News & Analysis

Trade Tariffs – NFP in focus. Stocks higher – AUS200 hits new records; Risk higher to JYP and USD

Jul 6, 2018 | Daily Market Outlook

Upcoming high impact news:

22:30 CAD Employment Change – Unemployment Rate – Trade Balance
22:30 USD Average Hourly Earning – Non-Farm Employment Change – Unemployment Rate

Markets rallied overnight, the U.S. and Europe trading higher in the shadows of the looming trade war. The Dow Jones added 181.92, Intel and Walgreens Boots Alliance best performing. The Nasdaq rose by 83.75, Micron, Facebook, Amazon, Netflix and Google-parent Alphabet all pushed the tech sector higher.

The U.S. is expected to activate levies on $34 billion in Chinese-made goods on Friday, with Beijing expected to respond with its own levies on U.S. goods. “As he ratchets up the trade conflict with China, President Trump’s protectionism will inevitably start to damage the global economy,” said Dario Perkins, managing director at TS Lombard. “Markets are understandably skittish and a protracted period of tension could both undermine the macro outlook and produce a much nastier endgame.”

Fed minutes – the central bank was worried that letting the economy run too strong could lead to a “significant economic downturn.” At the last meeting in June, the Fed increased its benchmark short-term interest rate by a quarter percentage point. In addition, the central bank signalled that two more rate hikes were expected to occur by year-end. –CNBC

European indexes higher ignoring ongoing trade worries, the DAX +146.68 – the FTSE +30.13 – the Euro Stoxx 50 added 29.30. Autos stocks led the gains, closing up 3.4% amid news German carmakers were now prepared to support an elimination of EU tariffs on cars imported from the U.S. French catering firm Sodexo topped the Stoxx 600, closing up 8.7% after releasing its third-quarter results. Market focus is largely fixed to the ongoing U.S.-China trade row, with investors fearful the dispute could soon derail global growth. –CNBC

Markets in Asian trade continue to trade mixed, the ASX200 49 points higher, the Nikkei is trading 257 pts higher while the Hang Seng is 126 pts in the red. Incoming tariffs will be keeping traders cautious.

Currencies, risk is trading positive early afternoon to the Yen and USD. AUD – EUR –GBP making gains. The Japanese Yen appears the weakest currency right now with all the majors making gains. Tariff nerves, for now, are not driving a flight to safety. Trade is one issue but tonight US employment will move into the spotlight. The Fed minutes showed some worry about the speed of the US economy so average earnings and poll roll figures will be looked at with importance this evening. The market is expecting 0.3% for earnings and 195K for the payrolls.

Bitcoin saw a decline last night but continues to hold from 6415. Buyers continue to be knocked back from 6750, the short-term range continues. Price is higher today but has 6527 to beat on the short-term.

Oil slipped losing 116 cents after failing to beat $73.25 for the 2nd time. Traders are awaiting a raft of import tariffs expected to be imposed later in the day by the world’s two biggest economies, the United States and China.

Trader’s trade can be light leading up to U.S. employment data, markets can become very volatile after the data release so always manage your orders and risk.

Good trading from Eightcap.

Sources; CNBC – All times are AEST

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