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Market Update: U.S. Stock Selloff Deepens Following Global Rout; Cryptocurrencies Shed $16 Billion in Value

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U.S. stocks resumed their massive slide on Thursday, as a cocktail of rising interest rates, trade-related risks and plunging global markets weighed on investor sentiment. After weeks of stability, cryptocurrency prices sold off suddenly and sharply with all major assets reporting big losses.

Stock Rout Intensifies

All of Wall Street’s major indexes settled sharply lower, with the S&P 500 Index closing at its lowest level in over three months. The benchmark gauge fell 2.1% to 2,728.37, with all 11 primary sectors recording losses. Financials, energy, health care, industrials, consumer staples and real estate were all down more than 2%.

The blue-chip Dow Jones Industrial Average plunged 545.91 points, or 2.1%, to 25,052.83. It briefly fell below 25,000 for the first time since July.

Meanwhile, the technology-driven Nasdaq Composite Index reversed gains to close down 1.3% at 7,329.06.

A measure of implied volatility known as the CBOE VIX resumed its large upswing on Thursday, climbing 12.3% to 25.78, the highest since February. The fear gauge trades on a scale of 1-100, where 20 represents the long-term average.

Global Markets Plunge

The vicious cycle of declines hit global markets on Thursday, as Asian and European stocks sold off sharply. Chinese markets sold off the most since 2016, with more than 1,000 companies falling by the daily limit, according to Bloomberg.

https://www.bloomberg.com/news/articles/2018-10-11/hong-kong-stock-market-woes-worsen-with-tech-luxury-selloff

China’s benchmark Shanghai Composite Index closed down 5.2%, its biggest drop since February 2016. The Shanghai Shenzhen CSI 300 Index crashed 4.8%.

Japanese markets also suffered large declines, with the Nikkei 225 index closing down 915.18 points, or 3.9%.

In Europe, all major benchmarks in London, Frankfurt, Paris and Madrid finished down at least 1.5%. Euro Stoxx 50 Pr, the Eurozone benchmark, fell 1.8%.

While the bloodletting in global markets was triggered by the recent selloff on Wall Street, China is picking up where it left off at the beginning of the week. Investors are very pessimistic about the Chinese market, which is mired in a deepening economic slowdown and relentless tariff war with the United States.  China was the center of the 2015 financial meltdown after the central bank devalued its yuan currency unexpectedly.

Cryptos Plunge

Digital assets, which have held up fairly well over the past three weeks, declined suddenly and sharply on Thursday. The combined market capitalization of all coins touched a low of $200 billion, as bitcoin fell more than 5% and leading altcoins put up double-digit losses.

At the time of writing, the total market was worth just below $202 billion, according to CoinMarketCap.

While there was no immediate catalyst for the sudden reversal, controversy surrounding Bitfinex may have contributed to the decline. On Thursday, the exchange announced it had temporarily suspended fiat deposits, though didn’t provide an explanation for its decision. Fiat deposits are expected to go back online within a week.

Bitfinex has been at the center of growing controversy over Tether, a dollar-backed stablecoin, and its underlying financial status. The company released a blog post last weekend dispelling rumors that was insolvent.

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 695 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Market Overview

U.S. Stocks Rise on China’s Evolving Industrial Blueprint; Cryptos See Modest Progress following Heavy Selling

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U.S. stocks rebounded sharply on Wednesday as investors shifted from apprehension to optimism on China trade negotiations. Cryptocurrencies stemmed early-week volatility but failed to muster much of a rally as trade volumes dropped.

Relief Rally

Wall Street’s major indexes recovered sharply midweek, shifting the balance back in favor of the bulls for the time being. The large-cap S&P 500 Index climbed 0.5% to 2,651.07, with sectors ranging from information technology to consumer discretionary posting large gains. Five of 11 primary sectors reported gains in excess of 1%. Real estate and utilities were the only laggards on the day.

The Dow Jones Industrial Average jumped 157.03 points, or 0.6%, to 24,527.27. The blue-chip index was up 450 points earlier in the session.

