Monday the stock market continues its almost expected volatile behavior following daily reports surrounding the ongoing trade war between the U.S. and China. Bloomberg reported this morning that China is seeking more talks before signing a preliminary trade deal, with no news on whether there will be a delay on the increase of tariffs on Chinese goods that the U.S. plans to roll out in December 15.
Here's how the U.S. stock market settled Monday:
S&P 500 Index (SPY): -0.14% or 4.12 points
Dow Jones Industrial Average (DIA): -0.11% or 29.23 points
NASDAQ Composite Index (QQQ): -0.10% or 8.39 points
According to the report, China wants to hold more trade discussions this month to work out the details of the "phase one" trade deal before the General Secretary of the People's Republic of China, Xi JinPing, agrees to sign it. Further reports state that officials in China want the Trump administration to no longer schedule a planned tariff increase in December. This plan will add on to China's request to pause the tariff increase that was set to take effect Tuesday, a plan that was cancelled during last week's trade talks.
Treasury Secretary Steven Mnuchin told CNBC that he expects that the tariff increase will take effect in December if no deal materializes, though he believes that the two countries will reach an agreement before that time.
China's economy, being the world's second largest, has continued to weaken, with imports falling 8.5% in September and exports declining 3.2% from September last year. This has left a trade surplus of $39.65 billion for the month. It is not yet known the full effects of this economic slump on the rest of the global economy.
In U.S. stock sector news, all sectors except Real Estate +0.14% and Financials +0.10% took a small dive into the unstable waters of the market. The biggest losers include Utilities -0.70%, Materials -0.66%, Consumer Staples -0.43%, Industrials -0.22%, Communication Services -0.16% and Energy -0.14%; sectors that are highly sensitive to changes in trade costs.
In commodity news, Oil prices dropped more than 2% Monday due to investor fears surrounding global demand in light of the mixed news of future trade outcomes. Brent crude dropped over 2%, pricing a little over $59 per barrel and West Texas Intermediate almost fell 3%, pricing at about $53 per barrel. New reports show that the oil replacement rate is at a 20-year low, with the industry only replacing 1 in 6 barrels. This means that only one barrel for every six consumed is replaced by new sources. The price of Gold rose 0.49% and rests at $1,496.00 per ounce; gold prices usually increase when economic security is uncertain.
There has yet to be news of whether or not U.S. and China will be continuing trade discussion this month. It is the lack of agreement and anti-trust surrounding news that has been the driving force behind the market this month. Tuesday's market summary will following the relentless trade war and its further developments.
- https://www.bloomberg.com/news/articles/2019-10-14/china-wants-more-talks-before-signing-trump-s-phase-one-deal?srnd=premium
- https://www.cnbc.com/2019/10/11/mnuchin-says-china-tariffs-wont-go-up-next-week.html
- https://www.bloomberg.com/news/articles/2019-10-14/china-s-exports-and-imports-worse-than-expected-in-september
- https://in.reuters.com/article/global-oil-int/oil-falls-more-than-2-on-doubts-around-phase-one-of-u-s-china-trade-deal-idINKBN1WT0CV?feedType=RSS&feedName=businessNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FINbusinessNews+%28News+%2F+IN+%2F+Business+News%29
- https://oilprice.com/Energy/Energy-General/Replacement-Rate-Hits-20-Year-Low-Oil-Industry-Only-Replace-1-In-6-Barrels.html