News & Analysis
Dow snaps losing streak; Oil fly’s back to test $69 after OPEC meeting; Risk surges – AUD soars to USD and JPY – Bitcoin tanks to new monthly lows
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Buyers returned on Friday, risk traded mainly higher across the boards from FX to stocks, U.S. markets finished mainly higher. The Dow Jones snapping an –day losing streak closing 119 pts higher. Chevron and Exxon Mobil among the best-performing stocks in the index as Oil had a day out. Friday’s close marked the first gain for the 30-stock index in nine sessions, snapping its longest losing streak since March 2017. The S&P500 added 5.12 energy, materials and telecommunications driving gains. The NASDAQ lost 20.14 as tech stocks lost ground on Friday.
“As bad as it may seem to some people, this is more of a re-allocation of resources,” said JJ Kinahan, chief market strategist at TD Ameritrade. “The Russell 2000 and Nasdaq both hit all-time highs this week.”
“I think investors are wise to be cautious and re-evaluate these stocks and how they would be affected if these tariffs go through. … That being said, market conditions are still pretty good,” said Kinahan. Trump threatened on Friday to slap a 20 percent tariff on European cars, saying in a tweet: “Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!” Markets have started Monday a little warry.
European shares rallied on Friday helped by news coming out of the OPEC meeting. Sentiment over international trade disputes has shown signs of improvement compared to earlier on this week, allowing investors to edge back into riskier assets. The FTSE popped jumping by 125 pts. Automakers weighed on the DAX it still added 67.81.
Oil tested $69 on Friday adding over $3 at the close. OPEC’s meeting in Vienna drove sentiment. OPEC agreed a modest increase in output to compensate for losses in production at a time of rising global demand. Iraq said the real increase would be around 770,000 bpd because several countries would struggle to reach full quotas. Saudi Arabia said the move would translate into a nominal output rise of around 1 million barrels per day (bpd), or 1 % of global supply. Iraq said the real increase would be around 770,000 bpd because several countries that had suffered production declines would struggle to reach full quotas.
The actual output increases set a bullish tone, as they came in below some of the highest figures that had been discussed prior to the meeting.
Currencies shifted back to the risk side on Friday as the majors made strong moves against the Japanese Yen. The EUR was boosted stronger data out of Germany and France and Italian commitment to the Euro. The single currency was also bolstered after Greece clinched debt relief and received a cash infusion from the eurozone. The USD finished the week lower to risk and flat to the JPY. The USDCAD fought back after disappointing Canadian data but failed to hold gains, price settled 44 pips lower after a 74 pip rally. The AUD stared on Friday surging to the USD and JPY, finishing basically on highs to both currencies. The AUDUSD added 70 pips @ .7440 – the AUDJPY added 74 pips @ 81.84.
Bitcoin tanked dropping 478 hitting new monthly lows at 6065. Buyers would want to make a move as price is threatening to make a new downside break out!
Good trading from Eightcap.
Sources; CNBC – All times are AEST
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