Asia Morning Sep 11

Asia Morning: US Stocks Wiped Out Previous Gains, Pound Slumps

On Thursday, U.S. stocks closed lower and wiped out most of the gains in the prior session. The Dow Jones Industrial Average lost 405 points (-1.5%) to 27534, S&P 500 dropped 59 points (-1.8%) to 3339 and Nasdaq 100 slid 241 points (-2.1%) to 11154.

Nasdaq 100 daily chart:

Source: Gain Capital, TradingView

Energy (-3.67%), Automobiles & Components (-3.05%) and Technology Hardware & Equipment (-3.01%) sectors led the decline. Approximately 61.8% of stocks in the S&P 500 Index were trading above their 200-day moving average and 41.4% were trading above their 20-day moving average.

Regarding U.S. economic data, PPI fell 0.2% on year in August (-0.3% expected), while initial jobless claims totaled 884,000 in the week ending September 5 (850,000 expected), same as the prior week.

Later today, the U.S. Labor Department will release August CPI (+1.2% on year expected).

European stocks were broadly lower. The Stoxx Europe 600 Index lost 0.4%, Germany's DAX 30 slipped 0.2%, France's CAC 40 fell 0.4% and U.K.'s FTSE 100 was down 0.2%.

The benchmark U.S. 10-year Treasury yield retreated to 0.6772% from 0.7001% Wednesday.

WTI crude oil futures (October) slid 2.0% to $37.30 a barrel. The U.S. Energy Information Administration (EIA) reported that crude oil inventories rose 2.03 million barrels in the week ending September 4 (-1.96 million barrels expected).

Spot gold marked a day-high near $1,966 before closing flat at $1,946.

On the forex front, the U.S. dollar showed resilience as the ICE Dollar Index ended up 0.1% on day to 93.35, after marking a day-low at 92.70.

EUR/USD gained 0.2% to 1.1826. The European Central Bank kept its key rates and 1.35 trillion euros Pandemic Emergency Purchase Programme unchanged as expected, while lifting its 2020 eurozone GDP growth forecast to -8.0% from -8.7% previously. ECB President Christine Lagarde said "the Governing Council discussed the appreciation of the euro" and "will have to monitor carefully such matter", as exchange rate fluctuation could impact inflation.

GBP/USD plunged 1.4% to 1.2814. The European Commission warned the U.K. that "violating the terms of the Withdrawal Agreement would break international law" and called on the British government to withdraw its plan to overwrite parts of the Northern Ireland protocol by the end of the month. However, U.K. cabinet minister Michael Gove said they had made it "perfectly clear" it would not withdraw the bill.

On the other hand, U.K. July GDP growth (+6.7% on month expected) and industrial production (+4.1% on month expected) will be released later today.

USD/JPY was relatively flat at 106.15.

Commodity-linked currencies were broadly lower against the greenback. AUD/USD slipped 0.2% to 0.7265 and NZD/USD was down 0.5% to 0.6648, while USD/CAD gained 0.3% to 1.3186.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.