Equities Consolidate Post Profit Booking Amidst Trade Deal Uncertainties

Karthik Subramanian

Karthik Subramanian has been a professional trader and fund manager over the last 18 years. He is basically a software developer who made the transition to financial domain around 18 years back as the attractiveness of the financial markets proved too much for him. He lives in Chennai in India along with his wife and son. He began his career as a software developer in 1999 and then gradually moved into the financial industry as he began trading stocks in his pastime. He then moved into the financial markets full time and then shifted his focus to the FX markets due to the liquid nature of these markets. Since then, he has been trading FX diligently and his favourite pair are the EURUSD and EURJPY. Over the last couple of years, he has found blockchain to be of high interest and considering his background in software and finance, he has since assembled a team of highly talented developers who have since worked on a variety of projects like crypto exchanges and blockchain architecturing. Now, he balances his time between trading and commenting on both the FX and crypto markets. He has worked with many publications including FX Street and Finance Magnates, which has helped him gain experience and also recognition across the industry. He loves to write and this passion has helped him to reach out across the FX and crypto industry. Right now, he works on his pet projects in the FX and crypto industry and spends his time writing and managing his blockchain team and helping it to reach higher.

European equities

Equities Consolidate Post Profit Booking Amidst Trade Deal Uncertainties

November 9, 2019
Profit Booking
White House officials

Conflicting comments from White House officials on developments surrounding trade deal proceedings brings dovish influence to the market. Traders look to macro data for short term trading cues. 

Summary: The global equity market is seeing a slide in the price of major indices and stocks as traders took to profit booking activity on last trading session of the week. Further, uncertainties influenced by comments from US officials stating that no specific agreement for the phased rollback of tariff on Chinese goods has been prepared yet regardless of recent headlines took the wind out of market bulls causing risk appetite to die down overnight. However, expectations for further comments from US/China to mitigate the bearish cues have kept risk assets consolidating within a familiar price range.

European market saw major indices and key stocks take a sharp dip following the dovish opening on broad-based risk-averse investor sentiment and profit booking activities. In the forex market, USD continues to stay strong near three-week highs hit in the previous sessions while risk-averse investor sentiment pressured major global currencies resulting in dovish price action across Asian and European market hours. 

Precious Metals: Rare metals traded flat despite broad-based risk aversion in the global market. Despite the high level of risk asset sell-off, the fund flow towards risk assets remained low as the costly exchange rate for traders from major global markets on account of positive USD kept investors focus away from precious metal market leaning more towards other cheaper options such as safe-haven currencies. 

Crude Oil: Crude oil price declined sharply in the global market with price falling by nearly 1.30% on both major international benchmarks. The decline was influenced by fresh uncertainties surrounding the Sino-U.S. trade deal which is viewed as a sign of reduced demand for crude oil demand and consumption. 

AUD/USD: The pair is seeing dovish price action in the global market owing to risk aversion led by fresh uncertainties surrounding the trade deal. The pressure was strong enough to offset positive cues from better than expected Chinese trade surplus which combined with firm USD in the global market kept AUD bulls under considerable bearish pressure. 

On The Lookout: Given the fact that price action of the global financial market this week has been dictated by headlines surrounding Sino-U.S. trade deal proceedings, traders and analysts await further updates following comments from US officials last night who stated there was no official agreement to roll back tariff on Chinese goods. Unless US representatives or Chinese officials come up with a compromise or refute the US official’s statement, any lingering positive influence will have evaporated by end of today’s trading session paving way for sharp declines when the trading session begins next week.

On the macro calendar schedule, traders await US Michigan Consumer sentiment/expectations, Canadian Housing Starts, Building Permits, Unemployment rate, and Employment change data for short term profit opportunities. On the earnings calendar schedule, US market will see the release of quarterly financial reports from Ameren, DXC Technology & Duke Energy. 

Trading Perspective: Despite positive earnings cues from quarterly data release in the US market last night, US stock and index futures trading in the international market saw dovish price action ahead of Wall Street opening as uncertainties surrounding trade deal shot up following conflicting updates from US official released yesterday. 

EUR/USD: The pair is trading below mid 1.10 handle relatively immune to broad-based risk aversion on trade deal uncertainties. While firm USD in the global market keeps EURO bulls under pressure, upbeat German macro data helped underpin lingering positive influence surrounding EURO. Traders now await US macro data for short term profit opportunities. 

GBP/USD: The pair is trading with strong bearish influence pushing the price below the 1.285 handle as scandalous headlines surrounding both parties and dovish BOC forward guidance came as below for GBP bulls. Firm USD also adds considerable pressure to GBP but the pair has managed to contain loss above the 1.2800 handle while traders await US macro data for short term profit opportunities.

USD/CAD: The pair is trading with a considerable amount of bullish influence pushing past 1.32 handle post yesterday’s sharp surge in USD value. Further, dovish cues surrounding CAD on declining crude oil price and resurfacing trade deal uncertainties give USD bulls solid fundamental support. Traders now await the US and Canadian macro data for short term profit opportunities. 

Please feel free to share your thoughts with us in the comments below. 

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