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.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.