Varchev Finance: Trading day in one post – 26.06.2018

Asian stock market: Asian markets declined on Tuesday, with China markets lagging the region as investors weighed an escalating trade dispute between the U.S. and China. Japan’s Nikkei 225 edged down by 0.52 percent, but was off its intraday low, as major sectors came under pressure. Greater China markets underperformed their regional peers. The Shanghai composite fell 1.45 percent in morning trade and the smaller Shenzhen composite lost 0.53 percent. Over in Hong Kong, the Hang Seng Index declined 1.28 percent as all sectors but telecommunications traded lower. Other major markets in Asia also put in poor showings, with South Korea’s Kospi sinking 0.92 percent and Australia’s S&P/ASX 200 edging down by 0.4 percent.


FX Market: Over the night, Peter Navarro, a Trump administration trade advisor, made a statement that reflected in a big spike at the yen crosses. He commented that the president’s trade practices are widely misunderstood, and that the US does not intend to impose investment restrictions. Hedge funds are increasingly optimistic about the dollar, according to CFTC’s updated speculative data. Net USD positions recorded the sharpest change from short to long net positions since 2003. here. In just one week, net positions in USD for large investors rose from -22,084 to 134,925 contracts. Net positions moved to green territory for the first time this year after the USD 5 rally since mid-April. Looking at the major currency pairs with USD, we do not see good purchase prices, but we need to keep in mind the strong foundation and any greenback adjustment to be used to open new positions or add to existing ones.


Commodity market: Oil ministers from OPEC+ have agreed to boost oil production by signing an agreement to increase by 1m euros. barrels per day. However, the actual increase will be up to 800,000 barrels per day as part of OPEC countries do not have the technical opportunity to increase yields. Saudi Energy Minister Khalid al-Falih said in the morning that no one should expect “immediate floods” of oil and a collapse in prices. It seems that the traders are also of the opinion. The price rose by nearly 2% to over $67 a barrel. In the medium term, I expect black gold to stay at $65- $70 a barrel.


European stock market: European indices will start the session with cautious profits. The news that the US will not restrict Chinese investments in the technology sector is well accepted by traders. This is seen as a step forward towards a diplomatic solution to the misunderstandings between the two largest economies in the world. Today there are no major economic reports, so the attention of all market participants will be the rhetoric of the trade war.


U.S. stock market: The US economy is looking more and more scandalous and more scathing, with the expectation that GDP will show a 4% growth soon. According to the Trump administration, last week’s market deal was a great exaggeration from traders, with the indexes testing their historic peaks soon. Overall, markets have reacted positively to signals that the US will protect its technology ownership without imposing restrictions on China. If this really turns out to be true, I expect a new tide of energy in the bulls that will take control of the short-term movement of the main US indices.


Economic calendar for the European and U.S. trading sessions:
12:00 UK – MPC Member Haskel Speaks
12:30 UK – BoE MPC Member McCafferty Speaks
15:55 USA – Redbook
17:00 USA – CB Consumer Confidence
20:00 USA – FOMC Member Bostic Speaks
23:30 USA – API Weekly Crude Oil Stock

 Trader Aleksandar Kumanov

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