Wakey Wakey!!
Markets have kicked into life today, with US equity indices tumbling from their elevated perch. Falling by approximately 2% across the board, the sell off across the Atlantic has left a risk-off feel within markets, with investors flocking to safety. From the two graphs below, investors’ concerns can be clearly seen. The first graph shows both the NASDAQ Composite Index (Blue) and the NYSE Composite Index (Orange) in relative freefall, shedding hundreds of billions of Dollars from the value of US companies. In the second chart, the value of Gold, a traditional safehaven immune from the swings of more volatile and risky assets, can be seen to rise by 0.5% as rising demand unbalanced yesterday’s value.
The rally in safehavens and the selling of more risky assets, including emerging market currencies, has been precipitated by concerns that the trade war between the US and China, the effect of which had started to be priced out, may be reigniting. With the arrest of the Chief Financial Officer of one of China’s largest companies with a market cap larger than that of Apple and with considerable reach within the United States of America, there have been market-wide fears that the ceasefire between the two trading leviathans could be called off and tariffs ramped up once again. Within the Pound, developments in Westminster continue to cause disturbances. The Pound has received a bid today as the possibility of a no-deal Brexit seems increasingly unlikely. Whilst a second referendum would also contribute to political uncertainty, the increasing improbability of Carney’s chaotic no-deal scenario continues to support the Pound.
Today’s Global Market:
Discussion and Analysis by Charles Porter
A weaker Dollar: Trump vs. Powell The Dollar continued to lose ground yesterday as the truce between Israel and Iran appeared to continue to hold. There has been a noticeable return to focus upon macro and monetary influences in major currency pairs. Yesterday, Fed Chair Jay Powell provided his semi-annual monetary policy report before the […]
Big Girls Don’t Cry A bond market tantrum and one of the sharpest one day sell offs in Sterling for several years appear to have been catalysed by the Chancellor’s appearance in PMQs yesterday. First: the back story. This Labour government has faced some embarrassment in recent weeks trying to get its welfare bill through […]
Next level EURUSD has managed a relatively smooth ascent to its current levels, around 1.18. That is despite significant resistance levels, most notably around 1.17. A large collection of option strike prices gathered around this key level and the price history of the pair shows us its significance. Sustained closes above this level since last […]