Pre-Market: Stocks Down on Asian Weakness, ECB-Hike Chatter
Stock markets are broadly lower today just after the US open, as the correction that started in February is still dominant, as expected. The major US indices opened with significant overnight losses, with the previously leading Nasdaq showing relative weakness, falling back below the 7000 level, with the broader market also drifting lower.
Nasdaq, 4-Hour Chart Analysis
Asian equities started the week on a negative note, as trade war worries continue to weigh on sentiment in the wake of the US plan to reduce the trade deficit substantially. Europe also joined the decline that was accelerated by a spike higher in the Euro, the European Central Bank is rumored to be confident with the market’s rate hike expectations.
Given the weakness in all of the major indices, we still expect the correction to continue, with at least a re-test of the lows in the case of most of the benchmarks, although the market might get very choppy before the Fed’s meeting on Wednesday.
Pound Jumps, Euro Spikes as Dollar Dips
GBP/USD, 4-Hour Chart Analysis
Bond yields rose while stocks fell on the ECB news, while the Great British Pound stood out with a strong performance, rising above 1.40 against the USD for the first time this month after a reported “breakthrough” on the Brexit talks regarding the transition with the EU.
Elsewhere in forex markets, it’s a relatively calm day, with a slight correction in the risk-off trade that we have been monitoring for weeks, as the yen is a tad lower today against all of its major peers, while the Dollar couldn’t gain on risk-on currencies, despite the equity weakness.
That said, the trend is still clear, as the Canadian Dollar and the Australian Dollar are both trading very close to their multi-month lows, while the Yen remains the best performing major of the year so far.
Gold, 4-Hour Chart Analysis
Commodities started the week without a clear direction, as industrials are down together with stocks, crude oil is also a bit lower after the late-day rally on Friday, while gold is edging higher following a negative Asian session, being back to unchanged thanks to the dip in the Dollar and stocks.
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