Pre-Market: Nasdaq Hits All-Time High as US Stocks Shrug Off Weakness
US stocks are firmly in the green today after yesterday’s slip with the Nasdaq surging higher yet again, proving its relative strength in the face of the global weakness. While not much changed in the overall picture across traditional financial market in recent weeks, Asian equities continued their oversold bounce today, as trade war fears subsided again.
NASDAQ 100 Futures, 4-Hour Chart Analysis
The Chinese Yuan managed to appreciate before hitting a new low, and that helped mood globally, leading to a rally during the European session that continued in earnest in Wall Street trading. Although Treasury Secretary Steve Mnuchin caused a small dip when he stated that trade talks between the US and China halted, buying only paused, and the major indices are set to close near their session highs.
Nikkei 225 Futures, 4-Hour Chart Analysis
Currencies had an eventful session, with first the Turkish Lira drawing attention again, spiking lower to a new all-time low against the Greenback overnight before recovering somewhat in European trading. Emerging market currencies are still under pressure in general, even given the bounce in the Yuan, and together with the divergences that we pointed out several times, suggest that the foundation of the current rally in the US is quite fragile.
USD/Turkish Lira, 4-Hour Chart Analysis
The Dollar’s breakout against the Yen continued, while the Euro failed to rebound despite the risk-on sentiment, as the European Central Bank’s meeting minutes gave no clue about the tightening cycle that should start “before the end of the year”. The Dollar’s stability is especially impressive given the lower than expected CPI release that reinforced the message of last week’s “Goldilocks” employment report.
USD/JPY, 4-Hour Chart Analysis
Commodities Rebound After Rout
Despite the inflation miss, Treasury yields edged higher across the curve, and as short-dated yields outperformed the flattening of the yield curve continued. Commodities were hit hard in Wall Street trading yesterday, especially crude oil, but today the segment is in recovery mode with the oversold copper leading the way higher as expected.
WTI Crude Oil, 4-Hour Chart Analysis
We warned earlier that the rise in oil is most likely only a short-term supply-driven phenomenon, and yesterday the market snapped, and the key commodity quickly plunged below $70 per barrel, breaking below its recent volatile range. While further wild swings are expected in the front-month contract, the risks are still skewed somewhat to the downside here for crude.
Gold continues to suffer after failing to get back above the $1260 level, and it got close to testing its recent low near $1240 today amid the risk-on shift, and despite the long-term oversold state of the precious metal, the Dollar’s strength continues to weigh on it.
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