News & Analysis
The equity recovery continues to charge – Dow Jones jumping by 399.28; JPY losing steam majors fight back; Fed Chair Powell to Testify
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▸00:30 USD Core Durable Goods Orders – USD Fed Chair Powell Testifies
US markets – continued their charge on Monday climbing to new three week highs. The Dow closed 399.28 pts higher back above 25,700. The S&P500 added 32.30 and the NASDAQ closed 84.07 higher. We discussed the potential resistance on the US30 yesterday, buyer smashed that level with another strong session. Gains in industrial giants 3M and Boeing led the Dow in Monday’s session. The so-called “FAANG” stocks — including Facebook, Apple, Amazon, Netflix, and Google-parent Alphabet — have already returned to pre-correction levels. The Dow and S&P 500 have more than halved their correction losses. From the Dow and S&P’s 52-week intraday highs, the indexes are down 3.4 percent and 3.25 percent respectively through to Monday’s close.
Oil – gained on Monday adding 48 cents. Buyers dealt with a small challenge for sellers at the 63.65 to post a third straight day of gains. Buyers where support by; Saudi Arabia will keep its first-quarter output below production caps that have been in place since last year, their oil minister says. A cold snap across Europe has encouraged some refiners to delay maintenance, which could support demand. Libya declares force majeure on 70,000 barrels per day at the El Feel oil field. Plenty going on in the Oil pits at the moment. We’re seeing 64.80 – 64.05 as the next testing area for buyers.
European markets – traded higher on Monday, Anglo American one of the main mover increasing by 3% on news that the firm had sold its stake in an Australian mine. The FTSE closed 45.17 higher. The DAX added 43.25 and the CAC closed 26.89 points higher. In European politics, Germany’s Christian Democrats approved a coalition agreement with the centre-left Social Democrats. This brings incumbent Chancellor Angela Merkel closer to her fourth term leading Europe’s largest economy.
Forex – interesting night, the Japanese Yen strength dropped away as majors made a stand. The EURJPY and AUDJPY rejecting lows and recovering most to all of their mornings loses. The USD traded mixed losing ground to risk currencies and the Yen but made a 34 pip gain to the CAD. The AUDUSD and EURUSD still remain with bearish overtones as they continue to trade in lower high patterns. Gold added $5 but trimmed half of its daily gains. The lack of confidence may be due to testimony from new Federal Reserve Chair Jerome Powell that’s due out on Tuesday at 00:30 AEDST. In Powell’s first congressional testimony. He will testify on the central bank’s semi-annual report on monetary policy and the economy before the U.S. House of Representatives Financial Services Committee.
US30 – last night was a statement by buyers as they smashed through resistance area which included the 61.8 Fib point of the selloff. Generally, in Fibonacci, a break of this level signifies the market has moved above the last normal reaction point. I myself am not a big follower of Fibonacci but it has its place in the community. The signs are very bullish at the moment, 26,045 is an important point for me as this level failed and started the selloff. With bond yields still a factor and Powell’s testimony tomorrow morning there could still be potential setbacks but right now you can’t really argue with buyer strength.
Good trading from Eightcap.
Sources; CNBC. All times are AEDST
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