Stocks Decline At The Start Of The Week

S&P 500 futures are losing ground in premarket trading as traders react to disappointing economic reports from China which were released earlier today.

China reported that its GDP increased by 4.9% year-over-year in the third quarter compared to analyst consensus of 5.2%. Industrial Production grew by 3.1% year-over-year in September, while analysts expected that it would grow by as much as 4.5%. Retail Sales grew by 4.4% compared to analyst consensus of 3.3%.

China’s problems were caused by power shortages, coronavirus outbreaks, the country’s crackdown on various industries and recent debt problems of developer Evergrande. While some of these problems are China-specific, traders wonder whether China’s slowing growth will have a material impact on other countries and the global economy.

Today, traders will also have a chance to take a look at economic reports from U.S. Analysts expect that Industrial Production grew by 0.2% month-over-month in September while Manufacturing Production increased by 0.1%.

WTI Oil Gets To New Highs As Traders Stay Focused On Energy Shortage
WTI oil managed to get above the $83 level and made an attempt to test the $84 level as traders focused on problems on the energy front. Natural gas and coal prices stay high, and some consumers are switching to oil.

However, oil’s production is limited due to the OPEC+ deal, so demand is increasing at a time when production is scheduled to increase by just 400,000 barrels per day (bpd) per month.

While S&P 500 is set to open lower today, oil-related stocks will likely have a strong trading session as traders will continue to increase their exposure to this market segment.

Gold Moves Closer To The $1800 As Treasury Yields Increase
Gold has recently made an attempt to settle above the $1800 level but failed to develop sufficient upside momentum and pulled back. Today, gold is heading towards the major support level at $1750 as Treasury yields move higher.

The yield of 10-year Treasuries has recently managed to get above 1.60% and is moving towards recent highs near 1.64%. In case the yield of 10-year Treasuries gets to the test of the resistance at 1.64%, gold will find itself under more pressure which will be bearish for gold mining stocks.

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