News & Analysis

Tech rebound lifts stocks despite ongoing trade concerns; Oil surges as Hurricane Florence approaches; Risk lifts to USD

Sep 12, 2018 | Market Updates

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U.S. stocks, firmer on Tuesday as tech gains helped off-set trade war concerns.

The Dow Jones snapped its losing streak closing 114 pts higher. Gains from Nike and Caterpillar and Boeing rebounding from earlier falls helped the index hold in the black. The Nasdaq added 48 pts as tech sector was boosted by strong sessions from Apple + 2.5, snapping a four-day losing streak, after analysts at UBS raised their price target to $250 from $215, citing the potential growth of the company’s services business. Apple is expected to announce several new products. Netflix and Amazon also rose 2.2% and 2.5%, respectively, while Twitter jumped 1.2%. The S&P500 added 10.76 pts lifted by tech and energy sector stocks.

Trade worries linger, China will seek to authorization from the World Trade Organization to slap sanctions on the United States as trade tensions between the two largest world economies grow. This comes after President Trump said he was “ready to go” on hitting China with an additional $267 billion worth of tariffs. The U.S. administration had already previously announced that it would impose tariffs on $200 billion in Chinese goods.

“That reignited trade fears,” said Art Hogan, chief market strategist at B. Riley FBR. “While we may get some good news from trade negotiations between the U.S. and Canada … it feels like we’re going to get more bad news on China.”

European shares ended mainly lower for the session driven lower by ongoing trade worries.  The DAX recovered from sharp falls to end 16.07 pts lower. The FTSE lost 5.76 and the CAC closed 14.16 pts higher. Basic resources and auto stocks were the weakest sectors Tuesday, amid continued concerns of a trade war between the U.S. and China. EU Brexit chief Michel Barnier said a Brexit deal could be reached by early November.

Oil surged during to NY session closing over 2% higher as Hurricane Florence neared the East coast. Oil production shutdowns due to the storm stoking supply worries. Crude Inventories: Crude: -8.636M Gasoline: +2.122M Distillates: +5.821M Cushing: -1.165M hit this morning showing a larger than expected draw which also added to supply worries. The EIA figures will be released tomorrow morning at 00:30 AEST. USOUSD added 231 cents to close at 69.64.

Gold traded in a wide session breaking lower before the start of the US session hitting new weekly and monthly lows at 1187.72 before buyers reclaimed the session lifting price to a 3.73 gain. The USD spent most of the London session higher to risk currencies. The EUR AUD and GBP all fought back to finish the session higher to the USD. Risk was a lot strong to the Yen, the USDJPY jumped adding 51 pips and the USDCAD buckled closing 95 pips lower. The Euro rallied on easing of fears over Italian debt, The GBP strengthened after Barnier’s Brexit comments about a deal could be reached by November.

This morning, risk is lower to the USD and JPY the AUD trading the weakest falls of 16 pips to the USD and 20 pips to the Yen. Shares are off to a weaker start the ASX200 is 13.40 pts lower after yesterday’s 38 pt gain and the Nikkei is 77 pts lower.

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Sources; CNBC – All times are AEST

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