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Dow’s Streak of Nine Consecutive New Highs Comes to an End Amid North Korea Tensions

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The Dow Jones Industrial Average snapped its remarkable winning streak on Tuesday, as U.S. stocks ended on a whimper amid escalating tensions on the Korean peninsula.

Dow Falls for the First Time in 11 Days

The Dow snapped a ten-day winning streak, including nine consecutive record highs. The blue-chip index fell 33.08 points, or 0.2%, to close at 22,085.34. Over its ten-day winning streak, the index returned 2.8%.

Losses were not limited to the Dow blue-chips. The broader S&P 500 Index declined 5.99 points, or 0.2%, to close at 2,474.92. The technology-focused Nasdaq Composite Index was also down 13.31 points, or 0.2%, to 6,370.46.

Despite Tuesday’s declines, market volatility remains abnormally low. The CBOE VIX, which tracks expected volatility over the next 30 days, rose more than 10% on Tuesday, but is trading at roughly half of its historic mean.

North Korea Tensions Trigger Pullback

The pullback on Tuesday was partially attributed to growing tensions over North Korea’s ballistic missile program, with Pyongyang warning that it is “carefully examining” a potential strike on the U.S. Pacific territory of Guam. The remarks came mere hours after U.S. President Donald Trump warned the North Koreans that any threat to homeland security would be met with “fire and fury.”

According to Reuters, geopolitical tensions drove fresh declines in Asian stocks in early Wednesday trading. U.S. equity futures were also down across the board. Meanwhile, the Japanese yen rose alongside gold, as investors opted for the safety of haven assets.

Geopolitics play an important role in the financial markets, but the impact rarely lasts. Wall Street will likely remain in a firm uptrend as corporate earnings continue to steamroll expectations. S&P 500 companies have reported double-digit profit growth for the second quarter. That puts them on track for their best quarter of year-over-year gains since 2011.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 603 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Market Overview

Market Update: U.S. Stocks Rise as Investors Shrug Off Tariff War; XRP Leads Crypto Market Recovery  

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U.S. stocks rebounded sharply on Tuesday, with investors seemingly looking past a worsening trade spat between China and the United States. In cryptocurrencies, XRP surged more than 16% in anticipation of a major commercialization effort by Ripple, Inc.

Stocks Recover Lost Ground

All of Wall Street’s major indexes put up firm gains on Tuesday. The large-cap S&P 500 Index rose 0.5% to 2,904.31, with most major sectors finishing higher. The Dow Jones Industrial Average rose 184.84 points, or 0.7%, to 26,246.96. The technology-driven Nasdaq Composite Index jumped 0.8% to 7,956.11.

On a sectoral basis, consumer discretionary shares were the strongest performers Tuesday, gaining 1.3% as a whole. The S&P 500’s information technology component finished 0.9% higher. Healthcare, energy and industrials also put up firm gains.

The CBOE Volatility Index, also known as the VIX, fell 6.5% to 12.79. The so-called “fear index” surged more than 12% at the start of the week, snapping a five-day losing skid.

Trade-War Escalates

In response to new tariff measures by the Trump administration, China on Tuesday announced it will tax $60 billion in American-made goods. More than 5,000 U.S.-made goods will be targeted in the new round of levies, including meat, alcoholic beverages, automotive parts, clothes and machinery. Levies placed on American products range between 5% and 10%, according to China’s state council.

Hours prior, President Trump said he will impose 10% tariffs on $200 billion in Chinese imports, the most comprehensive measures taken in the yearlong trade spat. The new round of levies will take effect as early as next week.

With respect to China’s countermeasures, Trump issued the following tweet Tuesday morning: “There will be great and fast economic retaliation if our farmers, ranchers and/or industrial workers are targeted!”

Both sides were aiming to return to the negotiating table later this month but those plans appear to have faded. Given China’s massive surplus with the U.S., it is already running out of products to penalize.

XRP Leads Cryptocurrency Rebound

The cryptocurrency market made incremental gains back toward $200 billion on Tuesday after Ripple announced new commercialization efforts for its technology. As a result, XRP surged more than 17% to $0.319, the highest in almost two weeks.

Ethereum exhibited unusual trading activity as prices rose sharply and suddenly over the span of an hour. The second-largest cryptocurrency by market capitalization reached a session high of $222, more than offsetting the previous day’s drop. ETH was last seen trading at $210 for a gain of more than 7%.

Bitcoin also clawed back most of its recent slide, signaling renewed stability in the market.  BTC rose 0.7% to $6,347, based on latest available data.

The total crypto market cap briefly climbed above $200 billion. At the time of writing, the market was valued at $198.7 billion, according to CoinMarketCap.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 603 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Pre-Market: Sell The Rumor, Buy The News?

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After a long period of uncertainty, the US finally decided to commence with the second round of tariffs directed at China, slapping a 10% levy on $200 billion worth of goods, and threatening with tariffs on another $267 billion of goods in case of a Chinese retaliation. The tariffs will increase to 25% in 2019, but for now, the Chinese response was measured, with only an announcement coming from the Chinese ministry of commerce, saying that the country has no choice but to retaliate.

Shanghai Composite, 4-Hour Chart Analysis

While stock futures fell initially following the after-hours announcement by Donald Trump, today equities are slightly higher across the board, with even the Shanghai Composite staging a rally off its fresh bear market low. The new tariffs were widely expected by the market, so the “buy-the-news” response is understandable, but for a sustained rally in Chinese assets, a resumption of the trade talks between the two largest economies would likely be needed.

