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US stocks mixed on yield worries – lower tech sector; Earnings send Europe higher; Oil rebounds; USD continues to surge knocking AUD and Gold sharply lower

Apr 24, 2018 | Daily Market Outlook

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US markets – traded mixed on Monday, the Dow Jones traded lower for the fourth day in a row. Tech shares weighed on traders sentiment as Facebook, Amazon, Netflix and Alphabet all closing lower. The 10-year note is back on the radar the yield hit a high of 2.99 percent overnight. The benchmark rate last traded at 3 percent or higher in January 2014. Investors have been selling Treasury’s this month pushing yields higher with expectations of rising inflation, which could prompt the Federal Reserve to tighten monetary policy at a faster pace.

“Any time there are inflation concerns, that’s going to spook the market,” said Mark Esposito, CEO of Esposito Securities. “If the 10-year goes over 3 percent, that could be a catalyst for the market” to go lower. Traders looking at earnings; “Expectations have been built up so much in light of the tax cuts” that investors seem disappointed, said Kim Forrest, senior equity analyst at Fort Pitt Capital.

The Dow Jones closed 14.25 points lower. The S&P500 gained 0.15 points and the NASDAQ closed 17.15 points lower.

European markets – made modest gains on Monday, corporate earnings supporting buyer sentiment. Capita shares rocketed to the top of the Stoxx 600, rising more than 11 percent. UBS reported better-than-expected first-quarter earnings with net profit up 19 percent but its shares finished close to 3% lower. Philips released its first-quarter earnings, with sales coming in at 3.9 billion euros ($4.79 billion). Its stock price rose more than 5 percent across the session.

The FTSE closed 30.70 points higher. The DAX closed 31.89 points higher and the CAC closed 25.72 points higher.

Oil – traded in a mixed session falling as low as 67.07 before posting a solid recovery to close 73 cents higher at 68.83. Buyers continuing to hold close to multi-year highs. Iran’s oil minister said OPEC will not have to extend a deal to limit output with other oil-producing nations if crude prices keep rising. “Added price pressure comes from U.S. sanctions against the key oil exporting nations of Venezuela, Russia and Iran,” said Kerry Craig, global market strategist at JPMorgan Asset Management.

Forex – the USD continued its change last night driven higher by 10-year T-note yields closing in on 3%. Risk and Gold where the hardest hit, the AUDUSD lost 62 pips closing at Dec 2017 levels. The A/$ has lost close to 180 pips in three sessions! The EUR and GBP didn’t fare any better both closing at new monthly lows. The EUR is close to testing march lows and the GBP has lost close to 400 pips with 5 lower closes in a row. The USDJPY surged to the JPY adding 95 pips, closing at 107.70. The USDCAD continued its charge adding a further 102 pips touching 1.2856 overnight. Gold lost over $9 and is resting around its 1324 low.

Gold – sellers have continued to drive price lower. Will the current low/support area hold or could we see a breakout and test down to 1310?

Good trading from Eightcap.

Sources; CNBC. All times are AEST

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