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S&P500 hits new record highs – AUS200 tumbles in O/N session; Trump comments sink USD – Gold & risk see good gains to Yen and USD

Aug 22, 2018 | Market Updates

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The S&P500 touched all-time highs on Tuesday and tied the record for the longest bull market as investors bet that the strengthening economy and booming corporate profits seen under President Donald Trump’s first two years would continue, despite continuing trade battles mainly involving China. The Index closed 5.91 pts higher at 2,862.96 with a session high 2,873.23. The Dow added 63.60v pts and the Nasdaq added 38.17, Micron and Netflix lead the index higher. Currently, the Nas is sitting less than 1% away from new record highs.

“Nobody believed in this bull market and they still don’t,” said Marc Chaikin, CEO of Chaikin Analytics. Lots of people “were left so scarred by the crisis they didn’t get on board.” Quarterly earnings have grown at least 10% in five of the past six quarters, according to FactSet. This year, quarterly profits have risen at least 20% in the first two quarters. Meanwhile, the U.S. economy expanded by 4.1% in the first quarter, its best pace since 2014. “The three Ts, Trump, tariffs and trade, are sort of a wet blanket on the embers of growth, but … the market can still go higher,” said Greg Luken, CEO of Luken Investment Analytics. “Bull markets don’t die of old age; they die of euphoria and we’re nowhere near euphoria.”

European stocks finished mainly higher, the FTSE lost 25.56 while the DAX added 53.19 and the Euro Stoxx 50 added 19.51. Traders awaiting U.S.-China trade talks, comments from President Donald Trump did test market optimism during the session. Oil and gas stocks were some of Europe’s top performers, finishing up 0.82% helped by positive earnings news.

Oil gained adding 1.4% boosted by the prospect of price support from U.S. sanctions on Iran. Gains were capped by the ongoing worries over demand due to the current trade dispute between the US and China. “The upcoming U.S.-China trade talks are unlikely to offer any significant breakthroughs as more formal discussions and, hence, decisions will likely await expected talks in November between Trump and Xi,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

Gold continued its recovery adding $5 off the back off a weaker USD. since last week Gold has added $24 till this morning. U.S President Donald Trump criticized the Federal Reserve for raising interest rates. Trump said he was “not thrilled” with Jerome Powell’s rate hikes and said the U.S. central bank should do more to help him to boost the economy.  “It would appear that Mr Trump would like to keep the U.S. dollar a little on the weak side in order to remain competitive,” said CMC Markets chief markets analyst David Madden.

“But given the dollar has been in demand recently on account of geopolitical issues and the Fed’s monetary tightening policy, he might find it difficult to talk the greenback lower.” This set the tone for gold buyers and in FX markets as risk currencies continued to gain traction to the USD. The AUD, EUR and GBP jumped overnight closing with strong gains, all three pairs closed higher for the fourth day in a row. Risk also jumped to the JPY. The EUR and GBP adding well over triple figure gains. The USDJPY added 21 pips breaking its losing streak.

This morning the ASX200 continues lower after the AUS200 saw heavy selling in last nights session, this is surprising due to current optimism in the risk markets. The AUS200 lost 73 pts yesterday and is trading 15 pts lower this morning at 6251. Major Asian indexes are all in green at this point this morning.

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Sources; CNBC – All times are AEST

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