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Stock-Rally Halted as U.S. Economy Sheds 33,000 Jobs

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U.S. stocks settled mostly lower on Friday, with consumer staples and telecommunications shares leading the decline after Labor economists reported dismal NFP numbers.

Stocks Surrender Gains

The benchmark S&P 500 Index settled down 0.1% at 2,549.33, snapping a streak of eight consecutive gains.

The majority of the S&P 500’s 11 sectors finished in negative territory, with telecommunications services plunging 2%. Shares of consumer staples were down 1% as a sector. Energy stocks also dropped 0.9% as oil prices plunged nearly 3% in New York.

On the opposite side of the spectrum, information technology shares rose 0.3% as a sector. That was enough to pull the Nasdaq Composite Index to new record highs. The technology-driven index edged up 0.1% to close at 6,590.18.

Meanwhile, the Dow Jones Industrial Average pared losses to close at 22,773.67, where it was virtually unchanged from the previous close.

A weaker performance on Friday was outdone by a solid week of gain. Stocks are up 1.2% compared with last Friday, with the bull market showing no signs of abating. The health of the bull market is reflected in the CBOE VIX, which has closed below 10.00 for eight straight days.

Hurricanes Weigh on Jobs, but Unemployment Drops

The U.S. economy shed 33,000 jobs last month, confounding expectations of a 90,000 increase, the Labor Department reported Friday. The monthly drop was the first of its kind in seven years, when the economy was still emerging from the Great Recession.

But the news wasn’t entirely negative. Unemployment unexpectedly fell to 4.2%, the lowest since 2001. Hourly wages also jumped 2.9% from a year ago.

The impact of Hurricanes Harvey and Irma were immediately felt on the restaurant industry, which shed 105,000 positions last month. On the flip side, job gains were reported in healthcare, transportation and business services.

The combined impact of the hurricanes could reach $200 billion, according to Moody’s. The credit rating agency says the economy could suffer an additional $30 billion in lost productivity.

Meteorologists are also tracking a storm system making a beeline for the central Gulf of Mexico coast of the United States. Nate could make landfall as a Cat-1 hurricane this weekend. According to Bloomberg, the storm could bring up to $1 billion in damages.

«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 462 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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Italy Spooks markets Again as Stocks Remain Under Pressure

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European stocks Led the way lower today despite a bullish start in Asia, as equities gave back their gains when Daimler published a surprising profit warning, which was deeply affected by the recent trade war developments, reigniting fears of a tariff-driven downturn in global trade.

DAX, 4-Hour Chart Analysis

The Old Continent got into more trouble later on, when two anti-EU officials were named in Italy, resurrecting fears of a clash between the systematically crucial country and the core of the Eurozone. Italian yields rose in European trading, and although they are still shy of the levels hit during the May scare, the periphery could be in trouble as the ECB pledged to exit the market by the end of the year.

Nasdaq 100 Futures, 4-Hour Chart Analysis

The main European indices were smashed lower during the session, with the DAX hitting a two month low, still being very weak relatively speaking compared to its US peers. US stocks sold off heavily following the opening bell and they failed to recover, unlike two days ago, and the major benchmarks traded well below yesterday’s levels just before the close.

The Nasdaq and the Russell 2000 lost some of their recent mojo, pulling back heavily of the all-time highs during the day. All in all, the risk off shift continues to dominate across the board, as we expected and we remain negative on risk assets here, especially regarding emerging markets, even as the Dollar’s rally could be over for a while.

Dollar Pulls back as Pound Surges

USD/CAD, 4-Hour Chart Analysis

The Dollar took a beating as the Philly Fed Index came in much worse than expected, and as the Bank of England sent hawkish signals, pushing the Pound and the Euro higher. The central bank left its benchmark rate unchanged at 0.5%, but a rate hike this year got much closer, with a key member of the bank voicing inflationary concerns.

The Greenback fell more than what the events would imply, so a larger scale consolidation could have already started in the currency following the recent gains and the marginal new high yesterday. With the EUR/USD pair nearing the 1.1450-1.15 support zone, the USD/CAD hitting 1.33 and the AUD/USD touching 0.7350, a meaningful counter-trend move would be timely in the surging reserve currency.

WTI Crude Oil, 4-Hour Chart Analysis

Gold continued to drift lower before the Dollar’s reversal and it hit $1262 for the first time since lat December before bouncing back above the $1270 level in late trading. Crude oil also fell sharply in early trading, and the WTI contract traded with a $64 handle before rallying back to $66 per barrel.

The OPEC meeting, which is expected to result in a supply increase by the cartel made the crucial commodity very volatile in recent days, but we expect the bearish trend to continue, with a likely dip to the $60 level in the coming weeks.

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 279 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

Market Update: Dow’s Slide Hits Eight Days as Trade Risks Reemerge 

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U.S. stocks retreated Thursday, with the Dow Jones Industrial Average extending its losing skid to eight days as uncertainty over international trade undermined risk appetite.

Stocks Turn Defensive

Dow industrials were off 196.10 points, or 0.8%, by the close to settle at 24,461.70. That was the index’s worst settlement in three weeks.

The Dow’s losing skid is now the longest since March 2017. Another fall on Friday would bring the skid to nine days, the longest since 1978.

The broader S&P 500 Index fell 0.6% to close at 2,749.76. Seven of 11 primary sectors fell, led by energy and other commodity-sensitive sectors.

Meanwhile, the Nasdaq Composite Index closed down 0.9% at 7,712.95. The technology-heavy average closed in record territory on Wednesday.

