Summary:

  • US indices took a hit on Monday mainly due to a sell-off seen on FANG
  • US President Trump is to unveil details as for tariffs on Chinese products by Friday
  • RBA minutes offered no new clues regarding monetary policy, Antipodean currencies slightly lower on the day

The first session on Wall Street belonged by far to bears as US major indices ended the day with severe losses following declines seen across the old continent. The prime reason was a powerful sell-off of so-called FANG (Facebook, Amazon, Netflix and Google), and as a result the S&P tech subindex dropped ultimately 2.1% being the worst performing sector of the index. What led to such substantial falls? First and foremost, one needs to single out Facebook as its shares tumbled as much as 6.8% chiefly due to concerns about data management in the company as information concerning approximately 50 million Facebook accounts had been accessed to Cambridge Analytica without specific permission around the 2016 presidential election (do notice that the firm helped Donald Trump win the presidency back then). The yesterday’s session proved to be the worst one for Facebook since March 2014, and in a particular way contributed to soured moods on Wall Street. Consequently, the SP500 (US500) dropped 1.4%, the NASDAQ (US100) declined 1.35% while the Dow Jones (US30) finished 1.85% lower.

link do file download linkThe US30 moved down to a crucial technical support and for that reason bulls could not be doomed to failure yet. Once the price stays above a 23.6% retracement a possible swing toward 25800 points seems to be reasonable. On the other hand, a breakout of the mentioned line would enable bears to push lower even as low as 23200 points. Source: xStation5

Apart from the hideous session in the US it’s also worth mentioning the tariff story as we have been offered more details of late. Namely, according to Washington Post US President Donald Trump is likely to reveal his plans as to imposition a package of $60 billion in annual tariffs on China. The package could be applied to more than 100 products, which Trump claims were developed by using trade secrets China stole from US companies. Furthermore, the Trump administration is to press other countries to ally with the US is pushing against China’s trade policy in exchange for exemption from steel and aluminium tariffs – all of that sounds like a perfect bargaining chip being in the hands of Mr Trump. The US dollar has responded quite indifferently thus far, however, the EURUSD keeps trading clearly above a 1.23 handle being pushed higher by the ECB leaks yesterday.

link do file download linkThe US dollar index (USDIDX) appears to be trapped within range trading being in the midst of it at the time of writing. One may suspect that this theme is going to continue at least until the tomorrow’s Federal Reserve meeting when increased volatility may come in. Source: xStation5

Last but not least, the Reserve Bank of Australia unleashed its minutes from the March meeting when all rates stayed untouched. To be honest, the bank did not offer any new hints with regard to monetary policy reiterating that the rising AUD would slow economic recovery making the inflation target probably harder to obtain. It also stressed the strong backdrop of the domestic labour market underlying at the same time that it has yet to translate into any pick-ups in wage growth. The RBA mentioned high households’ debt which in its eyes added to uncertainty over consumption.

link do file download linkAfter the pair broke through its notable support zone it has not been able to recover and get back above it. Therefore, one may assume that selling pressure could prevail going forward until commodity-related currencies remain on the back foot. Source: xStation5