News & Analysis

Global shares return to the red – 2 Year yield hits 10- year high – ECB comments lift Italian bonds – Safes havens hit risk FX – GBP tumbles

Oct 18, 2018 | Market Updates

Upcoming high impact news:

13:00 CNY GDP
17:30 JPY BOJ Gov Kuroda Speaks
23:30 CAD CPI – Core Retail Sales
03:10 GBP BOE Gov Carney Speaks

U.S markets tanked overnight, the Dow losing 327, the S&P500 down 40.43 and the Nasdaq hammered 157 pts lower. investors, were worried about the U.S.-China trade war, rising yields. U.S. tech stocks returned to the firing line. Stocks also weakened as Treasury Secretary Steven Mnuchin pulled out of a Saudi Arabia investment conference as traders worried a large global investor in the kingdom is coming under greater scrutiny.

Investors and traders are also looking at China, The Shanghai Composite dropped 2.9% to its lowest point since November 2014. The drop in Chinese stocks increased fears that China’s economy, the world”s second largest, could be slowing down, dragging down global growth. “Chinese stocks are now at a four year low as rising U.S. interest rates and the likelihood of less favourable trade deals is going to adversely impact Chinese companies profits next year and its market price is re-setting lower to reflect that,” Nick Raich said. China will report its quarterly GDP at 13:00 today.

Yields – overnight the 10 year hit 3.21%, before dropping back and the 2-year note rose to its highest level in more than a decade, breaking above 2.9%.

Stocks in Europe fell after negative leads from Wall, ECB comments and a cancellation on the Brexit summit. EU leaders shelved plans for a special summit to complete a Brexit deal over the coming weeks. Mario Draghi said one of the risks for the economy was countries trying to circumvent EU budget rules. Draghi’s comments sent Italian bond yields to their highs of the day and sent major European stock-market indexes to their session lows. – CNBC The DAX closed 125 pts lower while the FTSE finished 27.61 pts lower.

Oil shed a further 1.6%. Crude futures came off one-month lows in early trading as U.S. stock markets bounced. But equities turned sharply lower in late morning trade, and the oil market fell to session lows. Brent dipped below $80 a barrel. USOUSD closed 127 cents lower at 68.66. Traders keep an eye on 68.45 this level could offer buyers support.

Gold rallied as stocks sold off but gains were capped due to yields driving the USD higher. Gold closed 3.66 higher after cutting gains from its 1230.30 session high. Risk failed to hold gains to the USD as traders moved away from risk into the U.S session. The Dollar hit 1-week highs overnight, knocking risk majors lower, the AUD cut gains to close 10 pips lower, the EUR and GBP lost 48 pips and 95 pips respectively. The USD dropped 47 pips to the Yen and jumped by 70 pips to the CAD. Risk had a bad night to the Yen, the AUD EUR and GBP losing over 100 pips.

Traders will be looking to today’s Chinese GDP as worries grow over the Chinese economy. The ASX200 has followed weaker leads and is currently trading 46 points in the red.

Good Trading from Eightcap

Sources; CNBC – All times are AEDT -44

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