News & Analysis

Stocks maintain run, S&P500 closing in on new records; USD drops on trade worry ease – EUR and AUD jump; Bitcoin continues south back at 6500 area

Aug 8, 2018 | Market Updates

Upcoming high impact news:

13:00 NZD Inflation Expectations
13:05 AUD RBA Gov Lowe Speaks
00:30 OIL Crude Oil Inventories
07:00 NZD Official Cash Rate – RBNZ Monetary Policy Statement – RBNZ Rate Statement
08:00 NZD RBNZ Press Conference

Stocks continued their overnight, earning offsetting continuing trade worries. The Dow Jones rallied by 126.73, Caterpillar helping the cause with a 2% gain. The S&P500 added 8.05 edging closer to records set earlier in the year. Industrial and energy stocks led the gains. The Nasdaq closed 23.99 points higher, Amazon and Tesla climbing.

At Tuesday’s close, the S&P 500 was just 0.5% away from reaching an all-time high of 2,872.87, set on Jan. 26. The Nasdaq Composite was also within 1% of a record high, while the Dow was more than 3.5% away from reaching an all-time high.  – CNBC The CBOE VIX fell to 10.52 it lowest level since January 16.

“The earnings season has been good and that’s helped investors realize there are strong fundamentals to justify the high prices,” said Bruce McCain, chief investment strategist at Key Private Bank. “The other thing is people get used to worries overtime. We’ve had trade concerns for a while and now they don’t seem as bad.”

Trade worries linger, in what’s becoming comfortably numb, the market looks to becoming desensitized to the new almost daily tariff threats. Overnight – U.S. trade representative says finalizes the second tranche of tariffs on $16 bln worth of Chinese imports. This news failed to reverse FX and stock rallies. On the back of mixed earnings, Pandora losing 24% European stocks closed higher, the DAX +49.48 – The FTSE +54.70. Europe’s auto sector among the top performer, ending the session 1% higher on positive earnings.

Asian stocks closed higher on Tuesday, the Nikkei has started Wednesday’s trade flat. The ASX200 higher +16.30.

Oil gained during the LON session hitting 69.13 for a 2nd time this week. As with yesterday sellers trimmed the rally. Price closing at 68.48.

Gold traded as high as 1216.10 before settling at 1210.76. “At the moment gold is more sensitive to the yuan than the dollar (index), so if the dollar is rallying but not against the yuan, gold is stable. The correlation (with the yuan) is almost one on one,” ABN Amro commodities strategist Georgette Boele said.

The USD decline really kicked into gear as the European session started to come online.

The EUR and GBP started to make gains and quickly added to them into the London open. Trade worries which have been boosting the USD stabilized during yesterday’s session before new tariff news hit during last night’s session. The RBA held rates giving the AUD a boost. The AUDUSD jumped back above .7430 before settling at .7419. This morning price is 13 pips higher. The GBP failed to launch Brexit worries kept buyers on the sidelines. The Cable finished flat and the GBPJPY closed slightly lower while the EUR and AUD finished higher to the JPY.

The USDCAD fought back from weekly lows to end the session 52 pips higher. The USDJPY parred 36 pip loss to finish flat. Bitcoin failed to hold its rally closing lower. This morning sellers have been active price 266 lower back at the mid 6500 area. The break out rally is under serious pressure atm.

Good trading from Eightcap.

Sources; CNBC – All times are AEST

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