News & Analysis

Dow hits new record highs; Gold moves back above 1203 – Italian worries knock risk FX lower – EUR hits 6-week lows

Oct 3, 2018 | Market Updates

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Bank Holiday Germany
18:30 GBP Services PMI
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U.S markets rallied overnight, the Dow Jones hitting new record highs beating the last record high set in September. Intel climbs more than 3.5% and Boeing reached new all-time high. The S&P500 finished flat and the Nasdaq fell, Amazon shares dropped 1.6% after the company announced it would raise its minimum wage to $15 per hour for all U.S. employees. Facebook, meanwhile, dropped nearly 2%. Trade has settled on the local front but China trade worries will persist.

Traders are also watching issues in Italy, “While Italy’s budget plan is below France and less than the 3% threshold that triggers concern, … the worry is the lack of any cushion along with their massive debt pile and little economic growth,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “But maybe the biggest risk is the negative feedback loop that is the Italian banking system that owns many billions of Italian bonds,” Boockvar said.

The Dow +122.73, the S&P500 -1.16, the Nasdaq -37.36

Europe closed lower as worries over Italy continued. Claudio Borghi, a euroskeptic economist who chairs the budget committee of the lower house of Italy’s parliament, said in a radio interview Tuesday that he was “truly convinced” most of the country’s problems would be solved if it had its own currency. – CNBC. This contradicted the main message from the Government that they want to continue in the European Union.  Italian Prime Minister Giuseppe Conte also rebuffed the comments, saying the euro was “unrenounceable” for the country.

The DAX finished -51.45 the FTSE -21.12

Oil dipped after it’s strong rallies, traders are focused on coming Iranian supply cuts. Many analysts say OPEC will struggle to cover a decline in exports from Iran.HSBC sees “a growing risk” that crude oil will rise to $100 a barrel. USOUSD tested higher setting a new weekly high before dropping back and closing 40 cent lower.

Gold surprised on the back of a higher USD to risk, buyers held gains and extended higher late into the London session breaking above 1203 with a 15 dollar rally. As mentioned the USD held firmer from the European session open knocking the EUR GBP and AUD lower. The EUR was hit by Italian comments stating the country would be better off with its own currency. The Yen also gained to risk knocking the GBP, EUR and AUD lower. The Yen also gained to the USD, the U/J snapped a 3-day winning streak closing 26 pips lower.

The AUS200 is higher this morning after losing 50+ pts in yesterday’s session. The JPN225 is lower as the Yen continues to see buyers this morning. ADP Non-Farm Employment Change is due tonight and is small prelude to Friday ket US employment data.

Good Trading from Eightcap

Sources; CNBC – All times are AEST

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