Market News & Analysis

Stocks and EUR rebound after Trump delay’s auto tariffs

May 16, 2019 | Market Update

High-impact economic news:

11:30 am AUD Australian Employment Change and Unemployment Rate 

01:15 am CAD Bank of Canada Governor Poloz Speaks

Trade and tariffs continue as the main driver for traders and investors, we got off to another soft night in Europe with the main indexes and European currencies making new declines. The DAX and CAC were all trading deep into the red approaching the NY session. The EUR failed to hold a third intaday rally moving 23 pips lower at one stage to the USD. 

U.S. futures moved into the NY session start in the red. Sentiment took a sharp turn back to the positive after president Trump announced that there will be a 6-month delay in auto tariffs. this was mainly going to affect the EU and Japan. “If you look at today’s market action, it does show how sensitive investors have become to trade news,” said Jeff Kravetz, regional investment director at U.S. Bank Wealth Management. “What it may do is put equities in a range-bound mode as investors wait on the outcomes of trade tensions.”

This news had a dramatic effect on European markets, the DAX erased all losses and finished the session 107 pts higher. The EUR jumped back to the USD paring losses. Trade is really dominating atm, the EUR ignored German Prelim GDP coming in at 0.4% which was expected and good news under the current German economy questions, and also ignored an increase of 0.3% employment in the Eurozone. 

Gold had a saw-saw session due to trade news, the yellow metal rallied on negativity gaining $3.79 before finishing lower after the tariff delay hit the market. Oil gained despite rising U.S. stockpiles which for now are being offset by rising tensions in the Middle East.

The ASX200 has started the session with small gains, local traders will be looking to today’s employment data, if we see bad numbers this could reinforce future rate cuts and will do more damage to the AUD. We’d think after last night’s tariff comments the Nikkei could bounce back in today’s session. 

Last night’s reversal on the GER30 (DAX)

Good trading from EightCap

Sources – CNBC

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