News & Analysis

Stocks end mixed, Tech – Dow Jones lower; Europe higher migration deal; Gold snaps losing streak with $11 rally; USD lower to risk

Jul 4, 2018 | Daily Market Outlook

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18:30 GBP Services PMI
US Bank Holiday

U.S markets finished lower in a shortened session overnight, the Dow Jones losing 132 points, Caterpiller dragging on the 30-stock index. Tech stocks fell sharply sending the Nasdaq to a 65 point decline. Micron lost 5.5% and Facebook fell by 2.4%. U.S. markets closed at 1 p.m. ET on Tuesday ahead of the Fourth of July holiday.

“In the scheme of things, trade talks are getting worse,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “So any rally we have is going to be capped.” President Donald Trump’s administration is set to activate tariffs on Chinese goods worth around $34 billion on Friday, which is widely expected to trigger a tit-for-tat response from Beijing.

In Europe, the session mirrored the U.S with gains earlier in the session being wiped off later by futures after the close. Shares did end higher in the normal session, German Chancellor Angela Merkel calmed a brewing row over migration that threatened her fragile government. Germany’s DAX was among those to lead the gains, up 0.9 % on Tuesday. This after a political breakthrough late Monday evening prompted Germany’s interior minister to rescind a threat to resign. The FTSE gained 45.44 pts and the DAX closed 110.97 pts higher.

Oil and U.S trade also continues to be key factors traders are watching.

Today’s Asian session has seen falls due to back end of the U.S session. The ASX200 is trading 32 points lower, main Asian markets are also tracking lower Nikkei -91 – Hang Seng -323.

Currencies, risk held gains to the USD and Yen overnight. The EUR ended slightly lower to the JPY. So far today risk has been trading slightly higher to the Yen and USD.

Australian retail sales data beat forecasts coming in at 0.4%. The trade balance data missed forecasts dropping to 0.83B. The AUD parred some of its earlier gains after the data releases.

Gold finally found some buyer interest overnight closing $11 higher, buyers have continued to this morning with further gains of $5.40. Price beating 1253 resistance. Oil was lifted by a report of declining U.S. fuel inventories amid the ongoing crude supply outage at Syncrude Canada in Alberta. USOUSD traded in a wide range finishing flat at $72.78. Price has added 33 cents today but $73.40 is setting up as a short-term high.

Bitcoin failed to beat 6645 1 hour resistance, this led to further price declines of 252. 6382 is offering some short-term support this morning.

Traders keep in mind that U.S markets will be observing Independence Day holidays for the 4th of July.

Good trading from Eightcap.

Sources; CNBC – All times are AEST

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