News & Analysis

Stocks mixed – Dow lower – DAX jumps; Oil – Brent hits $80 – Crude touches $72; USD fightback – USDJPY breaks above 110.70

May 17, 2018 | Market Updates

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US markets – tracked lower on Thursday, the Dow Jones lost 54.95 – the S&P500 lost 2.33 and the NASDAQ closed 15.82 points lower. US-China trade talks one of the main talking points. Thrumps tweet ÔÇ£ Will that be successful? I tend to doubt it,” “The reason I doubt it is because China has become very spoiled. The European Union has become very spoiled. Other countries have become very spoiled because they always got 100 percent of whatever they wanted from the United States.” These comments worried traders and investors. Tech shares hit their session lows after Trump made his remarks Thursday. Higher yields also helped push stocks lower. The benchmark 10-year Treasury note yield broke above 3.1 percent for the first time since 2011, while the two-year yield hovered around its highest levels in a decade.

Europe – traders ignored US-China talks and focused on earnings and corporate deals. Ocado boosted the retail sector, closing up over 44 percent after the British online supermarket said it had signed an exclusive deal with U.S. grocer Kroger. The oil and gas sector closed 1.6 percent to the upside, propped up by oil prices that are at multi-year highs. Brent crude hit $80 in last night’s European session. The FTSE finished 53.77 pts higher – the DAX added 118.28 – the CAC closed 54.38 pts higher.

Oil – made fresh 2018 highs last night as USOUSD hit 72.32 before trimming gains. Brent crude oil topped $80 a barrel for the first time since November 2014, Trumps administration’s effort to sanction Iran’s crude exports could be more successful than originally thought. John Kilduff, founding partner at energy hedge fund Again Capital, chocked up oil’s failure to hold earlier gains to traders taking profits off the table and “crisis fatigue.” “There was no new catalyst today, no new rhetoric from key players. This is what passes for relative calm these days,” he said

OPEC members can replace any supplies lost from Iran, and the United States is pumping at record levels, noted Anthony Grisanti, president and founder at GRZ Energy. concerns are mounting over falling output in Venezuela after ConocoPhillips moved to seize the assets of Venezuelan state oil giant PDVSA.

“The screws are really tightening on Venezuela,” Dan Yergin, vice chairman of IHS Markit, told CNBC on Wednesday.

Forex – last nights big move came from the USDJPY as it hit 4-month highs. Buyers breaking back above 110.50 to settle at 110.75. The other majors also enjoyed a weakening Yen closing higher. The GBPJPY shot up by 91 pips. The USDCAD made a come back closing 32 pips higher. The EUR was stronger much of the day but found active sellers late into the London session and into the New York session. Giving up a 32 pip rally the EURUSD closed 13 pips lower. The EURGBP continued to be sold off losing another 30 pips and 82 pips for the week so far. The AUDUSD gave up a 34 pip rally to finish slightly lower.

The USD recovery could try to reestablish its self-tonight. Gold continues to range from 1289.65.

Good trading from Eightcap.

Sources; CNBC All times are AEST

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