News & Analysis

Stocks rally earnings and China fiscal policy; Risk gains to Yen and USD -EUR stalls; Bitcoin reclaims 8K

Jul 25, 2018 | Market Updates

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The Dow Jones added 197.65 United Technologies leading the blue-chip gains.  The S&P500 added 13.42 materials the best performing sector. The Nasdaq took a small breather closing -1.11 points in the red after hitting new records earlier in the session. Alphabet shares rallied 3.9% to a record after the company reported stronger-than-forecast quarterly results. FaceBook and Amazon also climbed both adding 1.8% and 1.5%.

“Despite all the noise surrounding tariffs, a flattening yield curve, and tighter monetary policy, nothing matters more for the intermediate term for equities than the ability of companies to pump out profits,” said Jeremy Klein, chief market strategist at FBN Securities. “Corporate executives have done just that during the current reporting season which will make it extremely difficult for stocks to struggle especially with volatility in the midst of a disappearing act.”

Stocks also got a boost after China said it would use fiscal action to support its economy. The news jolted stocks around the world. In Europe, the Stoxx 600 index rose nearly 1% while the Shanghai Composite jumped 1.5%. The possibility of further loosening in monetary conditions also pushed the offshore yuan down to a 13-month low. –CNBC

The main European indexes rose overnight, China and corporate earnings driving buyers. PSA Peugeot shares climbed to the top of the pan-European Stoxx 600 after it beat earnings expectations. UBS shares jumped after the bank reported a 9% increase in net profit during the second quarter. The FTSE  gained 53.26 – The DAX gained 140.82and the Eur Stoxx added 33.23 points.

In trade news, President Trump is set to meet with European Commission President Jean-Claude Juncker on Wednesday, where the two will negotiate the U.S. president’s tariffs on EU imports.

Strong leads looked set to push Asian and local stocks higher this morning. So far; the ASX200 is 14 pts lower. The Nikkei 70 pts higher, China is seeing green across the boards with the Hang Seng 406 pts higher.

Oil bounced back overnight as oversupply and trade tensions eased. USOUSD added 91 cents closing at 68.42. Gold ended flat after a mixed session, price trading higher this morning but price remains in a short-term range.

Risk traded flat to the USD most of the Asian session and early into the LON session with no key news or developments to kick up volatility. Risk appetite increased after Beijing promised to pursue a more “vigorous” fiscal policy. The AUD EUR and GBP made gains to the USD. The EUR failed to hold late into the NY session closing slightly lower. The Japanese Yen started higher to the majors but lost ground into the LON session. It held gains to the EUR and USD. The AUD and GBP snapped losing streaks to close higher.

Bitcoin’s strong week continues as buyers reclaimed 8000. Price trading at 8397 this morning as buyers continue to maintain interest. The next main pullback is going to tell us a lot about this current move.

Good trading from Eightcap.

Sources; CNBC – All times are AEST

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