News & Analysis
Stocks Continue Lower; Euro Surges; Oil drops 2%
Today’s high impact news:
▸ 20:30 GBP Average Earnings Index
▸ 00:30 USD CPI – Core CPI, Retails Sales – Core Retail Sales
▸ 02:30 USD Crude Oil Inventories
US Indices traded lower overnight, the Dow Jones lost 30.23 points, the S&P500 lost 5.97 points and the NASDAQ settled 19.72 points lower. GE shares fell 5.9 percent and have fallen more than 12 percent over the past two days. Concerns about a potential global economic slowdown and U.S. tax reform also dampened investor sentiment. Investors grew worried about the whether Republican lawmakers would pass a tax plan by year-end. Last week, the Senate unveiled a tax bill that would delay cutting the corporate tax rate to 20 percent until 2019. The current U.S. corporate tax rate is 35 percent. The House, meanwhile, wants to vote on its own tax bill this week. The House bill would immediately reduce the corporate rate.
In Europe, shares continued their red week. The DAX lost 40.94 points and the FTSE settled slightly lower losing 0.76 points. Basic resources were the biggest loser in trade, closing over 2.5 percent down. The sector was weighed down after disappointing data came out of China and metal prices declined. Industrial production, retail sales and fixed asset investment numbers in the world’s second-largest economy missed expectations. In the U.K., new inflation numbers came in lower-than-expected with consumer prices up 0.1 percent month-on-month and 3 percent year-on-year versus 0.2 and 3.1 percent expected, respectively.
FX traded mixed as the USD Index lost ground and the EUR surged. Weaker CPI caused the GBP to stumble but it recovered late session to close higher to the USD and JPY. The EURO was the main event last night posting massive gains across the board. The EURUSD rose to a 2-1/2 week high on Tuesday and was on track for its largest percentage gain in more than two months after data showed Germany’s economy shifted into a higher gear in the third quarter. Germany’s seasonally adjusted gross domestic product (GDP) rose by 0.8 percent on the quarter, compared with a Reuters poll forecast of 0.6 percent. In a further positive sign for Europe’s biggest economy, the ZEW institute said investor morale improved in November and prospects for the economy remained “encouragingly positive.” The AUD recovered slightly overnight closing higher to the USD and JPY.
Oil prices fell about 2 percent on Tuesday on forecasts for rising U.S. crude output and a gloomier outlook for global demand growth in a report from the International Energy Agency. Analysts also noted that oil prices were being pressured by a global commodities selloff, led by base metals like nickel and copper, due to weaker-than-expected economic data from China. Tomorrow mornings EIA inventories report will be important to traders looking for clues into the US stockpile situation. A big miss could see further price falls.
EURUSD – jumped overnight as positive German data fueled buyers. 1.1800 -1.1820 seen as the next possible levels of resistance.
Good trading from Eightcap.
Sources; Reuters, CNBC
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