Axi | Jun 28, 2018 09:14
Originally published by AxiTrader h2 Market Summary (7.46 am Thursday, June 28)/h2
The Dow finished 450 points off its highs and the S&P closed 47 points from its peak as the attempt to soothe market fears from the US Administration fell on deaf ears. Or at least ears that now understand this trade battle looks set to be protracted and may materially impact company profits and global growth.
So at the close, the S&P 500 finished at 2,699, down 23 points for a fall of 0.86%. The Dow was 165 points lower for a 0.68% drop to close at 24,117 while the Nasdaq 100 lost 1.23% to 6,981 and the Russell 2000 dropped 1.54%.
It was different earlier as Europe had a good day in the hope that President Trumps less aggressive stance toward Chinese investment (sorry, foreign investment, the Administration says) - using beefed up, but established agencies to vet deals - saw stocks lift even though there was carnage in Asia.
So it’s likely to be an uncomfortable open for Europe’s bourses this afternoon my time unless something changes in Asia given the DAX, CAC, and FTSE 100 all closed 0.1% either side of a 1% gain.
Here at home though the SPI traders are still unwilling to say the local market will come under the pump, having only knocked 9 points off prices overnight. That seems heroic to me. We’ll see though.
On forex markets, it was a story of US dollar strength with the Greenback up 0.7% in US Dollar Index terms and – CRUCIALLY – above the 95.20 level on a close basis at 95.31 now. It still hasn’t taken out 1.15 against the euro though with EUR/USD at 1.1555 this morning down 0.76%. That is the key to everything in many ways. A break of 1.15 and the US dollar is away. The pound is down around 0.8% at 1.3118 and against the yen the dollar is also stronger, but only mildly so, given the funk in markets right now. It’s at 110.21 up 0.15%.
The commodity bloc was mixed with the Canadian dollar doing best given the surge in oil prices. USD/CAD is only up 0.35% to 1.3353 even after BoC governor Poloz intermated rates aren’t moving anytime soon and uncertainty has risen. The Aussie fell o a new low for this run at 0.7325 and sits at 0.7339 as I write, down 0.7%. And the Kiwi, the flightless bird that it is, did worst falling 1% to 0.6795. It’s held in okay given the RBNZ this morning held rates and signaled that policy would be for the foreseeable future. The kiwi's low, 0.6780, has been my long-held target. If it breaks then its 0.6656 as the new target.
Finally to oil and other commodities.
9.9 million! That’s a big number, even if you say it fast. And it’s the size of the draw in US crude inventories the EIA reported for the last week. Naturally given everything that is going on around Iran and supply disruptions that send oil prices belting higher with WTI gaining 2.6% to $72.36 while Brent was up a more circumspect 1.4% to $77.39.
That rise and the prospect of inflation down the track still couldn’t lift gold from its slumber. The yellow stuff is down again having lost another half a per cent to $1252 an ounce. $1235/40 here we come. Silver lost 1% and copper is down just 0.22% at $2.99 amid a mixed night for industrial metals. Bitcoin is still clinging above $6,000. But it did lose about 1% to $6,137.
On bond markets the carnage saw rates go bid and the US 10-year Treasury fell to 2.82%, the 2 dropped to 2.51% and the curve is at 31.80 points. And of course, that FT chart of the global yield curve inverting for the first time since 2007 is getting a lot of airtime.
It’s been an ugly 24 hours folks. China has had a shocker on its stock and for the yuan and developed markets are only just starting to pay attention. This could be the start of another decent bout of volatility.
So as the Sergeant used to say in Hill Street Blues – be careful out there.
h2 Here's What I Picked Up (with a little more detail and a few charts)/h2 h2 International/h2
h2 Australia/h2
h2 Forex/h2
Have a great day's trading.
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