News & Analysis

US Markets plunge – Dow makes 2nd 1000 point loss; AUDUSD back at .77; JPY jumps – USDJPY recovery stalls; Oil takes another hit

Feb 9, 2018 | Daily Market Outlook

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US markets – plunged for the second time this week. The Dow Jones fell by 1032.89 the S&P500 lost 100.66 and the NASDAQ lost a whopping 274.83 points. “This whole correction is really about rates. It’s really about inflation creeping up. It’s really about people thinking the Fed is either behind the curve or actually has to be more aggressive,” Stephanie Link, global asset management managing director at TIAA. The Dow Jones is now reaching correction territory as it closed at its lowest level since November 28. Also trading close to making its biggest weekly loss since October 2008. The NASDAQ composite fell 3.9 percent to close at 6,777.16 as Facebook, Amazon and Microsoft all fell at least 4.5 percent.

The benchmark 10-year U.S. note yield rose to 2.88 percent before slipping to 2.848 percent Thursday, holding around multi-year highs. The initial move higher follows the release of strong jobless claims data. Weekly jobless claims hit a 45-year low, totaling g 221,000. They fell from 230,000 in the previous week.

Oil finished sharply lower for a 2nd day losing a further 128 cents to close at 60.23. Price is now trading back at early January levels. Brent crude oil fell to a fresh 2018 low on Thursday, while U.S. crude had nearly wiped out all of its gains for the year. Oil prices were also dented by the restart of the Forties pipeline in the North Sea, following an outage the previous day that had sent prices higher when it was announced.

European markets – followed the US lower with further strong falls. The FTSE lost 108.73 points. The DAX lost 330.14 and the CAC lost 104.22 points. Earnings continued to shake up sentiment, Zurich Insurance pared almost all of its gains to end marginally lower after earnings beat expectations. Swiss Re closed up around 2 percent. Societe Generale posted an 82 percent drop in quarterly net income, impacted by restructuring costs and tax-related charges. Despite this, the results topped expectations and shares closed nearly 2 percent higher. Commerzbank saw a 51 percent fall in net profit during its fourth quarter, as the lender turned its attention to a major overhaul. Shares ended down more than 2 percent.

Forex – USD and Japanese Yen strength ruled last night’s session. The JPY winning out over the USD. The USDJPY fell 60 after looking like it had confirmed a higher low. The AUD and EUR lost ground after being positive during the Asian session. The EURJPY lost 90 pips to hit new weekly lows. Sellers are testing 133.09 low this morning. The USD made gains to the EUR and AUD. The AUDUSD breaking back into the .77 handle.  The GBP held out better than most majors as the BOE rates hold gave some support to the sterling. The GBPJPY fell by 36 pips, not too bad considering some of the other moves lower seen to the Japanese Yen. The USDCAD added a further 35 pips taking price above 1.2590 resistance to close above 1.2600 for the first time since DEC 2017.

Gold – started the NY session on the bid as sellers raced down and tested 1306.40. Safe haven status kicked in? Price recovered sharply as stocks plunged, buyers took over and price rallied $11 to close flat. This morning buyers have been active we’re seeing a rally of $3.60. $1323.50 could come in as the next point of short-term resistance for buyers if reached.

US30 – took another beating overnight, a few interesting things came out of it. Sellers were unable to make a new weekly low or beat Monday’s low. We’re starting to see signs of accumulation developing very early day’s but the signs are there.

Good trading from Eightcap.

Sources; CNBC.  All times are AEDST

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