- Summary:
- The Dow Jones rallied to new highs on Friday as US companies benefit from phase one of the US-China trade deal. Today's PMI reports from the US are on deck.
The Dow Jones finished Friday’s trading around its historic highs as the US announced a phase one deal with China. The US’ blue-chip stock index closed 3.3 points or 0.01% higher at 28,135.4 as last week’s trading came to an end.
Gainers and Losers
Gains were led by American Express at 1.70%. In second was Visa with a 1.37% profit. Apple came in third which was up 1.36%. The tech company is said to have avoided hefty tariffs which would have amounted to about 15% of its most popular products.
On the other hand, Dow Chemical incurred the biggest loss at 2.15%. It was followed by Exxon Mobil which was down 1.58%. Boeing had the third biggest loss at 1.33%.
US-China Trade Deal
On Friday, US Trade Representative Robert Lighthizer announced that the US and China have finally agreed to a phase one deal. China would buy at least 200 billion dollars-worth of US goods spanning from agriculture, to manufacturing, and energy. In exchange, the US has cancelled additional levies that were supposed to come into effect last Sunday, December 15. Existing tariffs are also said to be rolled back.
US PMI Due Today
Later today, Markit will release its data on its Purchasing Manager’s Index surveys. Readings above 50.0 are taken to mean that an industry is expanding. On the other hand, figures below teh base line hint at a contraction in economic activity in the sector. At 2:45 pm GMT, the services PMI is seen at 52.0. Meanwhile the manufacturing PMI is eyed at 52.6.
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Dow Jones Outlook
On the 4-hour chart of the Dow Jones Industrial Average Index CFDs, we can see that the index has pared some of its gains. Drawing the Fibonacci retracement tool from the low of December 11 to the high of December 13, the DJIA has pulled as far back as the 50% Fib level.
The US blue-chip stock index is trading above the 23.6% Fib level. If sellers dominate today’s trading, we could see the Dow trade lower to 28,038.7. This price corresponds to the 50% Fib level as well as the rising trend line when you connect the higher lows from December 3, December 11, and December 12. If risk aversion dominates market sentiment and this level does not hold, we could see the stock index test its December 12 lows around 27,294.3.
On the other hand, if risk appetite picks up today, the Dow could make a run for its current highs at 28,274. Who knows, it may just set new historic highs.