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- Varchev Finance: Trading day in one post – 26.03.2018
Varchev Finance: Trading day in one post - 26.03.2018
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Loading...Asian stock market: American bloodbath hit Asian stocks again. A resurgence of volatility on Wall Street transferred to another bout of selling for Asian stocks. The S&P 500, the Dow and the Nasdaq all just experienced their worst week since early 2016. While Mnuchin expressed cautious optimism that the U.S. and China can reach an agreement, the threat of a trade war will continue to hang over stock markets until there's some clarity on the new U.S. tariffs list due in two weeks' time.Just like in the U.S., financials and technology stocks are likely to lead the drop in Asia this week, with the two sectors having the biggest weightings on benchmark indexes throughout the region. China will be in particular focus after state funds were said to intervene to buy energy stocks and financials to contain losses into Friday's close.
FX market: Investors seem to be pulling out of the dollar. The uncertainty brought about by Donald Trump's sudden decisions raises great questions about how the US economy will develop in the coming months. With uncertainty in the markets, one thing is certain, investors are fleeing controversial instruments, such as the dollar. There is hardly any need to point it out, but the most profitable in the situation is JPY. Despite the modest decline of 0.2% during the Asian session, the JPY is close to its strongest against the dollar over the past 16 months. This decline is a slight correction to the hedging instrument as market participants are defensive and cautious in the first trading hours of the new week. Another important topic that traders will follow in the new week is the Brexit talks. So far, it has become clear that Britain will remain in the EU by the end of 2020, but with limited rights. The EU and the UK agreed on a transitional period of 21 months - from 29 March 2019 to the end of 2020 - before leaving the bloc completely. Every time, however, when the headlines about Brexit are positive, it seems that we have to wait a little while before everything changes. Despite the good news of the transition period and of the understanding between the two countries, one big obstacle stands in the way of Theresa May - the border with Ireland. According to Michel Barnier, this topic is extremely important and no consensus will be made. The United Kingdom agreed to insert a decision to "backstop" solution for the Irish border in the legal text that will outline all the details of the separation. But for now there is no compromise on how this solution will look. The EU has proposed Northern Ireland to continue to follow EU rules, even if it means isolation from England. But the UK did not agree with that. According to Barnier, this agreement will only apply if no other solutions are found. The pound has been on the rise for the past week because of the progress of the talks, but even a small hurdle from here can erase all profits. Traders remain cautious and do not allow themselves to be too bullish without having absolutely strong arguments for that.
Commodity market: WTI crude climbed 0.3% to $66.09 a barrel. The political and trade uncertainties that have sent the shares back into the correctional territory become a strong support for gold. Investors have invested a total of $ 617 million in the two largest gold-trading funds. The threat of trade war further stimulates the purchase of assets known as safe havens. Investments in these funds peaked at almost a five-year period despite the fact that the Fed raised interest rates. Expectations are that in the new week the precious metal will continue to rise.
European stock market: Contrary to expectations, European markets are expected to launch the week with gains. There, the German DAX will open about 86 points up around 11,866; The French CAC is about to start with 39 points in green around 5,084; while UKX has a 32-point gain. As today's economic calendar for the European session does not offer significant news, the focus here is on potential news about Theresa May's progress on the Brexit talks, as well as comments on Trump's tariffs. Also, the widely expected meeting between Turkish President Recep Erdogan and the EU administration - Donald Tusk and Jean-Claude Junckler - will also be held today. Although this meeting is not expected to have an impact on key indices, investors will be interested in tracking the event, as well as drawing conclusions on the future relationship between Turkey and the bloc.
U.S. stock market: In the new week, the focus will be on Washington again. Following the imposition of tariffs on imports of steel and aluminum into the United States, traders expect exactly which companies in China will be subject to new obligations. It will also be interesting to see what the counter-response from Asia will be - China's government has already said it will hit over 130 state-of-the-art products - comments that are feared by investors. Traders from all over the world will track the headlines in the new week, with stocks remaining over-sensitive on the subject. The Dow and S & P 500 futures began relatively quietly the new week, but it could all be a calm in the face of a storm.
Economic calendar for the European and U.S. trading sessions:
08:00 Germany - Import Price Index
11:30 UK - BBA Mortgage Approvals
14:30 USA - Chicago Fed National Activity Index
16:30 USA - Dallas Fed Manufacturing Business Index
19:30 USA - Fed's William Dudley Speaks
22:30 USA - FOMC Member Mester Speaks
Trader Aleksandar Kumanov Read more:
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