Daily Analysis: Stocks Jump as North Korea Fears Subside and Irma Weakens

Monday Market Recap

Asset Current Value Daily Change
S&P 500 2485 0.99%
DAX 12475 1.39%
WTI Crude Oil 48.13 1.37%
GOLD 1335.00 -1.11%
Bitcoin 4211 1.89%
EUR/USD 1.1965 -0.59%

Bulls are back in full force today, as the most important stock indices all roared higher following the de-escalation regarding North Korea. The missile test that the world feared didn’t happen during the weekend, and the superpowers seemed to have reached an agreement on the new set of sanctions against the nation, with the active cooperation of China. Hurricane Irma also weakened considerably, and although it made landfall as a category 4 storm and caused severe damage, the first estimates point to a less-than-feared impact on the Florida infrastructure.  Safe haven assets, such as the Yen and gold pulled back heavily after last week’s rally, the VIX collapsed by 10%, and even the battered Dollar rebounded.

Hurricane Irma also weakened considerably, and although it made landfall as a category 4 storm and caused severe damage, the first estimates point to a less-than-feared impact on the Florida infrastructure.  Safe haven assets, such as the Yen and gold pulled back heavily after last week’s rally, the VIX collapsed by 10%, and even the battered Dollar rebounded.

S&P 500, 4-Hour Chart Analysis

Asian and European equities were even stronger than their US peers thanks to the decline in the Yen and the Euro and the improving sentiment, gaining as much as 2% compared to Friday’s closing prices. The EUR/USD pair is now back below 1.20, and the marginal new highs of last week could mean that a meaningful bottom is in, although next week’s Federal Reserve meeting could still cause major surprises. With today’s economic calendar being empty, all eyes are now on the US CPI and Retail Sales reports that might have a major impact on currencies and equities alike. The Bank of England also holds its monetary meeting this week, but it’s fair to say that the current leg higher in stocks is not in any danger from that event. That said, the mid term worries regarding equities are still prominent, and although we expected a short-term rally, we still advise investors to lighten their risk exposure as prices move higher.

The Bank of England also holds its monetary meeting this week, but it’s fair to say that the current leg higher in stocks is not in any danger from that event. That said, the mid term worries regarding equities are still prominent, and although we expected a short-term rally, we still advise investors to lighten their risk exposure as prices move higher.

EUR/USD, 4-Hour Chart Analysis

Cryptocurrencies

The major coins are slightly higher today, as the selling pressure eased somewhat after Friday’s flash-crash in the segment. Bitcoin is still showing relative strength, while most of the majors are also holding up above crucial support levels after one week of elevated volatility. The Chinese legislative changes are still unconfirmed, and the uncertainty still weighs on investors sentiment, despite the bounce. Ethereum, Ethereum Classic, and NEO are among the weakest majors, while the most overbought coins, Litecoin, Dash, and Monero are performing strong, in the face of the long-term pressures. XRP and ETC remain the most encouraging currencies at the current price levels, while generally speaking, patience is still the name of the game in the sector.

ETH/USD, 4-Hour Chart Analysis

Key Economic Releases on Tuesday

Time, CET Country Release Expected Previous
3:30 AUSTRALIA NAB Business Confidence 12
10:30 UK CPI 2.8% 2.6%
10:30 UK PPI 1.2% 0.0%
16:00 US JOLTS Job Openings 5.96 mill 6.16 mil

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Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.