US Market Outlook 26 Oct 2018

Posted by Tim Sholl on 27-Oct-2018 00:14:06

Market volatility has spiked again as earnings numbers at large cap tech stocks Amazon and Alphabet were considered to slightly missed with a weaker outlook. Analysts have mixed opinions if such a slight miss should cause a 10% fall in the stock price , but so far the weakness has continued. Stock indices around the globe have been sold down sharply as the continued worries about trade disputes and the effect on the Chinese economy , Italian banks , Brexit , Middle Eastern tensions , rising US interest rates all cause investors to be cautious.

The US dollar has continued higher again against most major currencies due to the relative strength of the economy and the higher level of bond yields. We have seen a new yearly high for the USDCNH today even in the face of the Chinese central bank selling. We are also close to a yearly low for the EUR  , the GBP and the AUD.

Crude oil prices have been steady for past 3 sessions but overall it looks likely that prices will continue to fall on the large stockpiles and the reduction in demand from slower economic growth. 

Gold has been strong even in the face of the strong USD as fear of a continued slowdown increases safe haven flows.

US GDP for Q3 has just been released and it was strong at 3.5% and 4.2% annualised with consumption strong and price pressures muted which is a good result. US10 bond yield has dropped under the recent range and is trading at 3.09% as funds move out of stocks and back into bonds. This may increase the calls of from the market for the Fed to pause in their interest rate raising timetable.

Daily Chart - EURUSD - Strong USD and concerns with European banks continue to pressure the EUR. Close to yearly lows at 1.1301.



Topics: Trading, Market News, US Market Outlook