On November 8, the Dow Jones Industrial Average Index (DJIA) closed at the 27,681.24 level, just 0.3% below its all-time high. The optimism surrounding the US-China trade deal helped equity markets rise last week. On November 8, a Chinese official said that both sides agreed to roll-back a portion of the existing tariff. Moreover, this is a crucial factor for a trade deal, according to the Chinese official. However, on November 9, President Donald Trump denied any plans for canceling the existing tariffs.
Today at 7:43 AM ET, the Dow Jones futures shrunk more than 100 points. It suggests a lower opening for the equity index. In today’s trade, the Shanghai Composite Index fell 1.8%. Also, Japan’s Nikkei 225 was down by 0.3%. The rising social unrest in Hong Kong plus concerns about trade deal might have impacted Asian markets. Today, the Vanguard FTSE Asia, excluding Japan Shares Index ETF, was down 1.2%.
Weekly market performance
In the week ending on November 8, the Dow Jones rose 1.2%. It was the third consecutive weekly gain. Moreover, last week’s gains were the second-highest since the week ended September 6.
In the trailing week, among sector-specific SPDR ETFs, the Financial Select Sector SPDR ETF (XLF) gained the most. XLF rose 2.5%. However, defensive and high-dividend yield sectors like the Consumer Staples Select Sector SPDR ETF (XLP), the Utilities Select Sector SPDR ETF (XLU), and the Real Estate Select Sector SPDR ETF (XLRE) declined 0.6%, 3.7%, and 3.7%, respectively. These were the underperformers among sector-specific SPDR ETFs last week.
Defensive and high-dividend yield sectors underperformed, and the equity market is near its all-time high. This might indicate that investors are shifting their holding away from these sectors. Usually, these sectors tend to outperform the broader market during turmoil.
For instance, in August, the Dow Jones declined more than 1%. Among sector-specific SPDR ETFs, only these three sectors closed in the green territory in the same month. In August, “tariff man” Donald Trump in a surprise move imposed a 25% tariff on $200 billion worth of Chinese goods. To learn more about Trump’s impact on the equity market, read “Tariff Man” Trump Is Back to Haunt the Markets after a Lull. In December 2018, Trump called himself a”tariff man.”
Dow Jones’ moving averages
On November 8, the Dow Jones settled 2.3%, 3%, 3.6%, and 5.4% above their 20-, 50-, 100-, and 200- DMA (day moving averages), respectively. The index above these key moving averages suggests bullishness in the equity market. Also, this week, investors should watch the 20-DMA at the 27,047 level. If the Dow Jones falls below the 20-DMA, the index might enter into a short-term downturn. Besides, after Trump’s comments, chances are high for a possible decline in the index.