Pre-Market Analysis And Chartbook: Risk-Off Trade Still On as Stocks Plunge Globally
Tuesday Market Snapshot
|Asset||Current Value||Daily Change|
|WTI Crude Oil||54.04||-4.81%|
The broad risk-off shift that we have been following in recent months continues to be the dominant force in global financial markets, and today, global stock markets and the majority of risk assets are deep in the red again.
With no progress in the main issues, such as the Brexit process, the US-China trade talks, and the Italian budget debate, the major benchmarks are near or at their October lows, while currencies continue to trade in corrective patterns, due mainly to the dip in US Treasury yields.
DAX 30 Index CFD, 4-Hour Chart Analysis
The German DAX index and the Nasdaq are still in the center of attention, being among the weakest major benchmarks, and the prior leaders of the US bull are all under heavy selling pressure. The DAX is testing its October lows as we speak following the release of the strong German Producer Price Index (+0.3% on a monthly basis), with the all-time low in the shares of Deutsche Bank (DB) weighing heavily on the index.
A sustained new low, with a move towards 10,000 would cement the bear market in the key benchmark, and it would be another warning sign for bulls globally, even if a year-end feel good rally materializes in equities.
US stock futures suffered heavy losses overnight, extending yesterday’s intraday trend and in the case of the Nasdaq and the Dow, violating key support levels in the process. The homebuilder sector was once again in the center of attention in pre-market trading, with Building Permits and Housing Starts both coming out before the opening bell, the two measures ticked higher, in line with expectations, and that’s already something to cheer about in the sector following yesterday’s dismal NAHB Index.
The sector’s main ETF fell sharply this year, but thanks to the recent dip in Treasury yields, it started to show early signs of stability, and now, a period of relative strength could be ahead, which could reset the bearish sentiment, even as the long-term outlook is still plagued by the decade-long highs in mortgage yields.
Dollar Attempts Rally of Key Levels as Pound Continues to Struggle
GBP/USD, 4-Hour Chart Analysis
The US Dollar bounced off yesterday’s lows amid the deepening risk selloff, but for now, it remains well below its recent highs against the Euro and especially compared to the safe-haven assets such as the Yen and gold. The Pound, which has seen heightened volatility in recent weeks is hovering above last week’s lows near 1.27 against the Greenback.
The pair looks ready to test that level in the coming days, with the Pound, and British assets in general showing weakness due to the uncertainty surrounding the Brexit process.
WTI Crude Oil, 4-Hour Chart Analysis
The risk-off shift has also been hurting crude oil today, and the weak bounce following last week’s crash is fading away, despite the still deeply oversold momentum readings.
We continue to expect a larger scale bounce in the commodity, even as the WTI contract is already testing the lows from last week due to today’s sharp selloff. With that in mind, opening short positions is not advised here, although until a short-term trend change bulls should also stay on the sidelines.
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
EUR/USD, 4-Hour Chart Analysis
USD/JPY, 4-Hour Chart Analysis
EUR/GBP, 4-Hour Chart Analysis
AUD/USD, 4-Hour Chart Analysis
Gold Futures, 4-Hour Chart Analysis
Copper Futures, 4-Hour Chart Analysis
Featured image from Shutterstock