News & Analysis
Equity Markets bounce back as Trade war fears ease – Dow Jones adds 669 pts; Majors jump to Yen – EURJPY adds 184 pips; USD lower – Oil stalls after testing Jan’s high
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US markets – rallied on Monday spurred by easing trade war fears. The Financial Times reported China has offered to buy more semiconductors from the U.S. to help cut its trade surplus with the U.S. Shares of Qualcomm and Intel rose 4.6 percent and 6.3 percent, respectively, on the news. The Wall Street Journal also reported that U.S. and Chinese officials are working to improve U.S. access to China’s markets. Investors “have apparently recognized that a trade war is in no one’s best interests and therefore extremely unlikely,” said Jeremy Klein, chief market strategist at FBN Securities, in a note. “Specifically, the President merely wants to fulfil a campaign promise while China will only enact token countermeasures to appease its citizens.” Microsoft added 7.6 percent after Morgan Stanley said the company could reach $1 trillion in market cap because of its cloud adoption. Futures started rallying early in the day, the Dow Jones closing 669.40 higher. The S&p500 closed 70.29 higher! The NASDAQ surged adding 227.88 points.
European markets – traded lower weighed by the Continuing Russian tensions. The U.S. and several European Union nations expelled Russian diplomats in a show of solidarity with the U.K. Trade war tensions easing failed to lift indices. The FTSE closed 33.25 lower, the DAX lost 99.05 points and the CAC finished 28.94 points lower. Looking at the GER30 4H chart we would like to see 11,840 hold as a low for buyers. A fresh break below this level puts pressure on the current buyer momentum.
Oil – pulled back on Monday as profit takers emerged. Buyers did make a shot a Januaries highs before sellers set in. The U.S. oil rig count hit a three-year high, pointing to rising output. A rebound in stock markets and escalating Saudi-Iran tensions provided support. China has launched the long-anticipated Shanghai crude oil futures. USOUSD finished yesterday’s session 38 cents lower. $65.40 is this morning’s 4H support low. A break of this level could set-up a deep test lower.
Forex – yesterday’s main move was the dumping of the Japanese Yen. It started early and carried on all the way through the day. As news hit that the US and China were looking to avoid a trade war the Yen was dropped. The Majors made massive gains back to the JPY, EURJPY +187 buying continues this morning. The GBPJPY +207 pips eclipsing two days of falls. Buyers have added 25 pips this morning testing 150.20 high. The gains weren’t only to the Yen, the USD continued to move lower to risk majors, the EURUSD flying higher by 96 pips clearing two resistance points in a session. This morning buyers continue push price trading above 1.2450. The AUDUSD buyers finally got some follow-through adding 46 pips and closing above .7720 resistance. The next upside test for buyers looks to be .7770. Golds run continued buyers added $6.50 after it looked like price was set for a stall. USD weakness the main driver for buyers.
Good trading from Eightcap.
Sources; CNBC. All times are AEDST
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