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US Market Outlook 23 Oct 2018

Posted by Tim Sholl on 24-Oct-2018 00:20:40

Stock indices around the globe are showing broad weakness and volatility is rising as fears of escalation in the trade dispute with China , fears of the EC rejecting the Italian budget and a hawkish US Fed that seems intent on continuing to raise rates is overshadowing what is looking like a strong earnings season. Generally companies are reporting strong numbers at or better than expectations , but the forward outlook is clouded by the rising cost of materials and interest rates and potentially inflation.

Analysts are now suggesting that these earnings may be the peak for a number of quarters and therefore looking for the stock indices to correct ,  something that has been happening for all of October. The three main US indices are at or below the 200 day moving average , a long term technical indicator used by many institutions and an indicator that has suggested support through all of 2018.

The US dollar remains firm against most major currencies , with even the JPY not yet trending higher although it is getting close. The EUR is slowly weakening on the concern that the Italian budget will be rejected , while the GBP moves up and down based on the market view of the probability that a Brexit deal can get done. The Chinese currency remains weak and is poised to blat higher over 7.000 at any time , and I am sure it is being bought agressively by the central bank.

As the stocks are sold down , funds are moving into bonds , with US 10yrs moving down to 3.15% from 3.21% last week.

Crude oil has sold off 2% today on concerns that growth and demand may drop away led by weakness in China.

Comments from China that they do not fear a trade war with the US ,has triggered a lot of fear that the escalation will continue well past the US mid term elections.

Latest prices

Dow Jones 24866 down 447 / S&P500 2710 down 44 / Nasdaq 7005 down 135.

EUR 1.1460 down 3 / GBP 1.3006 up 41 / JPY 112.100 stronger by 71 / DXY 95.67 down 8.

WTI Crude oil 67.82 down 154 / Gold 1237.90 up 16.20

Daily Chart - Spot Gold - XAUUSD - Sharply higher as market fear rises.

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Topics: Trading, Market News, US Market Outlook