Major US stock indices are stuck at the top, settling the 4th trading session near the historical highs on SP 500 and Dow Jones. Nasdaq keeps positive dynamics, but intraday growth has become much more cautious, as it often happens near the tops. Chinese indices feel much worse. The country's key indices were hit by the news of growing unrest in Hong Kong. Hang Seng has lost 4% this week. Shanghai's China A50 decreased by 2%, but feels worse than the most other markets.
Similar hope cooling is observed in the currency markets, where the Chinese yuan is retreating after a brief growth under 7.0 per dollar. Risk-sensitive currencies (JPY, CHF) also noted a more cautious approach of the markets. Equity markets are balancing at the top, from where they may drop with the monetary authorities' less dovish tone, as well as the frustration surrounding the progress in trade negotiations.
U.S. President Trump is back on track, threatening to raise duties if there is no Phase 1 deal. It is quite possible that the demonstration of progress in the negotiations affected not only market expectations, but also the central banks' policy.
For example, the Reserve Bank of New Zealand kept the rate unchanged, contrary to broad market expectations. Kiwi takes flight after this news. NZDUSD jumped 1.3% to above 0.6400 in less than a minute this morning. The RBNZ noted that they do not see a rush to soften the policy. Before that, the Federal Reserve Board made it clear that they intend to pause the rate cuts.
If this is a new trend, the world markets may lose their primary driver of growth in recent weeks. The dangerous decrease in the market volatility double the markets caution on prospects, assuming the possibility of both a soft landing and a very rapid drop if the news on world trade won't be able to maintain a positive mood.
FxPro UK Limited is authorised and regulated by the Financial Services Authority, registration number 509956. CFDs are leveraged products that incur a high level of risk and it is possible to lose all your capital invested. Please ensure that you understand the risks involved and seek independent advice if necessary.
Disclaimer: This material is considered a marketing communication and does not contain, and should not be construed as containing, investment advice or an investment recommendation or, an offer of or solicitation for any transactions in financial instruments. Past performance is not a guarantee of or prediction of future performance. FxPro does not take into account your personal investment objectives or financial situation. FxPro makes no representation and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by any employee of FxPro, a third party or otherwise. This material has not been prepared in accordance with legal requirements promoting the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and may not reflect the opinions of FxPro. This communication must not be reproduced or further distributed without the prior permission of FxPro. Risk Warning: CFDs, which are leveraged products, incur a high level of risk and can result in the loss of all your invested capital. Therefore, CFDs may not be suitable for all investors. You should not risk more than you are prepared to lose. Before deciding to trade, please ensure you understand the risks involved and take into account your level of experience. Seek independent advice if necessary. FxPro Financial Services Ltd is authorised and regulated by the CySEC (licence no. 078/07) and FxPro UK Limited is authorised and regulated by the Financial Services Authority, Number 509956.