News & Analysis
Nasdaq makes it 5 in a row – Facebook adds 4%; Trade worries lift the USD – GBPUSD hits new 2018 lows; RBA rates & statement today
Upcoming high impact news:
14:30 AUD RBA rate statement – cash rate EXP hold at 1.50%
17:30 GBP Halifax HPI (med impact)
U.S markets edged higher overnight, futures pared earlier losses due to new trade worries after China announced new tariffs. The Nasdaq closed 47.66 pts higher making it five in a row for the first time since May. Facebook gained 4% closing out its highest one day rally since April. Disney helped the Dow Jones to a 39.60 point gains and higher tech and consumer discretionary stocks lifted the S&P500 to a 10.05 point gain.
Facebook rose on reports that the social media giant is in talks with banks to incorporate users’ financial information into Messenger. Berkshire Hathaway posted stronger than expected quarterly profit on Friday, sending its Class B shares up by 3%. Jacobs Engineering shares spiked 7.8% higher on better than expected earnings, one of the best S&P500 stocks in yesterday’s session.
“Stocks are being bolstered by strong economic fundamentals that have driven earnings above elevated expectations,” said Bruce Bittles, chief investment strategist at Baird. While corporate earnings remain strong, there continues to be investor concern over trade, monetary policy and the mid-term elections.”
Tariff issues continue – A senior Trump administration official told CNBC that the White House is not ruling out slapping auto tariffs on Canada. This comes as NAFTA negotiations continue with Canada on the sidelines. It also comes as President Donald Trump is considering raising proposed tariffs on $200 billion in Chinese goods to 25% from 10%. – CNBC
European stocks ended mixed, trade worries continued to worry traders. The Dax traded in a volatile session trading above 12,700 during the session before losing steam to finish 17.55 points lower. The FTSE added 4.68 and the CAC lost 1.80 points. Basic resources slipped the lowest on Monday, ending trade 1.4% lower on the back of trade worries.
Oil jumped during the London session, USOUSD hitting 69.13 before paring gains. Saudi Arabia froze trade with Canada and President Trump is reimposing sanctions on Iran after the market felt he could be softening on his stance. Supply also played a factor in last night’s up move, OPEC sources said Saudi crude production unexpectedly fell in July.
Some of the sanctions will start on Tuesday at 12:01 a.m. EDT (1601 GMT). The United States also plans to re-introduce sanctions on Iranian oil in November, which could dent the OPEC member’s output. Renewed sanctions are part of the Trump administration’s strategy to deny resources to the Iranian leadership. –CNBC
Gold lost close to $6 in trade yesterday due to a stronger USD, traders keep an eye on 1207.00. We’ve seen three tests of this level with three holds. Sellers look to be hitting a short-term wall. Overall momentum remains down.
The USD continued to push risk lower overnight, the GBP made new 2018 lows. The EUR tested JUN lows before settling. The AUD closed lower but as with other risk, majors closed off session lows. AUD traders will be looking to the Reserve Bank today for the Cash Rate and Rate statement. The market is expecting a hold at 1.50%.
The Japanese Yen lost ground to the AUD, EUR and USD last night but closed stronger to the GBP. The GBP sank to an 11-month low after comments by officials about a no-deal Brexit stoked fears Britain would crash out of the European Union without securing a trade agreement.
Bitcoin continued lower yesterday, pressure remains on Julys break out rally. This morning prices are higher and we’re watching 6800 as it could develop into new short-term support.
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.