Markets Pare Losses As Weekend Draws Near
MarketPulse | Oct 12, 2018 10:59
- Indices rebound
- Oil
- China trade data
Stocks pare losses as we head into the weekend
Investors look set for a day of reprieve on Friday, as futures and Asian trade overnight suggest we’re not on course for a third day of a selling frenzy.
Stock markets in Asia overnight have rebounded fairly well, with indices posting decent gains, although this does little to change the narrative of the week which has been quite brutal for investors. While everyone has been desperately trying to explain what the catalyst for the sudden and sharp sell-off was, the fact is that there is clearly underlying vulnerabilities and it didn’t take much for investors to flood for the exit.
Perhaps this is just a necessary and normal correction but the scale of the losses in such a short period of time are worrying. We may be seeing a paring of those losses heading into the weekend but that doesn’t give me any real confidence that markets won’t start next week in much the same manner as they’ve spent much of this.
Oil 1% higher as traders test the water following 8% decline from last week’s peak
Oil has been fully caught up in the frenzy over the last couple of days, with the sell-off possibly providing an ample opportunity for those that have profited from its more than 20% gains over the last couple of months alone, to lock in some profits. I don’t think it’s changed the view of many that oil could have further to run, rather they may see the last couple of days as being a blessing given the levels we’re now at.
Brent and WTI are around 1% higher on the day after falling around 8% from last week’s peak. Whether they can build on these gains will depend on how risk appetite holds up over the course of the day and, more importantly, on Monday once everyone has had an opportunity to absorb the events of this week and decide whether there’s any substance to the sell-off or it’s just a knee-jerk overreaction that presents opportunities.
China posts record trade surplus of $34.13 billion with the US in September
For all the talk of trade wars being easy to win, the trade data we’ve seen this morning suggests it may not be quite so straightforward. It would appear that when you throw a floating exchange rate into the mix – a sensitive issue in itself after the Treasury department found China not to be a currency manipulator, despite Trump’s constant claims to the contrary - the surplus country can be quite well shielded from tariffs while the deficit country will face quite the opposite reality.
Get The App
This would appear to be particularly true when the deficit country’s economy is boiling hot and tax reforms mean the consumer has a few extra dollars in their pocket to throw around. While this trend isn’t expected to continue as the tariffs become increasingly harsh, more consumer goods are thrown into the mix and pre-emptive order flow passes, it will no doubt be infuriating Trump and pleasing those that oppose such measures.
"DISCLAIMER: CMC Markets is an execution only 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
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.