News & Analysis

Stocks mixed – U.S drops – Europe higher; Oil fades after testing highs; Yen fight back; Fed minutes in focus

May 23, 2018 | Market Updates

Upcoming high impact news:

18:00 AUD RBA Gov Lowe Speaks
18:30 GBP CPI
00:30 OIL Crude Oil Inventories
04:00 USD FOMC Meeting Minutes

US markets – Uncerticiy continues on, what looked like a clam situation now gets a little hazier. The US equity gave up early gains to finish in the red after very mixed comments hit the mark regarding trade talks with Beijing and the upcoming North Korea summit. The Dow Jones lost 178.88 the S&P500 down 8.57 and the NASDAQ closed 15.58 in the red.

Trump told reporters he was “not satisfied” with the trade talks that took place with China last week. He called the negotiations a “start” as his administration keeps working toward a final deal to address trade imbalances with Beijing. The president also discussed a summit with North Korean leader Kim Jong Un, stating: “Whether or not it happens, you’ll be knowing pretty soon.” The summit is scheduled for June 12 in Singapore. Steve Chiavarone of Federated Investors said he is not too worried about the tensions between the two giant economies, noting the amount of money in tariffs proposed is far smaller than the benefit of lower taxes. “It’s like 20 to 1,” the firm’s assistant vice president said.

The Fed Minutes give traders an idea of how the central bank is thinking about the strength of the economy, with many expecting that the Federal Open Market Committee will raise rates in June to stay ahead of creeping inflation.

Minutes from their previous meeting showed that “all participants” expected both the economy to strengthen and inflation to rise “in coming months,” citing strong spending patterns and a consistently tight labor market.

Europe – finished higher on Tuesday, China’s finance ministry said it would cut the import duty on passenger cars to 15 percent from current levels of 25 percent. Italian government bond yields came off 14-month highs on Tuesday, after several days of heavy selling amid concerns about a potential new governing coalition. Bank of England Governor Mark Carney said the U.K. economy would bounce back from a weak start to the year. He denied claims that the central bank had confused investors and households by deciding not to hike interest rates earlier this month. All green on the major indexes, the FTSE +18.28 the DAX +92.20 the CAC +2.59

Oil – edged lower overnight after testing this weeks high. USOUSD finishing 50 cents lower at 72.04. The U.S. government imposed new sanctions on Venezuela following Sunday’s re-election of President Nicolas Maduro. A potential drop in Iranian oil exports following Washington’s exit from the 2015 nuclear deal with Tehran and the renewal of U.S. sanctions also supported prices. Tomorning the EIA releases US stockpile figures at 00:30.

Forex – we saw a brief recovery from the GBP after the inflation report hearings. The GBPUSD traded 70 pips higher before sellers kicked-in. The Cable closed 7 pips higher snapping a 2-day losing streak. That was the way most risk pairs went last night. Rallies cut down into the NY session. The USD recovered to the CAD closing 33 pips higher. The Yen fought back to the majors. The USDJPY losing 16 pips. AUDJPY fell from its monthly highs losing 17 pips. Gold had a mixed session ending 1.70 lower. 1289 continues to be line buyers are defending, price is trading $3.40 higher this morning.

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.