Varchev Finance: Trading day in one post: 06.02.2018

Asian stock market: Asian indexes tumbled and U.S. stock indexes fell on Tuesday following massive losses seen stateside in the last session. Japan's Nikkei 225 was down 6.71 percent, or 1,522.70 points, as stocks across sectors pulled back. Automakers, financials and technology names were lower in the morning, with Toyota down 4.75 percent. Among other blue chips, SoftBank Group tumbled 7.94 percent and Fanuc Manufacturing lost 7.86 percent. Fast Retailing sank 8.14 percent. Across the Korean Strait, the Kospi declined 2.61 percent. Blue chip technology names were lower, with Samsung Electronics and SK Hynix down 2.21 percent and 1.57 percent early in the session. Among automakers, Hyundai Motor traded briefly in positive territory, but later slipped 2.2 percent. Down Under, the S&P/ASX 200 declined 3.65 percent on broad-based selling across sectors. The energy sub-index was among the worst-performing in the morning, falling 5.1 percent as energy-related stocks declined following oil prices' move lower. Santos fell 5.02 percent and Oil Search lost 4.17 percent. The Hang Seng Index was down 4.94 percent as stocks sold off across sectors. Among financials, heavyweight HSBC fell 3.14 percent and China Construction Bank lost 6.55 percent. Tech giant Tencent tumbled 5.9 percent. Energy-related stocks also extended declines on Tuesday, with CNOOC tumbling 6.79 percent. Mainland stocks, which had risen in the last session, followed the region lower on Tuesday. The Shanghai composite slid 2.15 percent and the Shenzhen composite lost 2.71 percent.

FX Market: The Bloomberg Dollar Spot Index gained 0.2%. The yen climbed against all its Group-of-10 peers and Treasuries rallied as a global stock rout fueled demand for haven assets. USD/JPY falls 0.4% to 108.71; reached 108.75, lowest since Jan. 30. Leveraged investors are liquidating long positions through 109.00, according to a trader. “While the correction may last a week, it’ll be temporary and not the start of a meltdown because the global economy is solid,” said Tsutomu Soma, general manager of SBI Securities Co.’s Independent Financial Advisor department in Tokyo. “USD/JPY may temporarily dip below 108 but it will stay in a recent range of 108-110.” The AUD traded at 78.39 U.S. cents - down 0.5% after RBA decided to keep the interest rates unchanged at 1.50%.

Commodities market: WTI crude was down 1.2% to $63.36 a barrel. Gold is flexing its flight-to-quality muscle. The metal climbed as much as 0.6 percent Monday after a plunge in the Dow Jones Industrial Average sent traders seeking a haven. “Gold rallied as the effects of a harsh equity selloff cascaded through the bond market and the dollar,” said Tai Wong, the New York-based head of base and precious metals trading at BMO Capital Markets. Algorithmic “programs designed to sell” intensified the selloff, he said.

European stock market: The broad selloff from the previous sessions will cast a shadow above European markets today. The German DAX is expected to open with a 350-point loss at 11,911; The French CAC is 136 points in negative territory at about 5,127; The FTSE 100 loses more than 100 points and will open around 7,012. Today, investors will remain cautious in trading. The general opinion here is that this is rather a short-term correction rather than a bear market. We are waiting for the formation of a price action signal around strong levels of support for entry into new positions.

U.S. stock market: U.S. stocks fell sharply in volatile trading Monday, extending a steep sell-off from the previous session. The Dow Jones industrial average shed 1,178 points and briefly declined more than 1,600 points The 50-SMA levels were key for DJIA and S & P 500 and traders were watching them. Immediately after their breakaway, the volatility spiked and the bears took full control of the movements. Activated SLs that were placed under the SMA , combined with cancelled pending orders increased the fall. The declining movement intensified in the New York afternoon, with Dow losing more than 800 points in about 10 minutes. "I think sentiment was a little too optimistic,” said Brad McMillan, chief investment officer for Commonwealth Financial Network. “What was driving the market up in January? It wasn’t the fundamentals, as good as they were, it was excessive confidence" Stocks are under pressure from the rapid rise in interest rates. The 10-Year Yield is at a 4-year high. The main question here is - is this a correction or the beginning of a bear market. The answer from Wall Street is, that for a new bear market - something in the economy's fundamental must change first. The important thing that we need to know here is, that the movement was not a product of a economic news piece or an event.

Economic calendar for the European and U.S. trading sessions:
09:00 Germany - Factory Orders
15:30 USA - Trade Balance
15:30 Canada - Imports / Exports
17:00 Canada - Ivey PMI
23:30 USA - API Weekly Crude Oil Stock

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