Market News & Analysis

Correction territory; are we in a bear market?

Dec 17, 2018 | Market Updates

Upcoming high impact news:

11:00 NZD ANZ Business Confidence
11:30 AUD RBA Monetary Policy Meeting minutes
00:30 USD Building Permits
00:30 USD Housing Starts

Thursday – FOMC

Dreams of a Santa rally have been squashed overnight, after Wall Street marked its worst start to December trading since the Great Depression in 1931. The Dow Jones dove more than 500 points, taking its total losses to more than 1,000 points over two-sessions. The S&P 500 fell almost 2.5% and is now at its lowest close for the year. Technology stocks didn’t escape the chaos with the Nasdaq sliding 156 points or 2.27%. The Dow and the S&P are both in correction territory with some Wall Street analysts already calling it a bear market.

The major sell-off comes as investors brace themselves for the U.S. Federal Reserve’s December meeting over monetary policy, where the central bank is expected to raise the cash rate by 0.25%. The Fed has raised interest rates three times this year, raising criticism from U.S. President Donald Trump on Twitter.

“It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!” Trump tweeted.

As Wall Street stocks tumbled, the USD strengthened with the Australian Dollar falling to 0.7176 and the EUR/USD pair falling to 1.134. The AUD is now at its lowest level since November 12 but still higher than its lowest close of 0.70484 on October 5.

The local share market is set to follow Wall Street, with the SPI Futures down 85-points at 0830 AEDT. Investors will be keeping an eye on the language used in the RBA’s monetary policy meeting minutes, due out at 1130 AEDT. But the focus remains on the U.S. Fed and whether the central bank will raise rates further in 2019.

Sources: CNBC

Good trading by EightCap

* The information provided here has been prepared by EightCap’s team of analysts. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and do not reflect the opinions of EightCap.

In addition to the disclaimer on our website, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. EightCap accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.

Please note that past performance is not a guarantee of or prediction of future performance. This communication must not be reproduced or further distributed without prior permission.

 

 

 

 

 

HEAD OFFICE

Level 6, 360 Collins Street
Melbourne, VIC
3000 Australia

Risk Warning: Margin trading involves a high level of risk, and may not be suitable for all investors. You should carefully consider your objectives, financial situation, needs and level of experience before entering into any margined transactions with EightCap, and seek independent advice if necessary. Forex and CFDs are highly leveraged products which mean both gains and losses are magnified. You should only trade in these products if you fully understand the risks involved and can afford losses without adversely affecting your lifestyle (including the risk of losing substantially more than your initial investment). A Product Disclosure Statement (PDS) and a Financial Services Guide (FSG) for our products are available to download from our Legal Documentation page. You must assess and consider them carefully before making any decision about using our products or services.

EightCap is a registered business name of EightCap Pty Ltd (ABN 73 139 495 944). We are regulated by the Australian Securities & Investments Commission (ASIC) - our AFSL number is 391441. This licence authorises us to provide financial services to people in Australia.

The information on this website is of a general nature only and is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. EightCap is not a financial adviser, and does not issue advice, recommendations, or opinion in relation to acquiring, holding or disposing of a margined transaction. We provide general advice only and accordingly you should consider how appropriate the advice (if any) is to your objectives, financial situation and needs before acting on the advice.