Meanwhile, the technology-focused Nasdaq Composite Index closed up 1% at 7,098.31.

China in the Spotlight

Investors got the go-ahead to bid up stocks amid reports that China was seeking to replace industrial policy that favored domestic companies across a range of vital industries. The new plan will reportedly open the door to foreign companies looking to set up shop in the world’s second-largest economy. As Hacked reported on Tuesday, the policy in question is called the Made in China 2025 plan.

The Wall Street Journal reported Wednesday that the blueprint was already being re-drawn in an effort to appease the Trump administration amid ongoing trade negotiations. Earlier this week, China agreed to reduce tariffs on U.S. automobiles to 15% from 40%.

Efforts to renegotiate free trade agreements comes in the wake of a face-to-face meeting between presidents Trump and Xi earlier this month. Both leaders held productive talks on the sidelines of the G20 summit in Buenos Aires, Argentina. This included a three-month truce not to escalate the trade war.

Cryptos Get Some Relief

Cryptocurrencies saw modest upside on Wednesday, as the majors recovered slightly from their most recent beating that nearly drove values to new yearly lows.

Bitcoin, XRP and Ethereum all recorded gains in excess of 2%, helping engineer a broad-based recovery in the market. Bitcoin was back above $3,500, while XRP returned above the vital 30-cent mark. Looking further down the market rankings, EOS jumped 8% to overtake bitcoin cash for sixth spot on the list. The digital currency was last seen trading just above $2.00.

Most coins ranked in the top-20 traded higher on Wednesday. The combined market cap rose to $111 billion as a result. However, trade volumes fell by nearly $800 million to $12.2 billion, with BitMEX seeing a drop off in activity compared with the heavy selling pressure observed earlier in the week. BitMEX has emerged as a popular venue for shorting bitcoin, which has wreaked all sorts of havoc on the leading digital currency and the market as a whole.

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 695 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Analysis

Forex Update: Dollar Drops, Risk-On Currencies Rally on Trade Optimism

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Forex Market Snapshot

Asset Current Value Daily Change
EUR/USD 1.1366 0.43%
GBP/USD 1.2634 1.19%
USD/JPY 113.25 -0.10%
AUD/USD 0.7223 0.26%
GOLD 1,249 0.09%
WTI Crude Oil 52.16 0.37%
BTC/USD 3,444 2.74%

The forex market saw another very active session, with the key topics of the recent weeks still making headlines and causing wild swings in the major currency pairs. The Brexit saga took another turn today, as Prime Minister Theresa May faced a no-confidence vote in her party following the delay of the vote on the draft plan in the British Parliament.

The result of the vote is not yet known, but analysts expect the PM to win the vote after she stated that she won’t run for another term in light of the Brexit-related chaos. The Pound has been rallying so far today together with most of the risk-on currencies, with yesterday’s decision to grant bail to the recently arrested CFO of Huawei boosting investor confidence across the globe. President Trump also hinted on progress on the ongoing talks, and that led to a sizable drop in the USD and in US Treasuries, as safe-haven flows reversed.

Technical Analysis

USD/CNH, 4-Hour Chart Analysis

The Dollar/Yuan pair, which has been crucial for all markets in recent months, broke its short-term uptrend on the news, and it fell to its lowest level in almost a week. The Chinese currency is still weaker compared to its post-trade-truce levels, but it’s also clearly above its October lows, despite the continued weakness in the Chinese economy thanks to the trade-related optimism.

That said, the long-term trend is clearly positive in the pair, and negative in the Yuan, and the credit-related troubles, which will likely weigh on the currency for years, will likely outweigh the topic of trade next year. We still expect the likely trade deal to cause a strong bounce in Chinese assets, but it’s unlikely to change the broader trends especially given the broad bearish shift in global risk assets.

EUR/GBP, 4-Hour Chart Analysis

The EUR/GBP pair is testing the recent break-out level amid the continued Brexit uncertainty, with the 0.90 level being in focus throughout the day. The short-term uptrend remains clearly intact in the pair, and bulls remain in control of the market from a long-term perspective as well.

