News & Analysis

Overnight on Wall Street: Tuesday 17/09/19

September 17, 2019

By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

Global markets were mostly trading in a risk-off environment. The drone attacks in Saudi Arabia had set a bearish tone in the markets ahead of key central bank meetings scheduled across the week.

The energy sector bolstered higher on Monday after fears of supply disruptions arise following the weekend attacks on a major oil facility in Saudi Arabia.

Aside from the energy sector, most sectors were flashing red. Wall Street closed the day in negative territory with losses ranging from 0.3-0.5%.

Currency Markets

In the FX market, the run to safe-haven currencies was immediate. We saw a few gaps across major pairs on Monday open. However, as we progressed through the day, major currencies were mostly weaker than the US dollar.

On oil-related news, the Japanese Yen initially jumped higher. The USDJPY pair dropped to 107.54 on the open but rebounded slowly above the 108.00 level and closed above the opening gap.

USDJPY (3-day Chart)


Source: Bloomberg Terminal

The Canadian dollar, a commodity-sensitive currency gathered strength and emerged as the best performer against the greenback.

USDCAD (Hourly Chart)


Source: GO MT4

Commodities

The attack on Saudi Arabia has triggered a rally in oil prices. Investors fear a significant supply disruption as the drone strikes have wiped out about half of the kingdom’s oil capacity which accounts for around 5% of the world’s crude oil supplies.

The US is blaming Iran despite Yemen’s Houthi rebels claimed responsibility for the attack. The sudden attack on the world’s largest exporter has caused probably the worst supply disruption the oil markets have seen in a while. Initially, there were reassurances that the oil market will be kept well-supplied.

President Trump appears to be prepared to tap emergency oil reserves if necessary. The national oil company in Saudi Arabia also stated that they will ramp up production to cover some of the losses.

The Saudi has enough inventories to cover about 26 days of exports according to Rystad Energy.

As of writing, WTI and Brent Crude is trading in the vicinity of $61 and $69. Both WTI and Brent Crude were trading above the 50-day and 200-day moving averages on Monday.

Gold surged higher on Monday as investors rushed to safety. The XAUUSD pair rose above the key psychological level o $1,500 on Monday before retreating lower as a stronger greenback weighed on the precious metal.

XAUUSD (Hourly Chart)


Source: Bloomberg Terminal

Key upcoming events

Westpac Consumer Survey, and GDT Price Index (New Zealand)
House Price Index, and RBA minutes (Australia)
ZEW Survey – Economic Sentiment, and Current Situation (Germany)
ZEW Survey – Economic Sentiment, and ECB Coeure Index (Eurozone)

Wednesday, 18 September 2019
Indicative Index Dividends
Dividends are in Points
ASX200WS30US500US2000NDX100CAC40STOXX50
0.06500.0140.089000
ESP35ITA40FTSE100DAX30HK50JP225INDIA50
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Disclaimer: Articles and videos from GO Markets analysts are based on their independent analysis. Views expressed are of their own and of a ‘general’ nature. Advice (if any) are not based on the reader’s personal objectives, financial situation or needs.  Readers should, therefore, consider how appropriate the advice (if any) is to their objectives, financial situation and needs, before acting on the advice.

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