News & Analysis

Italian worries return – DAX – FTSE MIB plunge; EUR hammered to USD; Canadian GDP surprise hits USDCAD

Oct 1, 2018 | Market Updates

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18:30 GBP Manufacturing PMI
00:00 USD ISM Manufacturing PMI

Markets ended the week mixed, US markets pared loses while Europe closed lower. The Dow added 18 pts while the DAX lost 188 pts. The S&P 500 rose 7.2 percent, its best quarterly gain since the fourth of quarter 2013.

“Unless we see some resolution, trade talks are going to heat up,” said JJ Kinahan, chief market strategist at TD Ameritrade. “But first, we have to go through the earnings season” and hear what CEOs have to say on the matter. “The deficit agreed upon … while not the worst-case scenario, is still somewhat worse than market expectations,” said Larry McDonald, head of the U.S. macro strategies at ACG Analytics and editor of The Bear Traps Report. He noted the deficit target puts Italy “in breach of its obligations.”

“On a year-over-year basis, inflation has met the Fed’s publicly stated target. The FOMC can, therefore, continue to trudge forward on its journey toward normalization,” Jeremy Klein, chief market strategist at FBN Securities, said in a note. “Given the robust economy, the lack of any deleterious upward pressure on consumer prices bolsters the bulls’ case.”

Italian worries returned to the radar, Italy’s FTSE MIB index tumbled more than 3.7 percent after Rome agreed to set a higher than expected budget deficit target that could put it on a collision course with Brussels. Looking at sectors across the region, banks were worst performers on Friday, down around 2.6 percent with a number of Italian banks dropping to the bottom of the STOXX 600.

Oil ended Friday’s session flat after Thursday’s surge, USOUSD settled at 73.37. Buyers look to be starting to consolidate after the breakout. Gold added $9 in a good recovery to end the week. This morning sellers have been active price $3.50 lower price has started to form a drawn out higher low but buyers will nedd to hold 1182 low.

Currencies have started the week mixed, the AUD gapped higher but the GBP continued to edge lower. USDCAD gapped 61 pips lower after plunging 130+ pips lower after better than expected Canadian GDP on Friday. EUR could remain under pressure due to market worries around Italy. Risk has started to make traction to the JPY the daily’s are showing early signs of developing continuations.

Bitcoin has started the week 70 USD higher and continues hold it’s uptrend for now.

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Sources; CNBC – All times are AEST

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