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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.

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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 735 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 Tumble on Weak China Data; Cryptocurrencies Make a Sudden Move Higher

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U.S. stocks declined on Monday, with the major indexes struggling to overcome a volatile start after dismal Chinese data cast a dark shadow over global economic growth. Cryptocurrencies erased their weekend losses after bitcoin made a sudden move higher midday.

Stocks Stumble

Wall Street’s major averages settled lower by Monday’s close after spending the entire session in the red. The Dow Jones Industrial Average managed to pare its losses down to 86.11 points, or 0.4%, to close at 23,909.84. The large-cap S&P 500 Index fell 0.5% to 2,582.41. It was down as much as 1% in the early morning. The technology-heavy Nasdaq Composite Index closed down 0.9% at 6,905.91.

Earnings season began in earnest on Monday after Citigroup Inc. (C) reported better than expected quarterly profits. The big U.S. bank made $1.61 in per-share earnings on revenue of $17.12 billion. Despite beating per-share earnings by six cents, sales missed analysts’ target of $17.48.

China’s Economy Suffers Another Blow

China’s economic perils intensified last month, as exports plunged at the fastest rate in two years. Overseas shipments declined 4% annually in December, confounding expectations of a 3% gain, the General Administration of Customs reported Monday. Imports plunged 7.6% year-over-year compared with forecasts calling for 5% growth.

Beijing’s trade surplus with the United States reached its highest level in over a decade, a possible indication that trade-war fears have been overblown. China’s 2018 surplus with the U.S. jumped 17% from a year earlier to reach $323.32 billion, official data showed.

President Donald Trump told reporters on Monday that his administration is very likely to reach a new trade agreement with China. The optimism extends from last week’s bilateral talks, which went on for a day longer than planned. Both sides made important progress on the purchase of U.S. energy commodities as well as increased access to Chinese markets.

“We’re doing very well with China,” Trump told reporters Monday, according to Reuters. “I think that we are going to be able to do a deal with China.”

Cryptos Bounce

A weekend of heavy selling in the cryptocurrency market came to an abrupt end on Monday, as bitcoin and its altcoin peers pivoted sharply higher midday. Between Sunday and Monday, the cryptocurrency market capitalization rose $8 billion peak-to-trough. It was last valued at $23.9 billion, according to CoinMarketCap.

Bitcoin once again bounced off the $3,500 price floor to retake $3,700. The move higher may have staved off a more severe drop in the short term. The bears have been eyeing a sustained drop below $3,550, a long-term inflection point for the bitcoin price. At last check, bitcoin was up 4.3% at $3,709.36.

News Flash: Crypto Markets Swing Higher as Bitcoin Climbs Above $3,700

As one would expect during a bear market, altcoins and tokens quickly followed in bitcoin’s footsteps Monday afternoon. With the exception of dollar-backed stablecoins, all major cryptocurrencies reported gains. Ethereum jumped 10.3% to $128.65, where it was just shy of XRP in terms of overall market cap. The XRP price rose 4.9% to $0.3334.

Other big gainers included EOS, which rose 9.5% to $2.47, and Tron, which added 15.9% to $0.2468.

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 735 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

Beyond Prices

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Hi Everyone,

As an investor, it seems that the last thing you want to look at is price, especially lately.

A savvy investor in an emerging industry will want to get a good picture of the overall landscape and one of the best ways to see this is in the job sector.

Job growth and average salaries are often seen as a leading economic indicator, which is why the NFP jobs report in the United States is one of the most scrutinized pieces of data that moves the markets every month.

So, if you want to get a good idea of how the crypto industry has grown throughout 2018, look no further than jobs data. At least according to this data point, we can see that jobs in blockchain development are in high demand.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • China Slowdown
  • Shutdown: Day 24
  • Bitcoin Support and Network

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

Traditional Markets

The week has started off on the wrong foot for global stock markets. Some sour trade data from China has investors worried that the narrative of a China slowdown or “hard landing” is starting to seem real.

Export growth from the number one producer of goods in the world has seen its sharpest drop in two years.

The market is already cringing with anticipation for the upcoming GDP figure announcement on January 21st.

Where’s the Safe Play?

A new political upheaval in Greece has barely grazed investors conscious this morning. With the US Government shutdown entering day 24 and the data out of China there scant little time for that.

The bright light at the end of the tunnel is coming in the form of earnings season, which kicks off this week. Let us pray they don’t disappoint.

One thing that is clear is that there is an overwhelming demand for safe havens. We can see it in the price of gold, which is still giving an extensive test to the $1,300 level.

The next clue comes from the currency markets, where the Japanese Yen and the Swiss Franc are leading today.

The final nail in the coffin is the bond markets, where we can see the yields dropping as investors turn to this traditional market for safekeeping of their assets. To think the 10 year US treasury bond was threatening a wide move higher in November and now it’s sliding into oblivion.

Crypto Safety

In line with what we’re seeing above, the risk assets are on the ropes and bitcoin is no exception. Just as the stock markets have reached a point of inflection the crypto markets are now giving a heavy test of their support levels.

