x
Breaking News
0

Traders Tread Lightly As Tensions Remain High

By CMC Markets (David Madden)Market OverviewAug 11, 2017 16:07
uk.investing.com/analysis/traders-tread-lightly-as-tensions-remain-high-200196658
Traders Tread Lightly As Tensions Remain High
By CMC Markets (David Madden)   |  Aug 11, 2017 16:07
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Europe

Stock markets in Europe are still feeling the pressure from the tension surrounding North Korea. When President Trump declared that the US is ‘locked and loaded should North Korea act unwisely’, investors became even more fearful. For the time being, tensions seem to be going one way, and equity markets are losing ground because of it. The high drama has prompted traders to take their cash out of stocks, and invest it in safer assets like gold.

Old Mutual (LON:OML) announced a 37% jump in first-half operating profits, and it upped its interim dividend. The company stated it is on track to break-up in 2018 and is aiming to spin off two businesses via an initial public offering (IPO). Old Mutual took the decision to fragment due to changes in the regulatory environment. The company raised £108 million from the sale of Old Mutual Asset Management. The stock price of Old Mutual is down 2.3% on the day.

Mining companies are losing the most ground on the London market as the copper market has been hit by profit taking recently. The red metal it its highest level in over two years on Wednesday, and we have a retreat since then. The lower than expected import data and inflation figures from China during the week, paint a picture the country is cooling down a bit. Anglo American (LON:AAL), BHP Billiton (LON:BLT), Rio Tinto (LON:RIO) and Glencore (LON:GLEN) have all lost ground today.

US

US equities have bounced back today as a mixture of short covering and bargain hunting has set in.

The Dow Jones, S&P 500 and Nasdaq are all up on the day, but the gains they have made are tiny in comparison to what they have lost this week.

Tensions remain high between the US and North Korea and even though the US indices are showing small gains today, I wonder how long it will last ,as some traders have a habit of squaring up their positions before the weekend.

The inflation figures from the US showed us the cost of living increased slightly in July. On a month-on-month basis, traders were expecting a reading of 0.2%, and it came in at 0.1%, while the previous reading was 0.0%. The year-on-year figure for July was 1.7%, and that was an increase on June’s 1.6%, but it missed the estimate of 1.8%. The slight rise in the CPI report tells us that US demand is creeping up, but not at a particularly fast rate.

Dealers should not overlook the fact that CPI edged higher, but the undershooting of the forecasts left dealers feeling disappointed.

The hawks at the Federal Reserve would have liked to have seen a higher growth rate.

FX

The EUR/USD was helped by the US inflation report as it came in below analyst’s estimates. Several eurozone countries like Germany, France, Spain and Italy posted their inflation numbers today, and broadly speaking they were in line with expectations, but traders didn’t have much of a response to it. The single currency got its boost from the softer than anticipated US inflation data. The euro managed to climb above the $1.18 mark, but seeing as it has been in decline since the start of the month, dealers are wondering if it will last.

The GBP/USD briefly traded above the $1.30 mark as the greenback nudged lower in the wake of the US inflation report. Sterling resumed the downward trend that it has been in since last Thursday. It is worrying for the pound if it can’t hang onto gains in a short space of time. There were no major economic announcements from the UK today, so the move is down to US dollar buying.

Commodities

Gold jumped higher on the back of the US CPI numbers missing estimates, but the metal pulled back afterwards when it sunk in that CPI rose slightly. The metal created a new two month high, and is only a $10 dollars away from the 2017 high of $1296. Gold has enjoyed a winning streak recently in light of what is going in global equities. The asset has traditionally been viewed as a relatively safe place to invest in whenever times are turbulent.

WTI and Brent Crude oil are weaker on the day after it was revealed yesterday that oil production by OPEC members actually rose in July. The 0.5% increase in oil production last month added to the global supply-glut, but it also highlights that members of the cartel serve their owns interest first, rather than what is in the best interest of the group. A representative of Gazprom (MCX:GAZP) Neft (MCX:SIBN) stated yesterday that oil production should revert back to previous levels once the oil production freeze runs out in March 2018. This is adding to the selling pressure.

Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

Original post

Traders Tread Lightly As Tensions Remain High
 

Related Articles

Traders Tread Lightly As Tensions Remain High

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

 
Are you sure you want to delete this chart?
 
Write your thoughts here
 
Replace the attached chart with a new chart ?
Post
Post also to:
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
 
Replace the attached chart with a new chart ?
Post 1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The inherent concept of such investments means that they are not suitable for the investor seeking income from such investments, and are only suitable for those who have the required experience and understand the market risks. You should carefully consider your investment objectives, level of experience, and seek advice from an independent financial advisor if you have any doubts.
Continue with Google
or
Sign up with Email