Daily Analysis: Trump’s Trade War Delivers another Blow to Stocks

Thursday Market Recap

Asset Current Value Daily Change
S&P 500 2683 -1.14%
DAX 12,062 -2.96%
WTI Crude Oil 61.23 -0.61%
GOLD 1318.00 0.06%
Bitcoin 11,060 6.01%
EUR/USD 1.2269 0.62%

US equities fell for the third day in a row today, with the major indices all losing around 1.5%, as the VIX topped the 20 level yet again. The weakness in European and Asian stocks continued in earnest with eth DAX and Nikkei futures closing trading very close to their correction lows after the US close.

The session very busy one indeed, even busier than we expected in our pre-market outlook, although most of the events played out according to the plan. The pressure on stock persisted, with a nice short-covering rally after the second part of Jerome Powell’s testimony, which, not surprisingly, turned out to be slightly more dovish than on Tuesday.

S&P 500 Futures, 4-Hour Chart Analysis

The rally quickly faded away after Mr. Powell’s appearance, and the market suffered another huge wave of selling after the announcement of the controversial trade tariffs on steel and aluminum, targeted mainly against China, by Donald Trump. Another Fed official, Dudley also poured more oil on the fire, when he called 4 rate hikes for 2018 a gradual tightening schedule, increasing the pressure on stocks.

DAX Index, 4-Hour Chart Analysis

Japanese Yen Close to New Highs Against the Dollar

The looming trade wars and the late-day pull-back in Treasury yields weighed on the Dollar that gave back some its recent gains against the Euro and the major risk-on currencies. That said, the Greenback is still well above its recent lows, and should the rise in yields resume and the correction in stocks continues, the main reserve currency could climb higher again.

USD/JPY, 4-Hour Chart Analysis

The Japanese Yen took advantage of the mix of Dollar and equity weakness, and the USD/JPY pair closed near the 106 level just slightly higher than the intraday low set in mid- February, the lowest since late 2016. The downtrend in the pair continues, and that means that the Yen is clearly the strongest fiat currency in the current market regime.

Gold also benefited from the risk-off environment and the dip in the USD, surging higher in late trading, while crude oil also cut some of its steep losses, with the WTI contract holding up above the $60 per barrel level after three consecutive bearish days of trading.

Cryptocurrencies

Yesterday’s after-hours sell-off is a thing of the past in crypto land, and today, the main digital currencies are trading in a bullish fashion after the US close after and encouraging recovery that lasted throughout the day.

BTC/USD, 4-Hour Chart Analysis

Most of the action is still concentrated in BTC, which is trading above $11,000 again, but Monero and IOTA are also flexing their muscles, and although Ethereum is barely moving, it could also be in for a large move as it is trading right at a crucial trendline.

Dash and Bitcoin Cash were also among the notable outperformers today, while among the smaller coins Nano and Tron continued to rise, with Ripple, Stellar, and Cardano still being the main laggards of the segment, as price action remained generally bullish.

after last week’s correction with all eyes on the $11,300 resistance and the $10,000 support.

Featured image from Shutterstock

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.

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