DAX 30 Index, 4-Hour Chart Analysis

The main European indices are little changed with the DAX still hovering around the 12,000 level and the EuroStoxx 50 being stuck ear 3350. Both benchmarks hit three-week highs in early trading, but the rally on the Old Continent is still lacking real momentum, especially given the distance to the bull market highs.

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Emerging markets are still very weak with the recent bounce being barely visible on the charts, and the segment is still stuck in a strong downtrend, with especially the most vulnerable countries weighing heavily. Emerging market currencies are mixed today, with the Turkish Lira completely erasing its rate hike gains, but with the Brazilian Real, the Chinese Yuan, and the Argentinean Peso being relatively stable after the US trade announcement.

S&P 500 Index Futures, 4-Hour Chart Analysis

Stocks are set to open slightly in the green on Wall Street, with the major indices still being within striking distance of their all-time highs, and with only the Nasdaq pulling back meaningfully recently. The S&P 500 is just a tad below its record high, and with the MACD indicator back in neutral territory, a move to new highs could still be just around the corner.

Dollar Stable as Oil Jumps Amid Syria Escalation

Interestingly forex markets remained stable despite the trade war escalation, with the Dollar drifting slightly lower compared to its major peers, and losing a bit more ground against the main China-related currencies. Commodities are also higher today, with especially the China-linked copper and crude oil being in the green and gold trading virtually unchanged.

WTI Crude Oil Futures, 4-Hour Chart Analysis

While the scope of the Syrian conflict shrank in recent months, the tensions around the last rebel stronghold Idlib are rising. Russia and Turkey (which back opposing forces) surprisingly announced the formation of a demilitarized zone around the city to avoid a siege and a likely bloodbath, but overnight, a Russian recon plane was downed, which could lead to a reescalation in the country.

Russia is blaming Israeli forces for the casualty, and an open conflict between the two countries would be increase risks in the region, and possibly drive oil prices higher. The Brent Oil contract has been already outperforming the WTI one thanks to the sanctions against Iran, and today Saudi officials stated that the Kingdom is comfortable with the $80 per barrel Brent price, further widening the divergence between the two contracts.

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 348 rated postsTrader 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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Market Update: U.S. Stocks Fall as Trump Set to Unveil New China Tariffs; Crypto Selloff Resumes

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U.S. stocks declined on Monday as investors once again weighed the prospects of an all-out trade war between the United States and China. On the cryptocurrency front, Ethereum led a broad decline in afternoon trading.

Stocks Fall

All of Wall Street’s major indexes headed for losses on Monday. The technology-heavy Nasdaq Composite Index was the hardest hit, falling 1.4% to 7,895.79. The large-cap S&P 500 Index fell 0.6% to 2,888.80, with losses mainly concentrated in information technology and consumer discretionary shares. Dow industrials closed down 92.55 points, or 0.4%, to 26,062.12.

The CBOE Volatility Index, commonly known as the VIX, spiked 12.8% to 13.62. The so-called “fear index” had declined in each of the past five sessions. Prior to that, it reached two-month highs as stocks declined following Labor Day.

U.S.-China Trade War

The White House is preparing to unveil a new round of tariffs on China targeting $200 billion in goods, marking the most dramatic escalation in the year-long trade war. According to the Financial Times, Washington’s trade haws are urging President Trump not to back down on tariffs, which are believed to run as high as 25% for certain goods. U.S. officials had previously said they are likely to impose a 10% tariff rate on 40% of Chinese imports.

The Trump administration is escalating its trade war against China amid reports that Beijing was looking to take a more assertive stance on tariffs. That said, China’s Foreign Ministry has once again reiterated that a trade war isn’t in anyone’s interest.

“We have always maintained that the only correct means to resolve the trade dispute is through dialogue and consultation on an equal basis with mutual trust and respect,” ministry spokesman Geng Shuang recent said, as quoted by CNBC.

The new round of tariffs will be announced mere days after both countries signaled their readiness to return to the negotiating table.

Cryptos Decline

The cryptocurrency market was back on the defensive Monday, with Ethereum leading a broad downtrend that included tokens, altcoins and bitcoin. The combined market capitalization of all coins fell to a low of around $193 billion, according to CoinMarketCap.

Ether’s price pivoted lower after regaining more than 30% of lost value. The second-largest cryptocurrency plunged10.5% to $197.50. Among the top-ten ERC-20 tokens by market cap, nine reported losses.

Bitcoin also pulled back sharply after failing to make new highs. BTC was down 3% to $6,311 despite relatively strong technical indicators that pointed to short-term upside.

There was no immediate catalyst for the sudden reversal, a sign that bearish sentiment continues to dictate market trends. In terms of news, Ripple has confirmed that one of Japan’s largest financial institutions will soon launch a payment app using the company’s xCurrent technology. Meanwhile, security issuer XBT has announced plans to launch a new product designed to give investors access to a basket of cryptoassets.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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2 votes, average: 4.50 out of 52 votes, average: 4.50 out of 52 votes, average: 4.50 out of 52 votes, average: 4.50 out of 52 votes, average: 4.50 out of 5 (2 votes, average: 4.50 out of 5)
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4.6 stars on average, based on 603 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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