News & Analysis
Stocks plunge – Dow and DAX lose over 300 – NASDAQ -2.09% as Netflix hurts; EUR – GBP recover to JPY higher to USD
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New trade fears plus Tech drove stocks lower last night. The Dow Jones dropped 328.09 – the S&P500 lost 37.81 and the NASDAQ was flogged losing 160.81. Netflix dropped 6.5 % to lead the FANGs lower. Netflix suffered its worst day in two years. The Dow was dragged lower after Harley Davison shares fell close to 6% after the company announced it will shift production of motorcycles headed for Europe to factories outside the U.S. The company sold nearly 40,000 bikes to the European Union, second only to the U.S. this hit right at the core of Trump’s tariffs as they were designed to increase and protect U.S manufacturing and jobs.
Peter Boockvar, chief investment officer at Bleakley Advisory Group, said in a note there are three goals the administration wants to complete with these tariffs: to protect tech companies from Chinese theft, to lower trade barriers set by other countries relative to the U.S. and lower the trade deficit.
Europe finished sharply lower as trade fears continue to hurt. Euro stoxx 50 lost 67.73 – the DAX was hammered losing 309.39 and the FTSE pummeled dropping 172.43. German Chancellor Angela Merkel said she would be looking to do a direct deal with different European countries to solve the migration program, given that they did not manage to reach a European-wide agreement. BMW became the next industry titan to warn on the effect of a “Hard Brexit.” Turkey, Tayyip Erdogan claimed victory on Sunday after a presidential election. The head of the country’s electoral body said Erdogan had an absolute majority. Will this settle the Lyria down?
Oil settled 50 cents lower as the market comes to terms with new supply amounts. OPEC agreed to hike output by 1 million barrels per day, but analysts warn there is little spare capacity for large-scale supply increases. The global oil markets could remain tight this year, analysts advised.
Gold fell as traders shifted to treasuries. “Right now, the flight-to-quality money is going into the bonds,” said Bob Haberkorn, senior market strategist at RJO Futures. “Commodities on a whole are being pulled back with the threat of tariffs.” Gold is higher this morning but settled at 6-month lows in last night’s trade. 1264 is seen as a short-term low for now.
The USD and Japanese Yen spent most of the day in the black as traders moved out of risk and into safe havens after presidents Trumps latest comments. Late into the London session things shifted and the EUR and GBP made unexpected recoveries. The EURJPY parred a 77 pip loss to close 47 pips higher. The AUD and CAD failed to fight back, the AUD closing lower to the USD and JPY. The USDJPY tested 109.75 before paring some losses. An interesting night on FX shorts would have had to do a bit of covering due to the EUR and GBP recoveries. The EURUSD after a 31 pip decline added over 43 pips to close higher for a 3rd straight session.
Bitcoin staged a small fightback after sellers broke back below 6000. The test was short as buyers moved price back to 6300. Price is softer this morning trading around 6200.
Good trading from Eightcap.
Sources; CNBC – All times are AEST
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