News & Analysis

Dow regains 567 after wild session; DAX – FTSE continue lower; Gold tumbles; AUDUSD snaps 6-day losing streak

Feb 7, 2018 | Daily Market Outlook

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▸02:30 OIL Crude Oil Inventories
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US markets – posted a fightback overnight. The Dow Jones added 567.02, the S&P500 added 46.20 and the NASDAQ closed 148.36 points higher. It was far from smooth sailing for the Dow as it traded in wild swings. The Dow closed 567.02 points higher at 24,912.77 and rose as much as 600.48 points. At its session low, it was down by 567.01 points. It traded in a range of 1,167.49 points.  This is quite normal behaviour to see after strong moves lower. “I thought we were going to see the bottom within five minutes of when we opened. I think that’s basically what we’re seeing,” said Ed Keon, portfolio manager at QMA, the quantitative and dynamic asset allocation business of PGIM. “At these levels, stocks represent pretty good value and we’re adding to equity exposure,” Keon said it’s too early to call a bottom but he expects that the worse is over.

Oil closed 51 cents higher overnight snapping a 2-day losing streak. Price looks to have found short-term support at 62.90. Tonight we have EIA inventories coming out at 2:30 am AEDST.

European markets – finished the day with further loses. The FTSE closed 193.58 points lower, the DAX lost 294.83and the CAC closed 124.02 points lower. Traders believed that inflation might kick in faster-than-expected. The FTSE 100 closed down 146 points, or 2.42 percent at 7157. It had earlier hit a one-year low, by shedding 255 points at the open. Overall, there was a sea of red across the European benchmark with only a handful of companies trading above the flat line. Austria Microsystems was a rare bright spot, rising 13 percent on the day. The Apple supplier said that an investment partner agreed to fund 25 percent of its planned $600 million spending this year, Reuters reported.

Forex – the USD fell on Tuesday but made gains to weaker Japanese Yen. The USDJPY added 47 pips after testing 108.45 to the downside. Most other majors made gains to the USD. The AUDUSD broke a 6-day losing streak closing 30 pips higher. The USDCAD lost 46 pips despite Canadian trade balance coming in worse than expected. The EUR failed to hold strong earlier gains to the USD adding 9.7 pips, after trading 58 pips higher. The majors closed higher to the JPY, the AUDJPY adding 71 pips after a solid test lower. The GBPJPY recovered by 60 pips after Monday’s massive drop. Gold tumbled overnight losing close to $16 after trading $6.70 higher during the Asian session. Gold looks to have taken its safe haven status back as we would have thought it would have held stronger due to the USD pulling back. Sellers testing January’s 1322.60 high. The 17/18 trend is now starting to come under some pressure.

Gold – has broken its medium-term trend, sellers look to be setting up a new downtrend. Price is currently sitting at a previous high support point. If sellers can break through this level could we see a move lower to test 1308?

Good trading from Eightcap.

 

Sources; CNBC.  All times are AEDST

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