News & Analysis

Overnight on Wall Street: Thursday 17/10/19

October 17, 2019

By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

Economic data and the concerns over Phase 1 of a trade deal weighed on risk sentiment despite a solid start to the third-quarter earnings season. Even though investors are aware that a trade deal in stages is a step forward for both countries, Phase 1 could just be forced on the US and China amid global growth concerns.

A comprehensive deal is still very far from conclusive and is difficult for investors and businesses to navigate through the uncertainties of the situation with just a small deal which does not resolve the structural differences and still leave them exposed to long-term tariffs and the possibility of further escalation of a trade war at any time.

Wall Street ended in the red as persisted weak economic indicators have offset the strong earnings results. Major US equity indices closed slightly lower:

  • Dow Jones Average Industrial ended relatively flat at 27,002.
  • S&P500 dropped by 6 points and finished at 2,990.
  • Nasdaq Composite lost 25 points to finish at 8,124.

President Trump failed to lift markets with his bullish comments as the realisation of no details yet are forcing investors to remain cautious.

Currency Markets

In the FX market, it was all about the Pound and Brexit-related headlines. The reports of a “Tolerable” Brexit deal pushed the Pound higher. There is more and more confidence that the UK and the EU will reach an agreement.

“Our hope, our goal is to be able to endorse an accord that I hope will be reached in the coming hours. The echos we’ve had are positive,” French President Emmanual Macron said.

“We believe it will be possible to have an accord between the European Union and Great Britain on Brexit,” German Chancellor Angela Merkel said.

The GBPUSD pair rose above 1.27 level and consolidated just below the 1.28 level yesterday as traders await for the news whether there will be a deal to discuss at the EU Summit. The pair broke the key 1.28 level on the increased prospects of a Brexit deal.

However, a signed deal from the EU is still subject to the approval of British politicians.

GBPUSD (Hourly Chart)


Source: GO MT4

Commodities

The Australian Petroleum Institute (API) reported a much larger-than-expected crude oil inventory of 10.45 million barrels which halted the initial rebound in oil prices on Wednesday. As of writing, WTI and Brent Crude are trading in the vicinity of $52 and $58 respectively.

UKOUSD and USOUSD (Hourly Chart)


Source: GO MT4

The yellow metal gathered some strength on the back of disappointing economic data. As of writing, the XAUUSD pair is trading higher in the vicinity of $1,490. In the chart, we can see that the pair has formed an ascending triangle and is finding resistance at the $1,490 level. Buyers are started to gain strength and are making higher lows.

Buyers should watch the breakout above the resistance level for more upside movement while sellers would likely wait to see if the resistance level is too strong and the price falls below the bottom of the triangle for selling opportunities.

XAUUSD (3-Day Chart)


Source: GO MT4

Key upcoming events

RBA’s Debelle Speech, NAB Business Confidence, Employment Change, Fulltime Employment and Unemployment Rate (Australia)
European Council Meeting (Eurozone)
Retail Sales and BoE Credit Conditions Survey (UK)
Housing Starts, Building Permits, Jobless Claims, Philadelphia Fed Manufacturing Survey and Industrial Production (US)

Friday, 18 October 2019
Indicative Index Dividends
Dividends are in Points
ASX200WS30US500US2000NDX100CAC40STOXX50
06.9860.0770.015000
ESP35ITA40FTSE100DAX30HK50JP225INDIA50
1.793000000

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.

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