Those that have recently called the bottom may not be wrong though. The critical support level for bitcoin is at $3,000, so we’re still about $500 above that at the moment.

Moving beyond the price, we can see that activity on Bitcoin’s blockchain is heating up rapidly. Here we can see the transaction rate hitting its highest level in almost a year.

Of course, more transactions on the blockchain is neither bullish nor bearish. The comforting thing is that last time the transaction rate was this high, we saw a distinct clog in the network.

Last January, the Bitcoin blockchain was so congested that transaction times were significantly slower and the cost to send bitcoin was through the roof.

During the bear market, however, developers have had more time to upgrade their systems. Specifically, we now see the adoption of SegWit, which reduces the size of transactions on the blockchain, is now about 40%.

In short, I don’t know when the next bull run will happen but I am fairly confident that the network is fully set up to handle the load.

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:MatiGreen

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 142 rated postsSenior Market Analyst at Etoro.com.




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Analysis

5 Things To Watch Next Week + ChartBook

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All Eyes On The EUR/USD Following Break-Out Attempt

EUR/USD, 4-Hour Chart Analysis

The Euro hit its highest level since mid-October against the struggling USD this week, with the most traded forex pair topping the 1.15 level leaving a long-standing trading range behind. While the dovish shift by the Fed, and the broad risk rally helped the common currency, and lot of analysts point to the ballooning US deficits as a long-term risk for the Greenback, from a technical perspective the pair is still clearly bearish.

The pair retraced most of its break-out gains, and it’s now back near the top of the previously dominant trading range, and the lack of follow-through after the move is a warning sign for bulls. The outcome of the current setup will be crucial for the whole forex segment, and although we wouldn’t conclude that the rally is over, the bearish long-term forces and the weak momentum all increase the chances of a bearish outcome.

Also, while economic numbers started to deteriorate in the US too, the sharp slowdown in the Eurozone is much more apparent, taking the collapse in industrial production as an example, and given the deep troubles in the European banking system, the outlook for the common currency is gloomy.

Major US Indices Testing Key Resistance Zones

Dow 30 Index, 4-Hour Chart Analysis

The counter-trend moves in risk assets, and in particular, the short squeeze in US stocks came a long way since the Christmas lows, and thanks to the sharp dovish shift in the Fed’s rhetoric, the Volatility Index (VIX) dipped below the 20 level for the first time in over a month.  Now, the short-term rally is stretched, and with the October lows, together with the lows from last spring are now ahead as strong resistance, bears might soon be back in control on Wall Street.

The earnings season is about to kick off in earnest next week, and financials will dominate the weekly releases, with JP Morgan (JPM), Bank of America (BAC), Wells Fargo (WFC), Citigroup (C), and Goldman Sachs (GS) all releasing their reports. That will likely increase the day-to-day volatility in stocks, but given the muted forecasts and the profit warnings following the recent turmoil in financial markets, we could be in for some positive surprises.

Pound Headed for Turmoil Again as Key Brexit Vote Looms

GBP/USD, 4-Hour Chart Analysis

It seems that British Prime Minister is going all in on a the draft Brexit plan with the EU, as she warned members of the Parliament that there won’t be a new agreement, and if they fail to accept the plan on Tuesday, a no-deal Brexit could follow or the process could be delayed or halted.

While at this point it’s impossible to predict the outcome of the political turmoil, The Pound managed to gain ground compared to its major peers last week, thanks to the broad risk rally, and the rumors regarding and extended deadline for the Brexit process. Should the Tuesday, vote fail, Theresa May might resign, especially in light of her recent rhetoric, and wild swings will likely continue in the currency.

Gold Looking To Extend Rally

Gold Futures, 4-Hour Chart Analysis

Gold has been in a strong uptrend amid the bearish months in global risk assets and the key safe-haven commodity reached the $1300 level for the first time since June, before entering a consolidation phase as expected.

The precious metal cleared the overbought short-term momentum readings in the past two weeks, as risk assets rebounded, and we might soon enter the next upswing, even though a spike below the $1280 level is in the cards. The next major resistance zone above $1300 is found between $1350 and $1360, and we expect a test of that one in the coming months, given the long-term fundamental tailwind.

G20 Meeting, PPI Report, and Central Bankers On Tap

Besides the crucial Brexit vote on Tuesday, the G20 meeting for finance ministers and central bankers in Tokio will be in focus next week, and it will be very interesting to see how the financial leaders will react to the turmoil in financial markets. We expect a lot of talk about caution and coordinated action, and should the key central bankers join the Fed’s dovish shift, significant moves could be ahead for currencies.

With regards to “real” economic news, the US Producer Price Index (PPI) will closely watched on Tuesday, the British CPI and PPI numbers will come out on Wednesday,  the US Philly Fed index is scheduled for Friday, while British Retail Sales, the Canadian CPI report and the Prelim US Michigan Consumer Sentiment will likely make waves on Friday.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Nasdaq 100 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

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

Forex

USD/JPY, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Copper Futures, 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 440 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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