News

U.S. Stocks Tumble on Trade War Woes, Dollar Rallies

Equities

Major U.S. indices reversed earlier session gains and ended lower in a wild session. The news that Trump administration is ready to slap tariffs on more Chinese products if the talks between Trump and Xi fail to produce a trade deal weighed on the markets. Market participants are afraid that a full-blown trade war between China and the United States would lead to an economic slowdown. The Dow Jones Industrial Average futures traded at a four-month low of 24086 but trimmed losses to settle at 24392. The S&P500 futures traded at 2605, the lowest since May 3rd, and pared losses to close at 2640. Meanwhile, the Nasdaq futures tumbled to a six-month low of 6580 and retraced partial losses to 6722. However, the sharp drop attracted buyers especially that some technical indicators signaled that the stock market is oversold. The stock futures recovered part of the losses during the Asian session.

USD

The dollar index which measures the greenback against a basket of major currencies rallied to a high of 96.82, slightly short from posting a fresh 2018 high. The dollar gained support from the safe haven bid following fresh developments in the trade disputes between China and the United States. Moreover, the steep fall in equity prices backed the demand for the buck. The USDJPY is hovering near a three-week high at 112.86.

Metals

Gold prices drifted lower as the U.S. Treasury yields rebounded from a four-week low. The gold ounce traded at a one-week low of $1223 ahead of the European trading session. The silver ounce traded at a three-week low of $14.38 

Oil

Oil prices edged lower due to the ongoing weakness in the stock market and the fears of oversupply. The plunge in the global stock market signals that the world could be facing an economic slowdown which could lead to lower oil demand in 2019. Moreover, the oil production from the United States, Russia, and Saudi Arabia reached a high of 33million barrels per day in September. Russia said that it would provide enough supply to meet the demand as the U.S. imposes sanctions on Iran. The West Texas Intermediate crude futures settled at $66.67, and the Brent futures closed at $76.80. The American Petroleum Institute will report the weekly US crude oil stock later today.

Major Economic Events

GMT Country Event Expectation Previous
9:00 EU GDP (QoQ)  P 0.4% 0.4%
9:00 EU GDP (YoY)  P 1.9% 2.1%
14:00 US CB Consumer Confidence (Oct) 136.0 138.4
19:30 CA BoC Gov Poloz Speaks    
20:30 US API Weekly Crude Oil Stock   9.880


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