Investor fear over a U.S.-China trade rift returned on Thursday, sending the VIX Volatility Index sharply higher. Wall Street’s gauge of investor anxiety climbed to a session high of 15.18 on a scale of 1-100 where 20 represents the historic average. The index would later settle at 14.68 for a gain of more than 14%.

Trade War Looms Large Over Market

U.S.-China trade tensions were back in focus Thursday after U.S. policymakers urged Google to end its business ties with Huawei, a leading Chinese smartphone maker. Congress recently banned U.S. firms from selling products to Chinese telecommunication giant ZTE, a move that practically shuts down the company.

Under President Trump’s orders, Washington announced last Friday it would implement a 25% tariff on up to $50 billion of Chinese goods, including semiconductors. Trump says additional tariffs of 10% will be applied on $200 billion of Chinese goods should Beijing choose to retaliate.

The first round of tariffs will come into force July 6.

In theory, tariffs will make American-made goods cheaper than imported ones, thereby encouraging consumers to purchase from local producers. Importers themselves will have to pay an additional tax on certain Chinese products they bring into the country – costs that are passed on to the consumer.

Saudi Arabia Proposes Crude Output Hike Ahead of OPEC Meeting

Saudi Arabia, OPEC’s de facto head, is encouraging fellow producers to support a deal that would see oil production rise by one million barrels per day. However, Iran remains the key holdout in the deal, with the country’s energy minister suggesting that a compromise is unlikely before the cartel meets Friday.

Despite Iran’s opposition, the biannual meeting in Vienna is expected to result in the first coordinated output hike since the cartel decided to constrain supplies all the way back in 2016.

The Saudis are banking on a slowdown in U.S. shale production over the next two years until pipeline bottlenecks are solved in the energy-rich Permian Basin, energy minister Khalid al-Falih said Thursday.

International crude prices declined sharply on Thursday, with Brent futures reaching a session low of $72.94 a barrel on London’s ICE Futures exchange. The global benchmark was last down $1.57, or 2.1%, at $73.17 a barrel.

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 462 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

It’s Getting Hot

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Hi Everyone,

Welcome to the first day of summer!!

Top news in crypto-land today is the flash announcement from world-famous rapper Akon, who is now getting into the ICO market with his own crypto called Akoin.

It doesn’t stop there though. Apparently, his vision includes building a brand new crypto city in Senegal to use the currency exclusively.

I suppose with the recent updates from the in the United States it would be very difficult to raise money for an ICO of the coin there. Perhaps Akon can do some other type of token introduction without raising money from the public to get started.

In Senegal of course, this isn’t the first attempt at localized currencies in the region.

As we’ve been saying, the real need for Bitcoin and other decentralized currencies comes specifically from emerging markets. Only once natural growth picks up there, will the institutions get involved. If that takes a day or a year, nobody can say.

Today’s Highlights

  • Dollar Rising
  • Gold Falls Further
  • Crypto Ramps up Regulation

Please note: All data, figures & graphs are valid as of June 21st. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Stocks are mixed to negative today but the currency markets are in the throes of a strong US Dollar swing.

This is primarily the result of the new direction in policy from the US Federal Reserve, which is planning to increase interest rates while the rest of the world largely sustains their very low rates.

We’ve discussed before how the Dollar may be reversing the trend but now we can see that it is at its highest level in almost a year.

On this chart, I’ve put a Fibonacci Retracement line. For those of you who are green on technical analysis, fib lines are used to predict the likelihood in nature of a specific price being reached, according to Fibonacci’s patterns found in nature.

As we can see, we’re now approaching the 50% level.

 

Metals Moving

The main mover lately has been gold and other precious metals which are currently dropping like it’s hot.

As the Dollar get’s stronger gold tends to get weaker as you can buy more ounces of gold with a single dollar.

The recent slide has brought us all the way back to the medium term trend line that we’ve been watching for the last year.

Of course, everyone draws their trendlines a bit differently, but for those that are bullish on the long-term prospects for precious metals, this might be a good time to start looking for an entry.

On the other hand, the hotter it gets, with the USD and other reasons, the more gold tends to melt.

Also watch out for the Bank of England today, which will deliver its decision (most likely not to raise rates) at noon in London.

Though there will be no press conference following this decision, Governor Mark Carney will be speaking later tonight at the Mansion House Dinner.

Crypto Regulation

As we go forward, the role that governments play in cryptocurrencies is increasing at a rapid pace.

In response to hacks on Coinrail and bithumb, the government of South Korea has already released the details of a new bill to regulate crypto exchanges.

Europol is also ramping up efforts to get a handle on the space and will be meeting this week with more than a dozen major crypto exchanges, discussing anti money laundering initiatives.

Here at eToro, we’re doing our part as well. Yesterday, our very own Iqbal Gandham,UK Managing Director, addressed the Treasury Select Committee in London and did an amazing job representing the crypto industry.

Iqbal is not only the managing director of eToro UK but he is also the Chairman of Crypto UK self-regulatory body and a huge advocate for the sensible regulation of cryptocurrencies.

You can catch the recording at: https://www.parliamentlive.tv/Event/Index/252986ff-cec8-4647-a208-787618136dfb

The more clarity we see from global governments about how the space will be regulated the more people will feel free to invest and use cryptocurrencies regularly.

Let’s have an awesome day ahead!

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.

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 103 rated postsSenior Market Analyst at Etoro.com.




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