News & Analysis

Stocks dumped – Dow Jones – S&P500 – FTSE – DAX smashed; USD mixed – GBP gains after Carney; Oil dumped back below $64; Bitcoin breaks below 10K

Jan 31, 2018 | Daily Market Outlook

Today’s high impact news:

▸13:00 USD President Trump Speaks
▸21:00 EUR CPI Flash Estimate
▸00:15 USD ADP Non-Farm Employment Change
▸00:30 CAD GDP
▸02:30 OIL Crude Oil Inventories
▸06:00 USD FOMC Statement – Federal Funds Rate

U.S markets – where pummelled on Tuesday, futures started dropping early in the Asian session, we did see a mini-recovery into the London session. Futures still showed a 160 point deficit leading into the US session. Selling accelerated into a horror session for bulls. The Dow Jones lost 362.59. The S&P500 lost 31.10 and the NASDAQ closed 64.02 points lower. Long-dated Treasury yields climbed further on Tuesday, with the U.S. 10-year Treasury yield trading near levels not seen since 2014, amid fears of higher inflation. The Dow Jones posted its biggest percentage decline since May. It fell 411.06 points at its session low. The Cboe Volatility index (VIX), widely considered the best fear gauge in the stock market, rose to its highest level since August. Opinions are mixed, some seeing an unnatural rise in stocks for 2018. Other seeing this as a reason to sell and not a major market correction. Regardless, there’s a lot of money long right now and fear is the normal reason markets go from correction to crash. We’ve got an interesting end to the week coming up. I’d expect some value buyers to emerge on the short term. Oil sold off following other commodities, supply continues to be a negative influence, and U.S. oil output is soon expected to exceed 10 million barrels per day. Price settled 150 cents lower below $64 a barrel.  European markets – had a strong negative lead during the Asian session, buyers fought back into the market sessions, basic resources stocks led the losses, down more than 1.5 percent amid a potential power crisis in China. China’s second-largest province has asked coal miners to shorten or cancel staff holidays during upcoming Spring Festival celebrations in order to ease growing concerns of higher-than-usual heating demand, Reuters reported. Anglo American, Tullow Oil and BHP Billiton were all trading lower on the news. Autos, banks, oil and gas and telecoms also ended the day over 1 percent in the red. Main indices finishing sharply lower, the FTSE lost 83.55 points. The DAX lost 126.77 points and the CAC closed 47.81 points lower.

Forex – traded in a mixed session on Tuesday, volatility was there as we saw the USD make a charge through the Asian session but was put down into the London session. In the NY session, the USD parred loses. The JPY jumped higher during the day but as with the USD trimmed its gains to the majors. Carney expects Inflation to Stay Above 2% Target in the short-term -Inflation Effect from STG Decline has come through as BoE Expected. This news boosted the sterling, it finished higher to the USD and JPY. The EUR and AUD dropped during the day to the USD but fought back, the EURUSD closed 20 pips higher after trading in a 120 pip range for the day! The USDJPY tested 108.50 while sellers had control, CB Consumer Confidence came in better than expected giving the USD some support. The U/J finished 34 pips of lows but 20 pips lower for the day. Support continues to hold from 108.50. Bitcoin tanked overnight as news emerged FaceBook is going to ban cryptocurrency advertising. Another key issue weighing on price is Tether, investors are worried about the Tether value, a so-called “stablecoin” which aims to maintain a value of one US dollar per tether, has been described as the “ticking time bomb” of the cryptocurrency world which could trigger the next “bloodbath” similar to the 2014 collapse of the Mt. Gox exchange. Bitcoin dropped below 10K last night, price has continued lower today trading at 9789.

Busy day and night coming up traders, President Trump speaks, Euro Zone CPI and FOMC statement and funds rate, the market is expecting a hold at 1.50%

US30 – has lost over 500 points since buyers failed to hold new highs on Monday. Price is sitting at Jan 22 levels this morning. You normally see value buyers after solid selling. The key is what happens after that buying runs its course.

Good trading from Eightcap.

Sources; CNBC.  All times are AEDST

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