U.S. markets traded in a tight range to finish slightly higher following concerns about what impact Hurricane Harvey may have on the U.S. economy.
The small-caps showed the most strength with the blue-chips ending slightly lower. The Port of Houston has been shut down with Texas being the second-largest economy in the U.S., accounting for 9% of U.S. GDP. Oil prices were lower by over 2% while gasoline prices gained roughly 3% as many of the nation’s refiners were shut down due to hurricane.
Global Economy – European markets closed lower as energy stocks pulled back in the wake of refinery shutdowns caused by Hurricane Harvey along with refrained comments on the euro from ECB President Draghi over the weekend. The Belgium20, France’s CAC 40 index and the Stoxx Europe 600 dropped 0.5%.
The DAX 30 gave back 0.4% and FTSE 100 dipped 0.1%.
The euro reached its highest level since January 2015 against the dollar and is up nearly 14% year-to-date.
Asian markets were mixed with China’s market rallying to a 1-1/2 year high following strength in the brokerage stocks. China’s Shanghai index jumped 0.9% while Hong Kong’s Hang Seng Index climbed 0.1%.
Australia’s S&P/ASX 200 declined 0.6% and South Korea’s Kospi index fell 0.4%. Japan’s Nikkei slipped 0.01%.
The Chinese yuan rallied to a one-year high against the dollar.
U.S. Dallas Fed’s manufacturing index rose 0.2 points to 17.0 in August after rising 1.8 points to 16.8 in July.
The advance goods trade deficit widened to $65.1 billion in July, versus expectations for a deficit of $64.6 billion.
Wholesale inventories were up 0.4% in July and retail inventories fell 0.2% compared to the prior month.
Market Sentiment-The iShares 20+ Year Treasury Bond ETF (TLT) traded down to $126.73 during the first half of action with upper support at $126.50-$126 holding. Lower resistance at $127.50-$128 held on the late day rebound to $127.39.
Market Analysis-The Spiders Dow Jones Industrial Average ETF (DIA) tested a high of $218.56 with upper resistance at $218.50-$219 holding for the fifth-straight session. A move above $219.50-$220 would be a bullish development. Support at $217.50-$217 has been also been holding during the current range.
A move below the latter could lead to further weakness to $216 the 50-day moving average. Today’s low reached $217.53.
The iShares U.S. Oil & Gas Exploration & Production ETF (IEO) traded to an intraday double-bottom of $50.49 on August 18th and 21st and is currently holding support at $51-$50.50. Today’s backtest reached $51.12 with a move below $50.25-$50 signaling additional weakness and a bearish development.
Resistance is at $51.75-$52 followed by $53-$53.75 and a downward sloping 50-day moving average. RSI is curling lower after peaking at 40 and is now resistance after serving as support earlier this month.
All the best,
Roger Scott