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Market Update: U.S. Stocks Rattled by Tariff Threat; Crypto Bloodbath Wipes $35 Billion Off Market Cap

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U.S. stocks finished mixed on Wednesday as the threat of an all-out trade war between the United States and China rattled investors’ confidence. In cryptocurrencies, a decision by the U.S. Securities and Exchange Commission (SEC) to delay a ruling on a keenly awaited bitcoin ETF sent the market to 12-month lows.

Stocks Mixed

The large-cap S&P 500 Index pared gains in the final moments of trade to settle flat at 2,857.70.

A relatively upbeat performance in tech pushed the Nasdaq Composite Index higher. The technology-driven gauge advanced 0.1% to finish at 7,888.32.

Dow industrials edged down 45.16 points, or 0.2%, to end at 25,583.75

A measure of implied volatility known as the CBOE VIX fell to more than six-months on Wednesday, a sign of calm trading conditions on Wall Street. The so-called “fear index” dipped 0.7% to 10.85.

Stocks were pressured at the open after China’s Ministry of Commerce announced 25% tariffs on $16 billion worth of U.S. goods. With the latest tariffs, China is targeting vehicles, fuel and fiber optic cables.

U.S. Oil Prices at Seven-Week Lows

Oil prices swung sharply lower on Wednesday after U.S. government data showed a smaller than expected draw-down in weekly crude inventories.

Commercial crude inventories fell by 1.351 million barrels for the week ended Aug. 3, according to the U.S. Energy Information Administration (EIA). Analysts polled by The Wall Street Journal estimated a deeper decline of 2.3 million barrels.

U.S. West Texas Intermediate (WTI) futures declined $2.44, or 3.5%, to $66.73 a barrel – the lowest in seven weeks. Brent crude, the international futures contract, fell $2.63, or 3.5%, to $72.02 a barrel on London’s ICE futures exchange.

Oil prices received a boost earlier in the week in anticipation of fresh Iran sanctions. However, Iranian Foreign Minister Mohammad Javad Zarif told local media that Tehran has no plans to cut crude exports.

Crypto Bloodbath

More than $35 billion was wiped from cryptocurrency values on Wednesday after the SEC announced it was delaying a verdict on a long-awaited bitcoin ETF. Coin values plummeted to $219 billion, the lowest in 12 months, as bitcoin gave back more than two-thirds of its recent rally and the major altcoins fell between 12% and 22%.

On Tuesday, the SEC published a memo indicating that had not reached a decision on whether to approve the VanEck SolidX Bitcoin ETF. Although the agency said it will decide on the matter by Sept. 30, a further delay is likely as regulators go through more than 1,300 comments on the matter.

Although the market treated the SEC’s announcement as a surprise, many in the investment community were anticipating a delay.

“If you’re selling today after this decision, it’s the wrong way to do crypto investing,” Brian Kelly, CEO of cryptocurrency investment firm BKCM told CNBC. “A little spoiler alert: On September 30th, they will likely postpone it again because the market’s not ready for it and the SEC hasn’t had all the answers to their questions yet.”

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 546 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 Rebound as Turkish Lira Rebounds; Cryptocurrencies Plumb 2018 Lows

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U.S. stocks rebounded on Tuesday, as the threat of contagion from Turkey’s Lira crisis showed signs of fading. Meanwhile, the downward spiral in cryptocurrencies intensified amid signs of a large-scale ICO cash-out.

Stocks Return to Strength

All of Wall Street’s major indexes returned to positive territory, with the Dow Jones Industrial Average rising 112.42 points, or 0.5%, to 25,300.12. The broader S&P 500 Index gained 0.6% to 2,839.96, with all 11 primary sectors finishing in positive territory. The technology-focused Nasdaq Composite Index returned 0.7% to finish at 7,870.90.

Gains were evenly distributed across multiple sectors, with consumer discretioanry, financials and industrials shares leading the rally.

The CBOE VIX, also known as the fear index, pulled back sharply from five-week highs as risk-off conditions cooled. VIX closed down 10% at 13.31, on a scale of 1-100 where 20 represents the historic average.

Chinese Growth Figures Miss the Mark

Signs of a sputtering Chinese economy emerged last month with key industrial and consumption metrics missing their mark.

Industrial production and fixed-asset investment grew at their slowest pace in nearly two decades, the National Bureau of Statistics reported Tuesday.

Industrial production rose 6% year-over-year in July, unchanged from the previous month. Fixed-asset investment growth slowed to 5.5% annually from 6% a month earlier. Meanwhile, retail sales grew 8.8% annually in July compared with 9% in June.

China’s cooling economy comes as policymakers look to counter America’s protectionist policies, which have resulted in a tit-for-tat trade war between the world’s two largest superpowers. However, China’s massive trade surplus with the U.S., combined with its reliance on smoke-stack industries, suggest that Beijing can’t counter Washington’s escalating expansive levies.

Last month, U.S. President Donald Trump announced plans to administer levies on an additional $200 billion in Chinese goods. Earlier in the month, the administration implemented tariffs on $50 billion worth of Chinese goods.

Cryptocurrency Downtrend Intensifies

Ethereum was at the center of another crypto crash Tuesday, as the total market capitalization fell to $193 billion, the lowest point of the year. The ether price shed more than 10% to plumb new 14-month lows.

As Hacked reported earlier, ICO burnout appears to be largely responsible for the protracted selloff, leaving bitcoin with a 54.5% share of the total market. The largest digital currency by market capitalization came to within $100 of its yearly low, which would have likely sparked a deeper correction in the broader market.

At one point during the day, 78 of the top-80 altcoins had reported double-digit percentage losses. With the exception of a few obscure names, no major cryptocurrency in the top-100 was spared the losses.

