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Worst Day on Wall Street Since Jan 3

Wall Street closed deeply in the red on Monday. The Dow shed over 600 points and the S&P dumped 2.5% in the worst trading day since 3rd January. Investors rushed to take risk off the table as China raised tariffs on US imports, a retaliatory measure to the increase by Washington last week. Whilst the Dow and the S&P were hit hard, the Nasdaq was hit harder.

The Nasdaq plunged 3.4% as the tech sector was not only hit by trade concerns but also by news that the Supreme Court has said that App Store customers can sue. Apple. Apple lost 5.8% on the news, Amazon was off 3.5% and Microsoft dropped 3%. In general, the stocks which had been among the top performer’s this year suffered the worst losses.

Asian markets extended losses overnight, although the selloff was limited compared to the bloodbath on Wall Street. European and US futures are also in the black, with risk appetite finding some support from Trump’s comments that he expects trade negotiations to be successful. Market sentiment remains very fragile. Whilst Trump’s comments offered some support to market sentiment overnight we suspect it will take more than that to repair the damage done. Investors will want to see concrete evidence of progress after Trump’s 180 degree turn last week spooked the markets.

More to come?

The fact that Trump is considering slapping tariffs on a further $300 billion of Chinese imports is keeping investors jittery. The impact on the Chinese economy would be significant, potentially pulling China’s GDP a couple of percentage points lower. As we have seen, concerns over a slowdown in China can impact sentiment towards the health of the global economy severely.

Dollar steady despite increased expectations of a Fed rate cut

Flows into safe havens such as US treasuries have remained strong. US treasury yields remain nears 6-week lows. CME Fed Funds futures show the market is now pricing in a 70% probability of a Fed rate cut this year, up from around 50% after the previous Fed meeting.  Whilst the dollar is trading flat versus a basket of currencies, the euro is strengthening versus the buck, up 0.15% in early trade on Tuesday.

GBP sub $1.30, UK jobs data up next

The pound remains firmly below the key $1.30 level as the Tory Labour divide looks set to bring cross party Brexit talks to an end. Whilst investors will focus on Brexit developments, or the lack thereof, the UK jobs report could add pressure to the pound. Unemployment is expected to remain steady at 3.9%. Wage growth, the most closely watched component of the report is expected to show that wage growth slipped back from its decade peak of 3.5% to 3.4% in the three months to March.

17-5-2019

Pound below $1.28 as Theresa May prepares to leave
Wall Street closed higher for a third straight session overnight as solid economic data and robust earnings from the likes of Cisco and Walmart boosted sentiment. Investors put US China trade dispute anxieties behind them and continued to jump back into equiti… Read more

16-5-2019

Trump's Visible Hand Drives Markets
The Dow and the broader US market extended the relief rally on Wednesday amid easing trade tensions. News that Trump would restart trade talks with China boosted optimism that the two powers could avoid a prolonged, economically damaging trade war. But it woul… Read more

15-5-2019

Stocks Rebound with Chinese Stimulus Hopes
Asian markets followed Wall Street higher overnight as trade war fears eased. Markets across Asia rebounded from 3 ½ month lows on a softening of stance from Trump and amid growing expectations of further stimulus from the Chinese government. Despite the advan… Read more

14-5-2019

Worst Day on Wall Street Since Jan 3
Wall Street closed deeply in the red on Monday. The Dow shed over 600 points and the S&P dumped 2.5% in the worst trading day since 3rd January. Investors rushed to take risk off the table as China raised tariffs on US imports, a retaliatory measure to the… Read more

13-5-2019

Futures Plummet As Investors Eye Trade Dispute Impasse
As we head into the new week, trade tensions will remain a key focal point for the markets and risk sentiment. In the UK specifically, Brexit and Theresa May’s ability to cling to power ahead of next week’s European elections will be an important driver of dom… Read more

10-5-2019

Yield Curve Inverts But "Beautiful Letter" Keeps Deal Hope Alive Despite Tariff Increase
Global equity markets were mixed as investors digested the latest headlines from the US – China trade talks. Asian markets pared earlier gains, European bourses are pointing to a stronger open, whilst US futures head south. The mixed response from the market r… Read more

9-5-2019

China broke the deal and bullish spirits
Another day, another market moving comment from Trump. Wall Street fell for a third straight session overnight and Asian markets took another step lower after Trump portioned blame on China for a deal not being done. “China broke the deal”. These comments clea… Read more

8-5-2019

Markets continue to price in higher tariffs starting Friday
Asian markets followed Wall Street lower overnight as investors continued to fret over the unravelling of trade negotiations. For a third straight session investors are switching out of riskier assets and into havens such as government bonds, gold and the Japa… Read more