News & Analysis

US shares fall after long weekend – Europe gains; USD pushes back into the black; Gold tumbles – Oil snaps 4-day winning streak

Feb 21, 2018 | Daily Market Outlook

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US markets – closed lower on Tuesday as traders returned from an extended weekend. The Dow Jones closed 254.63 points lower, the S&P500 finished 15.96 lower and the NASDAQ closed 5.16 points in the red. Wall Mart missed earnings expectations falling 10.2 percent, having its worsed single day since January 1988! Front-month Cboe Volatility index (VIX) futures were trading higher than the rest of the curve, signalling “we’re going to need some more repair work.” The VIX rose 6.4 percent to 20.71. The benchmark 10-year U.S. note yield rose to 2.886 percent, after hitting its highest level since 2014 last week. The short-term two-year note yield, meanwhile, traded around a nine-year high. Adding to pressure stocks in last night’s session.

Oil – snapped a 4-day winning streak overnight to close 75 cents lower back below $62 a barrel. Traders could keep an eye on $61.54 it may continue as short-term support. A break could signal a deeper leg lower.

European markets – closed mainly higher on Tuesday led by corporate earnings. Shrugging off a weaker lead from across the Atlantic. The DAX added 102.30 points, the CAC closed 33.68 points higher and the FTSE just slipped into the red losing 0.89 points. Chemicals was a top performing sector on Tuesday, closing up 1.17 percent boosted by Covestro, which closed up 3.33 percent. SimCorp rose to the top of the STOXX 600, jumping over 12 percent by the close after reporting strong growth in its fourth quarter, and stating that its dividend payout for 2017 would be higher. France’s Edenred rose 6.5 percent on the back of strong earnings that saw the company’s earnings before interest and tax, and net profit for 2017, reach record levels. Mining giant BHP Billiton posted a 25 percent rise in underlying half-year profit on Tuesday. On the other side, HSBC shares fell by 3% due to worse-than-anticipated earnings.

Forex – the USD lead the charge last night hitting a 6-day high. Strong gains were seen to the JPY and CAD. The USDCAD rallied 87 pips to jump back into the 1.26 handle. The USDJPY continued its strong week adding another 72 pips. Buyers have recovered 118 pips since Friday’s close. The JPY was weaker across the board overnight losing ground to the majors. The AUD added 27 pips despite losing 29 pips to the USD. The EUR continued lower to the USD falling by another 70 pips. It had a positive session to the JPY but fell to most crosses. The GBP was last night’s surprise as it pared losses to finish flat to the USD. 1.3990 continues to hold for buyers. The GBPJPY surged adding 102 pips.

Gold was hammed last night, sellers started during the Asian session and didn’t let up, price closed $17.67 lower. Sellers have trimmed $25 off its value since Friday.

GBPUSD – refused to close lower last night. Short-term show’s bullish support from 1.3990. Medium-term still show’s a lower high.

Good trading from Eightcap.

Sources; CNBC. All times are AEDST

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