Equities ease as China says more talks needed

US indices gave back a small bit of the previous two days’ gains yesterday as China said more talks are needed to hammer out the details of the Phase 1 trade deal before President Xi Jinping would sign it. Turkey is facing US sanctions over Syria advance. Hong Kong violence escalates. A UK Brexit deal may be getting closer.

US30USD Daily Chart

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The US30 index slid slightly, falling for the first time in four days, after China diffused the near-term euphoria about a mini trade deal

The index remains capped by the 78.6% Fibonacci retracement of the drop from September 12 to October 3 at 26,974. The 100-day moving average is at 26,491

US Treasury Secretary Mnuchin said the US had a “fundamental agreement” with China, subject to documentation. He confirmed that more meetings are scheduled, adding that the signing of the deal prevent a further escalation in tariffs. There are no major US data releases scheduled for today.

DE30EUR Daily Chart

The Germany30 index held on to gains made in the previous three sessions yesterday as the UK’s Telegraph reported progress being made in Brexit negotiations

The index consolidated below Friday’s high, which was the highest since July 25. The 100-day moving average is at 12,138

ZEW surveys on economic sentiment for both Germany and the Euro-zone are expected to fall in October, according to the latest surveys of economists. Germany’s is seen dropping to -27.3 from -22.5 while the Euro-zone’s is expected to decline to -33.0 from -22.4.

UK100GBP Daily Chart

The UK100 index had a muted response to reports in the UK’s Telegraph that a Brexit deal may be crystallising

The index was little changed from Friday, holding below the 55-day moving average at 7,267. That moving average is below the 200-day moving average today, the first time since April 15. This is often interpreted as a medium-term bearish signal

UK’s jobless claims are seen improving to 27.9k in September from 28.2k the previous month, according to analysts’ estimates. BOE’s Vlieghe is due to speak today.

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