News & Analysis

Overnight on Wall Street: Thursday 15/08/19

August 15, 2019

By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

The relief rally was shortlived as the bond market sending warning signals of a possible recession. While an inverted yield curve does not mean imminent collapse, it acts as a warning bell that rattled the markets yesterday despite the efforts of President Trump to lift the markets.

Wall Street had a rough day, and major US equity indices finished around 3% lower.

  • Dow Jones Industrial Average ended 800 points or 3.1% lower at 25,479.
  • S&P 500 fell by 86 points or 3% at 2,841.
  • Nasdaq Composite dropped by 242 points or 3% at 7,774.

The CBOE Volatility Index, Wall Street’s fear gauge jumped by 26% at 22.10 amid recession fears.

Currency Markets

As risk-aversion takes control of the markets, the attention in the FX space is on the safe-haven currencies like the Japanese Yen and Swiss franc, which emerged as the best-performing currencies against the US dollar.


Source: Bloomberg Terminal

The disappointing Retail Sales and Industrial Production figures in China and soft data in the Eurozone drove the rally in safe assets.

The Aussie dollar is under pressure ahead of the key jobs report. After a more aggressive stance from the central bank of New Zealand, traders are looking for clues to see if the RBA will mirror the same dovishness.

In light of the RBA’s previous statements whereby the Board stressed the importance to monitor the development in the labour market, the jobs report to be released later today will be heavily scrutinised.

AUDUSD (Hourly Chart)


Source: GO MT4

Commodities

The economic data in China and the Eurozone revived fears of the global downturn and its negative impact on demand for oil. The EIA report also showed an increase in crude oil inventories, which did little to help the bearish sentiment in the oil market.


Source: Bloomberg Terminal

WTI and Brent Crude oil erased around 3-3.5% and fell in the vicinity of $54 and $58 respectively.

UKOUSD and USOUSD (Hourly Chart)


Source: GO MT4

Money is flowing back into safe-haven assets as fears of a recession in the US has gripped the markets. The signals from the bond market have allowed buyers to push gold prices higher.

As of writing, XAUUSD is trading above the psychological level at $1,516.

XAUUSD (Daily Chart)


Source: Bloomberg Terminal

Cryptocurrencies

Bitcoin, the flagship cryptocurrency is also facing a sharp sell-off and could drop to the four-figure price region below the $10,000 mark.

It is currently finding immediate support around the $9,700 level. The BTCUSD pair could benefit from a relief rally. However, it has to rise towards $10,700 in the near-term to confirm the upside momentum.

BTCUSD (H4 Chart)

Source: GO MT4

Key Upcoming Events Ahead

RBA’s Debelle Speech, Consumer Inflation expectations and Unemployment Rate (Australia)
Industrial Production (Japan)
Retail Sales (UK)
Retail Sales, Jobless Claims, Unit Labor Costs, Nonfarm Productivity, Philadelphia Fed Manufacturing Survey and Industrial Production (US)

Friday, 16 August 2019
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
0.78 8.071 0.471 0.097 0 0 0
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0 0 0 0 3.246 0 0

Disclaimer: Articles and videos from GO Markets analysts are based on their independent analysis. Views expressed are of their own and of a ‘general’ nature. Advice (if any) are not based on the reader’s personal objectives, financial situation or needs.  Readers should, therefore, consider how appropriate the advice (if any) is to their objectives, financial situation and needs, before acting on the advice.