News & Analysis
US Markets take a breather – Trade War linger; Europe mainly higher; USD lower; Gold bounces after low test
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US markets – finished lower on Monday as Boeing and Caterpillar weighted on the Dow Jones, trade war worries continue to linger. The NASDAQ failed to see a worry as it rallied to fresh highs supported by Apple’s recovery from last month’s correction. Amazon also hit an all-time high to help lead the gains. The NASDAQ finshing 27.51 pts higher. The Dow Jones closed 157.13 lower and the S&P500 lost 3.55 pts as industrials lost 1.2 percent. “It’s a growing concern that a mistake in trade policy could be as big as a mistake in monetary policy,” said Art Hogan, chief market strategist at B. Riley FBR. “At the end of the day, what matters is corporate earnings,” said Greg Powell, CEO of Fi-Plan Partners. “That’s what drives the market.” Powell also noted investors should expect more volatility moving forward, but he sees further gains ahead.
Oil – fell overnight losing 80 cents, as expectations that U.S. output will rise this year offset a boost from a lower American rig count and falling unemployment in the United States. Hedge funds and money managers cut their bullish wagers on U.S. crude oil for the first time in three weeks. “Our view is still that we have more downside oil prices ahead of us in the short term,” SEB said in a note. Traders could look at $6+2.25 as the current short-term resistance high. That level set up a lower high last night. Sellers have $61 previous level to beat again in the short term.
European markets – closed mixed on Monday, the FTSE lost 9.75 pts. The DAX gained 71.71 and the CAC closed 2.31 higher. Utilities held the top spot in sectoral gains by the close following news that RWE was to sell 76.8 percent of its Innogy arm to rival E.On. Morgan Stanley said the deal could be a “win-win” decision. Innogy shares rose to the top of the STOXX 600, finishing up 12.1 percent, while RWE came in second, jumping 9.2 percent, and E.On rose 5.4 percent. The GER30 has set up decent resistance from 12406 on the daily chart. Buyers have a weak looking low at 7188 on the UK100 daily.
Forex – the USD traded lower to risk overnight, the AUD, EUR and GBP making gains. The Cable added 52 pips testing 1.3900 resistance. The USDCAD traded higher mainly running its own race supported by lower oil prices. It added 30 pips from 1.2807 previous low. The USDJPY traded 24 pips lower after failing to hold an earlier rally. Sellers are active this morning price has moved below yesterday’s low creating a new weekly lower low. The JPY fought back into last night’s London session, most majors fought back to close higher but well off highs. The JPY is testing this morning making gains to major currencies. Gold support looked good going into Monday after a very flat day sellers made a test down to 1315 failing to beat support. Buyers stepped in at this point taking price back to settle flat. This new failed low has added further strength to that point. Buyers are active this morning, price trading above 1324.20. While that level holds we’re looking for possible further gains.
US30 – traders last night’s gap fill has also opened up a new pattern. We’re seeing a developing lower high. Further selling could confirm this and the recovery trend line break. Interesting few days coming up.
Good trading from Eightcap.
Sources; CNBC. All times are AEDST
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