Global Stocks Mixed, Nasdaq Rebounds, as US Wage Growth Accelerates

It’s been a tumultuous day for investors across the globe, with wild swings in the main financial markets and with strong positive and negative catalysts depending on asset classes. All eyes were on the US Employment Report and emerging markets, and the last session of the week wasn’t short on surprising developments.

DAX Index, 4-Hour Chart Analysis

Emerging markets crept higher after almost two weeks of deterioration, but European stocks continued to decline, and US equities also opened well below yesterday’s closing prices. The major US indices recovered on the heels of the better than expected Non-Farm Payrolls number, even as the much bigger than expected wage growth made the Employment Report mixed for risk assets at best.

Nasdaq 100 Index Futures, 4-Hour Chart Analysis

The Nasdaq is now in the green after three days of consecutive losses, despite the renewed troubles of Tesla (TSLA) which lost two more senior officers, which led to an almost 10% drop in the shares of the company. CEO Elon Musk also smoked marihuana during a live podcast yesterday, but the financial worries are more likely behind the carmaker’s decline.

Tesla, 4-Hour Chart Analysis

While the Dow and the S&P 500 are virtually unchanged before the afternoon session, given the huge divergences between the main global indices, next week we could see huge moves in stocks before the Fed’s next meeting. The central bank is expected to tighten for the third time this year, and as volatility usually picks up in September, the worst month for stocks on average, everything seems to be set for some fireworks in equities and currencies alike.

Treasury Yields and Dollar Jump on Inflation Fears

US 2-Year Treasury Yield, 4-Hour Chart Analysis

US Treasury yields surged higher after the employment report, as the recent releases started showing a pick-up in inflation that could hinder the slight dovish shift of the FED, as the most important measures are already close to the central bank’s 2% target.

This development comes at the worst possible time for the already suffering emerging markets, as the rising yields could further deepen the funding troubles of the most vulnerable countries while also making the currency issues worse as well.

Dollar Index, 4-Hour Chart Analysis

The US Dollar also pushed higher after the report as expected, and that could put more pressure on emerging market currencies down the road, even though the Greenback is still below its August highs, as measured by the Dollar Index.

Gold, 4-Hour Chart Analysis

Commodities are having a mixed and choppy day amid the conflicting global moves, but crude oil is markedly lower, while copper staged an intraday rebound parallel with the emerging market rally. Gold is still hovering around the $1200 level, finally showing some early signs of relative strength, holding up well amid the Dollar and yield rally. That said, the precious metal is still clearly in a broader downtrend, and although we strongly advise long-term investors to accumulate it, traders should still stay away from long positions in gold.

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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.