Strong support is found near 0.8920 and a move towards the 2017 highs near 0.93 is possible in the coming months, even as both currencies remain among the weaker majors, and European growth is clearly weakening.

AUD/USD, 4-Hour Chart Analysis

The AUD/USD pair is currently trading in a bearish wedge pattern amid the mixed price action in commodities, and the Aussie has been acting weak today, suggesting a likely move below the 0.7200 level in the coming days.

The currency is neutral on both time-frames currently, but a move below 0.7165 would mean that the long-term downtrend will resume following the two-month-long correction, that broke the long-standing declining trendline.

Gold Futures, 4-Hour Chart Analysis

Gold has been showing relative strength today compared to the other main safe-haven assets, which pulled back thanks to the positive developments in the US-Chinese diplomatic spat, and the precious metal successfully tested the recent break-out level.

Gold is very close to confirming a broader trend change, although it needs to stay above $1235, and a move above $1260 would suggest a test of the next major resistance zone near $1300, with strong support, found at $1215 and $1080.

Key Economic Events Tomorrow

 

ChartBook

Forex

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/JPY, 4-Hour Chart Analysis

AUD/JPY, 4-Hour Chart Analysis

GBP/JPY, 4-Hour Chart Analysis

USD/CHF, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

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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4.7 stars on average, based on 413 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 Overview

Breaking the Silence

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Hi Everyone,

You know the thing I love most about Ethereum upgrades?… They’re silent.

The last Ethereum major upgrade, known as Byzantium, went live in October of 2017 and barely any end users even noticed. Even though Byzantium was implemented using a hard fork, no new Ethereum coins were created. For a better understanding, see this article about how forks work.

The next Ethereum hard fork is now scheduled for mid-January. Constantinople is mostly a maintenance and optimization upgrade that will pave the way for most of the big league scaling solutions and more.

The field of decentralized networks and computing is still very new and presents various challenges. So these type of upgrades, though sometimes take longer than expected, are an excellent example of how dev communities get it right and pave the way for a better future.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • EU Japan Trade Deal
  • Yellen’s Warning
  • 1 Year B-day: Bitcoin Futures

Please note: All data, figures & graphs are valid as of December 12. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Today we’ll start off with some positive news for global trade. The European Union and Japan have finalized a deal that’s been 5 years in the making.

It’s nice to think that even at the present time when many politicians are advocating for more isolation, some countries can continue making deals.

The President of the European Commission was on record as saying,

“We’re saying…we believe in open, fair and rules-based trade,”

Stocks are enjoying a rally this morning. After holding steady during the US session yesterday, Asian and European markets are well off the lows.

Yellen Breaking the Silence

Life comes at you fast sometimes.

The former Chair of the US Federal Reserve said a bit more than a year ago that

It seems her rhetoric has changed completely since then and it now seems that she’s expecting something bad to happen soon.

In this interview, she pointed out the $9.1 trillion corporate debt and gave a stern warning that it could cause a lot of bankruptcies, especially for companies with less than sparkling credit.

Catch it on YouTube at this link: https://youtu.be/gcYTU1sQniI

Interesting times.

Happy Birthday Bitcoin Futures

The bitcoin futures market on Wall Street turns one today.

Many will argue and many often do about what effect this has had on Market prices. Though it’s often downplayed, even by the CBOE themselves, volumes in these CBOE and CME contracts often reach up to about 8% of the volumes reported by major global exchange sites.

For better or for worse, they’re part of this market now and it’s only going to grow when the new Nasdaq futures come online in Q1.

Happy birthday!!

Let’s have a spectacular day ahead!!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

eToro is a multi-asset platform which offers both investing in stocks and cryptocurrencies, as well as trading CFD assets.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,
Mati Greenspan
Senior Market Analyst

Connect with me on….

eToro: @MatiGreenspan Twitter: @MatiGreenspan LinkedInMatiGreenspan |Facebook:MatiGreenspa

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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4.7 stars on average, based on 138 rated postsSenior Market Analyst at Etoro.com.




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