Varchev Finance: Trading day in one post – 07.09.2018

Asian stock market: Asia markets were mixed in the morning of the last trading day of the week, amid a possible escalation in the U.S.-China trade war later today. The Nikkei 225 fell by 0.96 percent in the morning. U.S. President Donald Trump had hinted to columnist James Freeman that Japan could be next in the trade cross hairs of America, according to a Wall Street Journal article. Down Under, the ASX 200 continued the downward trend by sliding 0.73 percent. The Greater China stock indexes largely bucked the overall trend by trading in positive territory during the morning, with Hong Kong’s Hang Seng index edging up by 0.62 percent. The Shanghai composite was also up by 1.13 percent while the Shenzhen composite saw gains of 1.275 percent.


FX market: The continuing US-China trade war may also escalate today against a backdrop of the already strained relationship between the two economic superpowers following a report stating that the Trump administration may charge additional $ 200 billion in Chinese commodities today. China’s trade ministry did not delay with an answer that it would hit US tariffs. The dollar index, which monitors the performance of the greenback against a basket of other currencies, stood at 95,032, below its peak in the previous session. The yen has dropped some of its initial profits against the dollar, but should not be written off, as news related to the trade war or US-Canadian relationship with Nafta can quickly spark a turbulent reaction. With negative news on both front, traders will immediately sell their risky assets and rush to safe havens for hedging – then the Japanese yen and the Swiss franc will be in fashion.


Commodities market: Oil prices will probably not exceed $ 70 a barrel after higher US oil inventories. The OPEC + agreement continues to work to stabilize markets, with prices currently averaging around $ 70, although the US is criticizing rising prices. Prices are also supported by the US decision to re-sanction the main oil producer from OPEC Iran, which will stifle the oil industry and restrict supply, which may lead to price increases. GOLD seems to be totally losing its property as a Safe Haven tool, as it is traded for a day without reaction near the bottoms.


European stock market – European stock indices will start the session with declines, reflecting the high geopolitical risk. Today, the focus will be on NAFTA negotiations, with investors expecting a positive outcome. When I enter into a deal between the US and Canada, I expect support for the indices. At 15:30 we expect NFP data, and if the data differs significantly from the forecast, I expect increased index volatility and potentially deeper sales.


U.S. stock market: The big sales of technology companies led to losses for the Nasdaq and SP500 at the end of the session last night. However, Wall Street took a breath, as Chrystia Freeland, Canada’s foreign minister, said both parties in the NAFTA talks should return to the table with fresh ideas. Freeland said this is difficult, but both sides are aware of the impasse in which they are located and are making the necessary efforts to get out of the situation. At the end of the session, there were new positive rumors about this rhetoric: Lighthizer asks for rescheduling a meeting. Perhaps a sign that NAFTA talks with Canada are making progress is Lighthizer’s desire to reschedule a meeting that was supposed to take place yesterday afternoon. Canada placed most of their cards on the table and the US did not leave. Trump was optimistic that something would happen by the end of the week yesterday.


Economic calendar for the European and U.S. trading sessions:
09:00 Germany – Industrial Production
10:30 UK – Halifax House Price Index
12:00 Europe – Gross Domestic Product
15:30 USA – Nonfarm Payrolls
15:30 USA – Unemployment Rate
15:30 Canada – Employment Change
17:00 Canada – Ivey PMI

 Trader Aleksandar Kumanov

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