional downside supports at 93.00 followed by 90.00.

PVH Corp (PVH) – the company behind clothing brands including Calvin Klein beat estimates by 22 cents with adjusted quarterly earnings of $2.10 per share and revenue also beating forecasts. However, it cut its full-year profit forecast for the second time this year, with results coming under pressure from the US-China trade dispute and the unrest in Hong Kong.

Walt Disney (DIS) – Disney’s projections for its Disney+ streaming service may have been too modest, after 43% of households responding to a UBS survey saying they intended to subscribe to the service. Disney’s own projections had predicted 20% to 30% of households would subscribe by 2024.

The Disney stock price is up trending in the daily timeframe, creating higher highs and higher lows.  Key support to the downside is at 136.00 which is the 20 DMA. The initial resistance on the upside is at 139.70 (50 DMA). A confirmed breakout above 139.70 could appear bullish targeting additional upside resistances at 141.60 followed by 142.80 and 146.00. Alternatively, a confirmed loss of the current daily support at 136.00 could support a bearish outlook targeting additional downside supports at 133.70 followed by 131.30 and 130.00.

Next week the corporate diary is looking a little quieter. We do however have two big UK housebuilders due to report. Barratt Developments (BDEV.L) on Wednesday 4th September and Berkeley Group (BKG.L) on Friday 6th. The UK property market is a sector that is seen to be potentially very sensitive to Brexit and the conditions under which the UK leaves the EU.

Link: CNBC Article

Forex

The risk of no-deal Brexit increased significantly after UK Prime Minister Boris Johnson’s decision to suspend Parliament. UK sterling (GBP) initially sold off on the news, however, the fall was not as severe as feared by investors.

Link: Bloomberg Article

The GBPUSD currency pair which is the most liquid and frequently traded GBP forex pair is trading close to the psychologically important support at 1.2200. A confirmed loss and an end of day close below 1.2200 could support further bearishness potentially targeting additional downside support at 1.2120 followed by 1.2030 and 1.2000. Alternatively, corrective rallies above 1.2200 could retest initial upside resistance at 1.2300. A confirmed breakout above 1.2300 and an end of day close higher could cause a ‘short squeeze’ spike targeting additional upside resistances at 1.2380 followed by 1.2440 and 1.2530.

Crypto

Link: Cointelegraph Article

In a tweet on Wednesday bitcoin critic and gold aficionado Peter Schiff, CEO of Euro Pacific Capital, said that Bitcoin had failed the safe haven test.

“Bitcoin has again failed the safe haven test. On Friday, as escalating trade tensions sent global stock markets plunging, investors sought refuge in monetary safe havens. The Japanese yen, Swiss franc, and especially gold all moved higher. Yet Bitcoin plunged by more than stocks!” he wrote.

BTC is range trending in the daily,  4 hourly timeframes capped by 20 and 50 DMA and supported by 200 DMA. The price appears to be in consolidation range, creating lower highs and lower lows. Intraday price action is bearish, supported by 9,400. The upside is capped by initial resistance at 10,000.  A confirmed breakout above 10,000 appears bullish targeting resistances at the psychologically important 10,400 followed by 11,000 and 12,000. Alternatively, a confirmed loss of 9,400 would support a bearish outlook targeting additional downside supports at 9,030 initially, followed by 8,750 and 8,400.