News & Analysis
Equity Markets mixed overnight – Dow & NASDAQ drop on Tech sector – Europe higher; USD – JPY fight back sending majors lower; Gold – Oil pull back from highs
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US markets – headed towards last night’s open with decent gains. Sentiment shifted as the Tech sector came under pressure losses on the NASDAQ dragging other indexes lower. Facebook shares contributed to tech’s losses, as they fell 4.9 percent after Bank of America Merrill Lynch reduced its price target on the stock for the second time in five days. Reuters reported Nvidia is temporarily suspending self-driving tests. The news sent the stock down 7.8 percent. Tesla shares also fell 8.2 percent after the U.S. National Transportation Safety Board announced it would investigate a fatal crash that took place last week. Twitter fell 12 percent after short-seller Andrew Left said he is betting against the stock. “Everything’s changed; everyone is talking about data privacy,” Left told CNBC. “They’re a lot more vulnerable than Facebook.” “We’re still in an environment that’s a bit hesitant, but yesterday was incredibly important,” said Michael Hans, CIO at Clarfeld Financial Advisors. The NASDAQ plunged 211.74 points. The S&P500 dropped 45.93 points and the Dow Jones closed 344.89 points lower. The US30 and SP500 still remain in support zones while lows hold, the market could still be forming higher lows but further tests lower to this week’s lows pressure this idea.
European markets – traded higher overnight ignoring the Tech issues in the US, concentrating on the easing trade war fears. In stock news, GlaxoSmithKline ended the day at the top of the Euro Stoxx 600, closing 4.8 percent higher. GlaxoSmithKline is buying Novartis out of its consumer healthcare partnership for $13 billion, taking over products including Sensodyne toothpaste, Panadol headache tablets, and Nicotinell patches. Analysts believe that the merger will increase shareholder payouts. The FTSE jumped by 111.19 higher, the DAX added 183.57 and the CAC closed 49.46 higher.
Oil – finished lower as buyers failed to beat Januaries highs for the 2nd day in a row. Price traded 92 cents at one stage in the session tracking back above $66. Supply looks solid at this point from 65.75 – 66.30. Shanghai crude oil futures saw their second day of trading, repeating Monday’s high volumes. USOUSD closed 81 cents lower. Tomorrow morning traders, the EIA inventories report will be released at 1:30 am AEDST.
Forex – we started the day with majors continuing to make strong gains to the Japanese yen, the EURJPY trading 67 pips higher. The USD started its rally as the London open approached. As we moved into Europe the JPY and USD started to flex sending risk lower. The AUD and GBP hit the hardest. The AUDUSD closed 67 pips lower eclipsing yesterday’s come back. Sellers making a new closing low for the month at .7676. The GBPUSD traded 163 pips lower at one stage before buyers trimmed 90 pips to close 71 pips down. The EUR fell to the JPY and USD. The EURGBP surged by 56 pips at one stage getting close to .8800 before sellers returned. The USDJPY jumped by 50 pips before giving it back to close slightly lower. A break of yesterday’s low could confirm a trend continuation on the U/J. Gold like oil tested highs, buyers failing to close above 1353.50 for a 2nd session. Price closed $8.35 lower as the USD pushed higher and trade war fears continued to abate. The 4H chart is showing a trend break with a developing lower high this morning.
AUDUSD – doesn’t look too healthy for buyers this morning with LH’s a plenty and a strong move down yesterday. Sellers look keen to pick up where they left off, as .7680 low looks to be turning into resistance. Are we going to see another leg down, traders?
Good trading from Eightcap.
Sources; CNBC. All times are AEDST
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