News of China accusing the US of playing little dirty tricks in the trade talk negotiations and demanding sincerity on behalf of the US or a drop of the talks all together, has resulted in a fresh wave of risk-off sentiment. Shares in mainland China tumbled on Friday as tensions between Beijing and Washington intensified while shares elsewhere in Asia were mixed.
US Stock Markets Record Bullish Close, Dow Jumps
Stock markets in the US closed on a bullish note on Thursday as sentiment was boosted by a strong set of earnings from Walmart and Cisco Systems while US data came in strong yesterday which helped prop up the markets. Meanwhile banks closed on higher rates; in fact, option expiration might have had a big role in the push to the upside, which means that yesterday may have been a shallow "bull-trap" rally. Major US index futures point to a lower US open on Friday.
EU Stock Markets Dip
European stocks traded lower on Friday morning as trade fears intensified with the Trump’s recent bid to blacklist Huawei and China’s statements that it’s getting weary of the US’s “games”. It is also important to note that the US is now reportedly considering instead of putting tariffs on EU cars, to restrict the actual number of EU car imports, which if true will have a far worse impact on EU car manufacturer exports to the US and we would expect to see DAX reacting to any related news or updates today.
Geopolitics Take Center Stage
Meanwhile, reports suggested Brexit talks between British Prime Minister Theresa May and main opposition leader Jeremy Corbyn will end in stalemate, and that this in turn could trigger a new process for parliamentary votes. Market participants will keep their eyes fixed on any major geopolitical developments while the economic calendar is rather light today.
Forex Preview: USD Higher
The USD is gaining across the board today, especially the USD/CNH should be closely watched as it nears the most important 7.00 mark. Meanwhile, the EUR/USD trading below $1.12 again and today’s consumer prices may give it more of push depending on the actual number, which may not surprise however, and end up having little impact.
Oil Prices Rise, Gold Stable, BTC Lower
Oil prices extended their rally on Friday morning and were on track for the first weekly gains this month, amid rising tensions in the Middle East stoked which could in turn lead to major supply disruptions. Elsewhere, spot gold stabilised after dropping below the $1,290 as markets turned to a risk-on mode yesterday. Today, spot gold may be in for some substantial gains as geopolitical concerns intensify.
Bitcoin saw its first bigger drop since the rally started on Friday, supposedly because of a big sell order in the amount of 3,645 BTC on Bitstamp last night which caused the cryptocurrency from its $8K+ mark to briefly below the $7k level. BTC/USD was last seen trading 8% lower at $7,340 as of 8:05 GMT this morning.
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