News & Analysis

Nasdaq run halts – EUR continues strong week – Brexit updates knocks GBP off weekly highs

Jun 8, 2018 | Daily Market Outlook

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US stocks finished on Thursday, McDonald’s gave the Dow Jones a boost, while tech shares dragged the Nasdaq lower. McDonald’s, which rose more than 4 percent, held the Dow Jones above 25K. Tech was dragged lower by Facebook and Netflix both fell more than 1.5 percent. Amazon and Alphabet also pressured the Nasdaq. After a few record closes this week the Nasdaq closed 54.17 pts lower. The Dow traded 92.05 pts higher and the S&P500 closed 1.98 pts lower.

Investors loaded up on bonds after a sharp sell-off in emerging markets, led by Brazil. The iShares MSCI Brazil ETF (EWZ) fell 5.1 percent. Peter Donisanu, a strategist at Wells Fargo Investment Institute, said the fall was triggered by capital flows concerns.

“The Brazilian real is getting crushed and now with the Brazilian central bank stepping in [by issuing currency swaps], that is spooking investors,” he said.

European stocks finished lower overnight, travel and leisure lead the loses finishing 1.7%. Elior Group finished 4% lower. Caixabank rose more than 4 percent on Thursday, after proposing to take its Portuguese bank BPI from a public-held company to being private. Auto Trader added 8.7 % after posting a 7 percent increase in full-year revenue.

German data disappointed, industrial orders dropped 2.5 percent in the month of April, from a 1.1 percent fall in the previous month. Brexit negotiations, The U.K. is to publish its back-up plan for avoiding a hard Irish border, should it fail to gain a trade deal with the European Union, according to the BBC’s political editor. According to the Financial Times, the plan caused a “serious row” between Prime Minister Theresa May and Brexit minister David Davis.

The EUR continued to rally, while the AUD closed lower to the USD and JPY. TheG7 will be in focus as the meeting begins today and runs tomorrow. The USD gained to the CAD but lost ground to the JPY. The GBP lost ground after May and Brexit news emerged during the session. The GBP ended higher to the USD but lost ground to the JPY. Gold tested 1302.99 but failed to hold gains closing at 1297.03.

Good trading from Eightcap.

Sources; CNBC All times are AEST

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