News & Analysis

Lower than expected tariffs lifts stocks – Sends safe-havens lower to to risk Currencies; Bank of Japan heavy news day coming up

Sep 19, 2018 | Market Updates

Upcoming high impact news:

Bank of Japan JPY – Monetary Policy Statement – BOJ Press ConferenceBOJ Policy Rate all have a tentative release throughout the day.
18:30 GBP CPI
23:30 EUR ECB President Draghi Speaks
00:30 Oil Crude Oil Inventories
08:45 NZD GDP

Do expectations run the markets? Yesterday was a good example of this, new tariffs advised by the US and China failed to hit a negative extreme so we saw risk fire up with strong gains seen from stocks and risk currencies to safes havens.

US stocks recovered, the Dow Jones added 184.84 the S&P500 added 15.51 and the Nasdaq closed 60.31 pts higher. Nike and Boeing lifted the Dow. Tech stocks boosted the S&P and Nasdaq, Netflix, Amazon, Apple, and Alphabet all closing higher. Tariff saga, China announced tariffs targeting $60 billion worth in U.S. products after the United States slapped tariffs on $200 billion worth in Chinese goods. China also said it will put a 10% tariff on some goods it had previously earmarked for a 20% levy. This is after the Trump administration announced the U.S. will impose 10% tariffs on $200 billion worth of Chinese imports, and those duties will rise to 25% at the end of the year.

“The market is thinking this wasn’t the worst-case scenario,” said Daniel Deming, managing director at KKM Financial. “That’s why you’re seeing this pseudo-rally taking place.”

European stocks also moved back into the green lifted by the better than expected situation tariff wise between the US and China. The DAX added 61.26 the FTSE lost 1.87 and the Euro Stoxx 50 added 9.25.

Oil prices increased by 1.4% overnight as signs build OPEC will not boost output. Reuters previously reported that Saudi Arabia wants oil to stay between $70 and $80. U.S. sanctions on Iran continue to support prices. U.S. shale output expected to rise in October. Trade war continues as a concern as it may cap demand. USOUSD climbed 89 cents closing at 69.41. $70 continues as mid-term resistance.

Despite a weaker USD, Gold fell by 3.48 cents. price continues to hold in a range seen from the daily chart. Better than expected tariff amounts kept the safe havens lower, risk rallied to the JPY and USD through the London and US sessions. The EUR ended lower to the USD, while the AUD had a solid session ending 38 higher to the USD and 81 higher to the JPY. After a small fightback, the USDCAD settled 50+ pips lower. Today traders will be looking to the Bank of Japan, the Monetary Policy Statement – Policy Rate and Press Conference will be released throughtout the Asian to Early European session.

The ASX200 is trading 19 pts higher and the Nikkei is 334 pts higher.

Good Trading from Eightcap

Sources; CNBC – All times are AEST

* 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.