News & Analysis

Equity Markets lower in the US – Tech worries continue to drag – Trump sends Amazon lower – GDP beats expectations; USD climbs after GDP – Gold – Risk trade lower; Yen slides – USDJPY surges by 153 pips

Mar 29, 2018 | Daily Market Outlook

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▸ 19:30 GBP Current Account
▸ 23:30 CAD GDP

US markets – headed into the NY session with a decent looking lead, buyer confidence dropped as Tech sector worries reignited. Amazon, Netflix and Apple pulled back 4.4 percent, 4.9 percent and 1.1 percent, during the session. Amazon fell after Axios reported that President Donald Trump was “obsessed” with the company. The report also said Trump wants to “go after” Amazon. Amazon’s stock traded 3 percent lower in afternoon trade. President Trump reportedly wants to take on Amazon and the internet retail behemoth’s tax treatment. Some lawmakers have proposed legislation to settle the issue, and the Supreme Court is expected to rule on internet sales taxes this year. “Big Tech is no longer a sleek, elegant black box; it is a jumble of wires that requires the constant intervention of an increasing number of humans to keep it on the rails,” Nicholas Colas, co-founder of DataTrek Research, said in a note. “In short, the bloom is off the tech rose.” US final quarter GDP surprised the market coming in at 2.9% beating 2.7 expectations. The NASDAQ closed 59.58 pts lower. The S&P500 closed 7.62 pts lower and the Dow Jones finished 9.29 pts lower.

European markets – traded mixed overnight, the FTSE added 44.60. The DAX closed 30.12 lower and the CAC finished 14.70 higher.  Tech suffered, investors rotated out of the technology sector, following an uproar over the alleged misuse of Facebook users’ data by political consultants Cambridge Analytica. Electronic chip maker Austria Microsystems slumped to the bottom of the European benchmark, off more than 9 percent. The Shire surged to the top of the index despite a Tokyo court rejecting the pharmaceutical giant’s claim against a rival group’s drug. A Japanese court ruled Shire’s claim against Swiss drugmaker Roche’s new Hemlibra haemophilia medicine should be dismissed on Wednesday, Reuters reported. Dutch consumer goods firm Unilever jumped after UBS upgraded the stock from a “neutral” to a “buy.” Shares of Unilever closed up 4.7 percent.

Oil – fell on Thursday as stockpile numbers showed an unexpected surplus in US inventories. U.S. commercial crude inventories rose by 1.6 million barrels in the week to March 23, the Energy Information Administration said on Wednesday. Analysts in a Reuters poll had expected a decrease of 287,000 barrels. Gasoline stocks fell by 3.5 million barrels, compared with analysts’ expectations in a Reuters poll for a 2 million barrels drop. Distillate stockpiles, which include diesel and heating oil, declined by 2.1 million barrels, versus expectations for a 1.6 million barrels drawdown, the EIA data showed. “From a seasonal perspective, rising crude oil stocks and falling product stocks are what can be expected at this time of year when refinery maintenance reduce demand for oil and the production of products,” Saxo Bank head of commodity strategy Ole Hansen said. USOUSD dropped down to $63.68 before recovering to close above $64. Support continues to be seen from $64 – $64.27.

Forex – the USD traded lower through the London session, risk looked to be setting up lows, the EUR and GBP did turn into positive territory before the NY session kicked off. When the final GDP hit the USD fortunes reversed. The 2.9% sent the USD higher and knocked risk lower. A weaker Euro was quickly knocked sharply lower to the USD, price finishing 92 pips lower. The Cable gave up a 46 pip lead to end 83 pips lower. The AUDUSD help up the best overnight finishing 15 pips lower but making new weekly and monthly lows. Buyers look to be digging in from .7650. The Japanese Yen rollercoaster continued last night as majors made strong rallies after Wednesday’s falls. The A/J touched new weekly highs, closing 98 pips higher. The G/J closed above 150.17 resistance adding 128 pips. Well, the JPY star of last night’s session was the USDJPY what a rally, GDP drove the USD to a very weak JPY. The U/J surged to close 153 pips higher, clocking up it’s best single day rally for 2018. Buyers have also broken the med-term downtrend.

Gold traded weaker most of the day, but sellers really accelerated loses once the GDP data come in. Price closed $20 lower in it’s worst single-day decline for 2018.

With Easter just about upon us, trading will be lighter as some exchanges close for Good Friday and Easter Monday holidays. FX will continue to trade but liquidity is normally lower. We hope everyone has a lovely Easter break.

USDJPY – what a turnaround, only three day’s ago we saw what looked like a new breakout lower, now we have a trend break after buyers set the best rally for the year. This is a very interesting turn of events. We need to give this move some time to prove its self, we’re looking to see if a higher low will develop to give this breakout more credibility.

Happy Easter and Good trading from Eightcap.

Sources; CNBC.  All times are AEDST

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