News & Analysis

Global Equity markets return to plunge mode! – Dow Jones drops 724 points; Trade War worries intensify – Yen hammers majors – USDJPY drops back to 104 handle

Mar 23, 2018 | Daily Market Outlook

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US markets – saw sharp losses last night. The Dow Jones losing 724.42 points. The S&P500 lost 68.24 and the NASDAQ closed 178.61 points lower. Things are starting a lot like February again! The US30 has lost over 1600 points in two weeks. A possible trade war driven by tariffs has traders on edge. Trump administration unveiled tariffs designed to punish China for intellectual property theft, imposing about $60 billion in retaliatory charges. “Trump’s protectionism is making investors nervous,” Dario Perkins, managing director of global macro at TS Lombard, said in a note Thursday. “Past experience suggests these policies are flawed, while even moderate trade barriers could disrupt today’s complex global supply chains.” Boeing dropped 5.2 percent, while shares of Caterpillar and 3M fell 5.7 percent and 4.7 percent adding to the drive lower on the Dow Jones. This morning China responded to Trump tariffs with a proposed list of 128 US products to target.

European markets – followed the US with sharp losses. The FTSE lost 86.38 pts. The DAX dropped 209.07 and the CAC lost 72.53. Markets where jittery going into the open as the GER30 traded 70 points lower only to recover all gains and trade in the positive briefly. Sellers returned taking the market to new weekly lows. The developing trade war worries being the main negative driver. The UK100 is now trading below the Feb correction and has made new 2018 lows last night, this morning futures continue to sell off. The BOC of England held rates as expected.

Oil – fell overnight losing 129 cents, global insecurities, profit taking and US production concerns weighing on bullish sentiment. After the rally we saw during this week, it’s not surprising some traders would be looking to take a bit off the table. Price is trading 30 cents higher this morning, traders should keep an eye on $64.05 as it’s this morning’s turning low and a previous high.

Forex – Yen, Yen, Yen! Trade war fears sent the JPY soaring. The AUD was the hardest hit losing 137 pips plus more this morning. The USDJPY also took a beating but did make a fightback late in yesterday’s Asian session. Price closed 78 pips lower and lost a further 65 pips this morning. Sellers took price back into the 104 handle its lowest point since 2016. Small rebound currently, price sitting just inside 104 level. The USD was mainly strong last night increasing to the risk pairs. The GBPUSD didn’t get much from the BOE rate hold closing 45 pips lower after an 80 pip rally. The AUDUSD was dumped losing 72 pips. Price is holding for now just above its .7680 low area. Gold failed to get going last night under the circumstances global markets were dealing with, you would have thought it may rally as a safe haven but it traded lower to USD strength finishing $2.90 lower. Buyers have been active this morning price is testing 1332 high area. Like oil, we did see a Stella rally earlier this week.

US30 weekly is starting to paint a much more bearish picture. The Trump election trend line is being tested/broken. We also have a confirmed lower high. We do see a support zone that has come in for buyers on February’s sell-off, will we see it hold again if sellers are able to retest it?

Good trading from Eightcap.

Sources; CNBC. All times are AEDST

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