News & Analysis
Stocks buckle – 10-year note yield hits 3% – Caterpillar tanks; Oil tanks Trump – Macron to preserve Iran deal; USD takes breather EUR – GBP snap losing streaks
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US markets – fell over on Tuesday after a stronger start to trade. Caterpillar reported earnings and revenue that beat expectations, but the industrial giant’s stock fell after management said the company’s outlook assumed that the first quarter would be “the high watermark for the year.” This sent the Dow 100 points higher, this was short lived as 10-year Treasury yield broke above 3 percent for the first time since January 2014. Caterpillar shares dropped 6.2 percent knocking the wind out of the Dow Jones sails, sending it steaming lower. Tech sector also weighed as Facebook, Amazon, Alphabet and Netflix all dropped more than 3.5 percent.
The Dow Jones dropped 424.56 points. The S&P500 lost 35.73 points and the NASDAQ plunged by 121.25 points.
European markets – closed before the real damage kicked off. Germany’s business confidence slipped for the fifth consecutive month in April, according to data published Tuesday by the country’s Ifo Institute. Travel and leisure stocks were the worst performers, down 1.4 percent. The sector was dragged lower by William Hill after the U.K. Treasury said it planned to support a proposed cut in the maximum bet for fixed odds betting terminals. Shares of the U.K. firm tanked 12.7 percent on the news. CFDs showed the influence the US sell-off had after the European session closed. The UK100, GER30 and FRA40 all dropped heavily. The GER30 lost 98 points in the last 4 hours of trade.
The FTSE closed 26.53 points higher. The DAX closed 21.57 points lower and the CAC closed 5.62 points higher.
Oil – Oil prices fell to session lows after President Donald Trump said the United States France could reach an agreement to preserve the Iran nuclear deal “fairly quickly.” The United States has until May 12 to decide whether to quit a nuclear deal with Iran and reimpose sanctions against the third-largest producer in the Organization of the Petroleum Exporting Countries. During a press conference on Tuesday with French President Emmanuel Macron, who wants to keep the deal in place, Trump said he and Macron “could have at least an agreement among ourselves fairly quickly.” “That’s something of a surprise to the market,” said John Kilduff, founding partner at energy hedge fund Again Capital. “We were more expectant of the harsh rhetoric he started with than that he would intimate there’s a deal.”
Forex – the EURUSD and GBPUSD snapped losing streaks last night. The EUR gained 23 pips and the GBP added 43 pips. The AUD finished flat to the USD and slightly higher to the Japanese Yen. Risk majors did post strong rallies to the JPY during the London session before sellers trimmed some, the GBP and EUR trading over 80 pips higher at one stage. The USD closed slightly higher to the JPY locking in 5 higher closes. The USDCAD closed 14 pips lower. Gold broke a 3-day losing streak closing $6 higher. Bitcoin continues to move higher trading back above $9570 this morning. Traders have added 1061 this week, price looking to post it third weekly gain in a row.
US30 – dropped hard last night but buyers have formed a new higher low. We would like to see 23,930 hold as short-term support. The trend has been broken but the last nights wick is a sign of buyer rejection.
Good trading from Eightcap.
Sources; CNBC. All times are AEST
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