News & Analysis

Overnight on Wall Street: Thursday 24 September 2020

September 24, 2020

By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

Global stocks ended mixed on Wednesday as risk sentiment remains fragile following fears of a second wave of an outbreak and the impact of the global economic recovery, geopolitical uncertainties, and limitations of central banks. European stocks fared better than its US counterparts. 


Source: Bloomberg

Wall Street plummeted due to a heavy sell-off in mega-cap tech stocks. The share price of Apple, Amazon, and Alphabet lost between 3-4% while Tesla’s share price tanked by more than 10%.

  • The Dow Jones Industrial Average lost 525 points or 1.9% to 26,763.
  • S&P 500 fell by 79 points or 2.4% to 3,237.
  • Nasdaq Composite ended 331 points or 3% lower to 10,633.

Currency Markets

In the FX space, the US dollar retained the King dollar status as investors fled to safety given the number of uncertainties in the financial markets. All G10 currencies were weaker against the greenback.


Source: Bloomberg

On the technical side, the US dollar index broke out of its bearish downtrend to test the 50-day moving average on the back of its haven status.

Amid a stronger US dollar, the Antipodeans currencies remained on the downside:

Australia – Rate Cut Calls and Retail Sales

Traders are digesting the possibility of a rate cut and the option of negative interest rates which until this week was not considered as a viable option. The Aussie dollar was also under pressure following downbeat Retail Sales figures. The seasonally adjusted estimate fell 4.2% (-$1,276.3m) from July 2020 to August 2020.


Source: abs.gov.au

The Antipodean currency remained among the worst performers. As of writing, the AUDUSD pair dropped further to 0.70 level.


Source: GO MT4

New Zealand – RBNZ Status Quo

In their statement yesterday, the RBNZ reflects the possible need for further monetary stimulus and the instruments include: 

  1. Funding for Lending Programme (FLP), 
  2. A negative OCR 
  3. Purchases of foreign assets.

The RBNZ has maintained nearly the same statement which was relatively in-line with expectations. 

PMI Surveys

A series of preliminary PMI figures were released on Wednesday in the US, Germany and Eurozone area. While we note an uptick in the manufacturing sectors, there is a decline in services activity following the ongoing social distancing measures. 

Commodities

Crude oil prices remain underpinned by the fears of a second wave of an outbreak in the European regions, a stronger US dollar and a bearish API report. As per the weekly crude oil stock report from API, inventories rose from previous -9.517M to 0.691M in September 18. 

On the other side, the EIA report shows that crude oil stocks changed at -1.6 million in the week ending September 18 which did provide some support to the oil market. However, crude oil prices remained on the downside amid the current dynamics surrounding the oil market. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading around $39.49 and $41.42 respectively.

Gold

The precious metal is bearing the brunt of a stronger US dollar and the lack of progress of the fiscal side. The XAUUSD pair plummeted below the key psychological level of $1,900. As of writing, the pair is currently trading around $1,865 level.


Source: GO MT4

By Deepta Bolaky
 @DeeptaGOMarkets

Key upcoming events

  • Trade Balance, Exports and Imports (New Zealand)
  • BoJ Monetary Policy Meeting Minutes (Japan)
  • SNB Interest Rate Decision and Monetary Policy Assessment (Switzerland)
  • Economic Bulletin (Eurozone)
  • IFO – Business Climate, Current Assessment and Expectations (Germany)
  • Jobless Claims, New Home Sales and Fed’s Williams Speech (US)
  • BoE’s Governor Bailey Speech (UK)
Thursday, 24 September 2020 
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
0.527 0 0.109 0.024 0 7.332 2.357
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0 0 0 0 0 0 0


Disclaimer:  The articles are from GO Markets analysts,  based on their independent analysis or personal experiences. Views or opinions or trading styles expressed are of their own;  should not be taken as either representative of or shared by GO Markets.  Advice (if any),  are of a ‘general’ nature and not based on your personal objectives, financial situation or needs.  You should therefore consider how appropriate the advice (if any) is to your objectives, financial situation and needs, before acting on the advice.  If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.

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