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XTB TRADEBEAT

Stocks lick their wounds after major declines

Summary:

  • Stock markets look for support after strong sell-off
  • What next for the US30, US500 and DE30
  • USDCAD pulls back from 3-week high post trade data  
  • NZD on the rise ahead of jobs release
  • Bitcoin attempts to rally after more declines

Monday saw stock markets around the globe plummet with the US30 recording its largest ever daily decline after falling more than 1000 points on the day. Today’s the markets have licked their wounds and attempted a recovery of sorts, but they remain vulnerable going forwards and the coming sessions will likely decide whether there will be another swoon lower. 

 The gloom spread to Europe with the Dax futures seeing a similar crash and S&P500 futures heading towards the lowest levels since October. The main reason behind the bloodbath was a rise in bond yields as investors started to worry about an impact of more restrictive monetary policies on the global economy and equity markets. It remains to be seen if these higher bond yields cause some actual damage in the near term and inflict a longer-term bear market. For now we take a look at the three major indices and crucial levels on the charts of the US30, US500 and DE30.

 It’s a relatively quiet afternoon ahead on the data front from north America with the release of trade data from the US and Canada the main event. The US trade balance for December came in at -53.1B vs -52.1B expected after a prior reading of -50.5B. The Canadian equivalent showed a fall to -3.2B from -2.5B prior with the consensus forecast for a -2.3B print. 

 The fortnightly GDT auction has concluded and the results have shown another large increase in the global milk benchmark. The latest result was an increase of 5.9% after a strong rise last time out of 4.9%. It is now three positive readings in a row and with each print exceeding the previous one it is clear that there is a strong upwards momentum to the price at present. This evening sees the latest jobs data from New Zealand and with the RBNZ meeting tomorrow it could be an interesting 36 hours for the Kiwi. 

Monday was the ugly day not only for equity investors but also for them being immersed in cryptocurrencies as Bitcoin was dropping during the past hours making a bottom a notch below $5900. Today has seen a fairly strong bounce with the market moving back above the $7000 level and the question now is whether a retest of the lows lies ahead or whether price can recoup some of the large recent losses. 

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