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Tech selling continues – Trade worries – Average earnings hits Dow – new rate worries; USD rebounds knocking AUD and EUR lower
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Tech woes continued on Friday with further losses, the Nasdaq ending the session 20.18 pts lower. The S&P500 lost 6.37 and the Dow Jones retreated by 79.33. Dark clouds continue to form on the equity market skyline, on top of tech and trade worries rate jitters reemerged after Friday’s employment data. Average earnings hit .4% soundly beating 0.2% expected, this set up new worries about more than expected future rate rises. NFP data came in at 201K beating 191K expected. Dow futures went into the open 100 pts lower.
President Donald Trump, speaking from Air Force One, said Friday the U.S. is ready to slap tariffs on an additional $267 billion worth in Chinese goods. This is on top of the existing new 200plus billion in proposed tariffs. “The $200 billion we’re talking about could take place very soon, depending on what happens with them,” Trump said. “I hate to say this, but behind that, there’s another $267 billion ready to go on short notice if I want.” Trade with Japan also came into the picture but it hasn’t seen any key threats, this didn’t stop the Nikkei form taking a dip.
“There are lots of uncertainties in the market right now,” said Komal Sri-Kumar, president of Sri-Kumar Global Strategies. The U.S. has been largely resilient, but “there are significant storm clouds that are gathering.”
Europe ended Friday mixed, the FTSE lost 41.26 while the DAX (+4.38) and EUR Stoxx 50 lost 5.21. Travel and leisure stocks closed slightly lower following some rating downgrades. Markets are mainly focused on ongoing trade worries. Data wise, eurozone growth has come in higher by 0.4% in the second quarter of the year in comparison with the first three months of 2018. On an annualized basis, growth stood at 1.5%, which was slightly below the 1.6% registered in the first quarter of the year.
Oil declined on Friday, weighed down by a strong dollar, equity market, and Tropical Storm Gordon’s lower than expected impact on U.S. Gulf Coast oil production. USOUSD closed flat after testing 91 cents lower hitting 66.70 before buyers took price back higher to close flat at 67.63. Gold lost $3.73 after dollar bulls came raging back post-employment data.
Friday’s employment data saved the session for the USD as it spent a lot of it behind the CAD and the EUR. Risk was mixed, the EURUSD closed 69 pips lower, the AUDUSD plunged 95 pips back to the 71 handle. The GBP gave back a 100 rally to settle 11 pips lower. Average earnings data set up the USD rally as markets anticipate further U.S rate rises. “This is a solid report. It reinforced the view that the Fed will raise rates at the next meeting,” said Mark Zandi, chief economist, Moody’s Analytics, in West Chester, Pennsylvania.
Risk fell to the Yen, but the GBP held in the positive and the USD added 31 pips post-employment data. This morning, risk is higher to the JPY and USD in Asian session trade. Bitcoin has started the weak weaker to the USD down by 124.
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Sources; CNBC – All times are AEST
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