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 546 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: Stocks Rebound as Turkish Tensions Ease

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While nothing has been fixed in Turkey overnight with the vague plans announced to fight inflation by the finance minister, global markets rebounded after yesterday’s panicky conditions.US stocks undoubtedly led the way higher yet again, as the Lira, which made it to the mainstream media in the last few days, is up by more than 7%, with the USDT/TRY pair pulling back to 6.50 from a high above 7, and risk-on assets are higher globally, with especially equities staging a rally.

USD/TRY, Daily Chart Analysis

The other emerging market currencies that sold off are also correcting, with the Argentinean Peso, Brazilian Real, and the Russian Ruble all being off their lows. Despite the positive signs today, the underlying trend is still bearish in the FX segment, and the Dollar’s strength doesn’t seem to abate, with short-term Treasury yields also looking stable.

DAX Index, Daily Chart Analysis

While the major European indices are slightly in the green, headed to the closing bell, European banks that are exposed to Turkey are not showing much enthusiasm, and we expect risk-off sentiment to return in the coming days, until meaningful action is taken by the Turkish authorities.

Emerging market currencies are definitely feeling the contagion effects, with the Argentinean Peso, the Brazilian Real, and the Russian Ruble all being down big time in the last few days. So far, the Turkish leadership failed to calm the market, rather they fueled the fire with the aggressive rhetoric, and the seeming ignorance of the basic macro-economic rules.

In economic news, China was all the rage today, and the country that has been targeted by Trump’s tariffs is feeling the pain. It would be foolish to think that the trade war alone is to be blamed for the weaker than expected indicators across the board, but the skirmish between the two mega-powers definitely triggered a slowdown in the credit fueled economy.

Shanghai Composite, Daily Chart Analysis

Industrial production, retail sales, and investments all came in well below the consensus estimates, and with the Shanghai Composite already being in a bear market, and the Chinese Yuan hovering near its 13-month low against the Greenback, all looks set for a harsh awakening in China.

US Still the Island of Caolm

In the US all eyes are on tomorrow’s retail sales report, while today only two less important economic releases came out. The NFIB small business indicator was higher than expected and import prices were unchanged as the Dollar’s rise likely evened out the first effects of the new tariffs.

Nasdaq, 4-Hour Chart Analysis

The Nasdaq rebounded strongly overnight, leading the major indices higher again, and with that it got very close to its all-time high, outperforming the rest of the world by a mile. With powerhouses Apple and Amazon still pushing to new highs, even as more balanced portfolios are left behind, the tech index could set a new record as soon as today, should the otherwise shaky risk-on shift hold.

Copper Futures, 4-Hour Chart Analysis

Commodities are mixed so far today, as copper fell below $2.70 again, as it got hit hard after the Chinese data dump, while oil continued to rally, climbing back above $68 per barrel, with regards to the WTI contract.

Gold also bounced back above $1200, despite the Dollar’s rally against its major peers, and we have to wait and see if the spike below $1200 finally marked the lengthy downtrend in the precious metal.

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 317 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

Reacting to the Buck

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Hi Everyone,

Extreme market action continues. What began earlier this week as a rout in the Turkish Lira has quickly spread throughout all markets and now it seems to be affecting the cryptos as well.

All the major cryptos fell over the last 24 hours. Bitcoin managed to hold the most steady and Ethereum bore the brunt of the selling.

This article on Bloomberg indicates that the reason for this could be that some ICO’s are cashing out.

However, there is a need for further analysis backed up by more in-depth intel before a final conclusion can be drawn.

The reality is that more money is flowing into ICOs than out of them. According to data collected from CoinDesk, $14.3 Billion has been raised so far in 2018. Nearly triple the $5.7 billion raised in 2016 and 2017.

On the ground, we continue to see positive headlines that show a clearly developing crypto industry. So the fact that token prices are falling could very well be a reaction to external factors like the rapidly rising US Dollar, as we’ll explore below.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Volatility is Back
  • Gold < $1200
  • Crypto Reaction

Please note: All data, figures & graphs are valid as of August 14th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Looks like we’re getting a bit of a rebound in the markets today as the markets are mostly reversing many of yesterday’s moves.

Looking at the Lira, it seems we’ve backed slowly away from resistance at 7 Lira to the Dollar (USDTRY). We should be hearing from Turkish officials including Erdogan later today.

Stocks are up across Asia and Europe. All except China who is processing some sour economic data.

No Safety

Perhaps the strangest thing about the current market action is the lack of safe haven sentiment.

We can see clearly that volatility is rising…

Yet, gold and other precious metals continue to fall. Yesterday, Gold dropped below the important level of $1,200 for the first time since January 2017.

This is a rather clear indication that whatever volatility is happening it’s not freaking anybody out.

Crypto Reaction

Though I couldn’t say with absolute certainty that the meltdown in emerging market currencies is what’s getting the crypto market down lately, it is the most likely explanation given the current market conditions

As the United States moves to tighten its economy and avoid strong inflation, they’re taking action that is strengthening the Dollar. Because the US Dollar is the global reserve currency, many smaller economies rely heavily on a stable exchange rate with the greenback.

So too, as the Dollar is being seen as a stable store of value at the moment, there really isn’t much incentive for people to store their money in digital assets.

Still, it does seem that we’re seeing some of the excitement spilling over onto the blockchain. In this chart, we can see the TPS (transactions per second) is rising rapidly over the last few days.

As well, we can see a noticeable spike in exchange volumes during the entire market action yesterday.

Many thanks to you for reading and to everyone sending me your questions, thoughts, feedback, and insight. It’s extremely valuable.

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

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

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

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 | LinkedIn: MatiGreenspan | Facebook:MatiGreenspan

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 122 rated postsSenior Market Analyst at Etoro.com.




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