News & Analysis

Stocks continue slide – Trump Tariffs Hit – DAX slogged; USD stalls – EURUSD rebounds; Gold recovers $14 drop

Mar 1, 2018 | Daily Market Outlook

Upcoming high impact news:

▸ GBP Prime Minister May Speaks (tentative)
▸ 20:30 GBP Construction PMI
▸ 21:00 GBP BOE Gov Carney Speaks
▸ 00:30 CAD GDP

US markets – red continues to rule, stocks making further strong falls last night with a new influence spooking buyers. The Dow Jones closed 420.22 points lower. The S&P500 closed 36.16 lower and the NASDAQ finished 92.45 lower. Tariffs, once this news hit it sent shivers through the markets. In Trump’s address, he said The U.S. will set tariffs of 25 percent for steel and 10 percent for aluminium. It is unclear whether they will apply to all imports or only metals from certain countries. In fresh testimony from Federal Reserve Chair Jerome Powell, “We don’t see any strong evidence yet of a decisive move up in wages. We see wages, by a couple measures, trending up a little bit, but most of them continuing to grow at about two and a half percent. Nothing in that suggests to me that wage inflation is at a point of acceleration.” Looking at the US30 daily chart we can see this week’s selling has hit the 50% point of the recovery rally. Buyers would want to see a higher low to come in soon to show buyers are still in this game.

Oil – traded in a volatile session on Thursday as sellers took charge sending price 111 cents lower before buyers fought back, price finishing 22 cents lower. “Despite the expanding output curbs by OPEC and non-OPEC members such as Russia, the market has been focusing more on rising U.S. output since around late January,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting in Tokyo. Technically while $60.70 continues to hold seller at bay we see a slight bullish bias on the short term.

European markets – fell solidly on Thursday dragged down by mixed earnings and US sentiment. The DAX was the hardest hit losing 1.797% closing 244.91 pts lower. The FTSE closed 56.27 lower and the CAC lost 57.93. Media stocks were some of the top losers, shares of WPP fell as much as 14 percent in trade before closing down 8.2 percent. This comes after the advertising giant announced lower net sales in 2018 and a cautious outlook for 2018.  France’s Carrefour, with the retailer’s shares dropping 6 percent after it posted earnings that failed to match market expectations. Looking at the GER30 daily chart price has returned to sell off low levels, sellers getting very close to 12,000 even in last night’s session. The damage a lot worse than seen on the US30 chart.

Forex – the USD buckled last night after a week of good gains. The USDJPY lost 44 pips returning to 106.06 low’s this morning. The USDCAD’s run stalled price closed 13.6 pips higher but gave up a 60 pip rally. 1.2895 looks to have set-up as resistance. The USD was knocked by less hawkish comments from Powell and Trump’s new tariffs. ISM Manufacturing PMI came in better than expected but failed to do much to sentiment. Risk was mixed, the EURUSD added 70 pips snapping a two-day losing streak. The GBPUSD closed slightly higher after putting in a new weekly low.  The AUDUSD closed lower unable to reverse loses set up by earlier data miss. But buyers got close. Trends remain bearish but the short-term balance may swing to the buyer’s favour. Gold fell as much as $14.90 during the NY session before buyers recommitted to a falling USD. 1314.27 looks to be forming support on the daily chart.

GER30 slump has taken price back to sell-off lows. With three zones below are we going to see a counter rally develop?

Good trading from Eightcap.

Sources; CNBC.  All times are AEDST

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