News & Analysis

Tech drives stocks – NASDAQ new record; Powell drives USD higher – Gold sinks new 2018 lows; Bitcoin jumps back above 7000

Jul 18, 2018 | Market Updates

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18:30 GBP CPI
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00:00 USD Fed Chair Powell Testifies
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U.S. stocks saw modest gains Tech leading the way, Amazon hit new records which in turn helped the NASDAQ reach new records at 7855.12 with an overnight gain of 49.40 points. Netflix put in a wild session for traders closing 5.2% lower after falling as much as 14.1% earlier in the session. The plunge kicked off after Netflix after reporting weaker-than-expected subscriber growth.

The Dow added 55.53 points boosted by the tech sector and strong earnings from Johnson & Johnson. Tech is the best-performing sector in the market this year, rising nearly 15% through Monday’s close. Also, just a handful of tech shares are responsible for more than 80% of the S&P 500’s gains this year. The S&P500 closed 11.12 points higher.

The earnings season “is off to a great start,” said Nick Raich, CEO of The Earnings Scout. “Up until now, more than 80% of the S&P 500 companies that have reported have beaten earnings estimates.”

European shares closed higher with earnings and Fed Chair Powell’s comments in focus, basic resources stocks were the best performers, up by 1.27% on earnings news, while at the other end telecoms fell by 1.19% amid consolidation news. Schibsted rallied close to 12.6%, leading the gains in Europe, after reporting an all-time high in earnings and 7% above Reuters consensus. The DAX added 100.52, the FTSE closed 25.88 points higher.

Fed Chairman Powell lead a revival in the USD as he stuck to a hawkish tone in last night’s first testimony to lawmakers on Capitol Hill. His comes when investors are paying attention to the yield curve, which compares long and short-term interest rates. This indicator has been used to anticipate economic recession’s. Minneapolis Federal Reserve Bank President Neel Kashkari said Monday that the U.S. central bank should take a break from hiking rates, because of how the yield curve is moving.

the International Monetary Fund has cut its growth forecasts for the U.K. and the eurozone, warning that tensions in global trade have darkened economic prospects. The U.S. launched five disputes at the World Trade Organization on Monday against China, the European Union, Canada, Mexico and Turkey for their retaliatory tariffs against the U.S.

The above had an impact on currencies and Gold. The USD jumped to risk knocking it sharply lower. Despite healthy unemployment figures the GBPUSD still dropped 118 pips. The AUDUSD lost 30 moving back below 74 cents. The EURUSD lost 47 pips. Risk held firmer to the Yen, the USDJPY jumped by 60 pips. This morning buyers have tested 133.00, taking the USD back to early Jan highs to the Japanese Yen.

Gold was hit hard by the USD overnight losing just over $12.70. Sellers smashing 1240 support area breaking back into fresh 2018 lows. Price is trading at lows not seen since July 12017.

Bitcoin on the other side of the coin broke out last night smashing though resistance to close back above 7000, buyers getting as high as 7400. Price is trading at 7297 this morning. Going to be very interesting now as the main long-term downtrends have been beaten. If the breakout can hold, signs suggest buyers could be forming a new uptrend. Further confirmation is still required.

Good trading from Eightcap.

Sources; CNBC – All times are AEST

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