Markets are going through a correction after a three-day rally

By 06/11/2019News
Morning Stock News

Gold   1485,45
(+0,13%)

EURUSD   1,1072
(-0,02%)

DJIA   27422
(+ 0,02%)

OIL.WTI  57,02
(-0,40%)

DAX   13149,93
(+ 0,01%)

 

After the rally on the US markets, investors finally got a respite on Tuesday. According to the Wall Street Journal, the Chinese and American negotiators are considering compromise options to sign a trade agreement. A total of $112 billion worth of tariffs could be canceled. The market feels overheated by all this news and needs to wait for more serious decisions to continue its upward movement. What are the reasons for the loss of the euro on Tuesday?

EUR/USD day chart

The crypto market is demonstrating cautious growth. In the past 24 hours, BTC trading volumes grew by 7%. Normally an increase in price and volume spurs on crypto enthusiasts and points to a bullish mood. However, recently such price fluctuations have been associated with market manipulations by whales. With the latest cryptocurrency news being generally positive, the road to new year highs lies open.

EUR/USD

Euro slumped on Tuesday – possibly because the new ECB head Christine Lagarde’s criticism of the German economy made traders change their plans. Growth in the euro zone is hurdled by the German economy; in turn, Germany isn’t happy with the ECB policy and the low interest rates that don’t leave enough German investors enough room for manoeuvre. After the positive data on the US non-manufacturing business activity for October, euro is trading at 1.1070 – the lowest point for the past week.

GOLD

Wall Street players keep nudging the market towards a new record high, ignoring the current geopolitical issues, trade wars, and recession risks. The current gold price movements seem completely illogical: indeed, it should normally fall when stock prices rise. With time, investors will find their way around the forming anomaly of the gold and stock prices growing simultaneously. Meanwhile, on Tuesday gold got corrected to below $1500 per ounce.

INDICES

Tuesday was a day of rest for the stock market. Global indices were all in the green, but no significant growth followed. All attention is still focused on the expected US-China trade deal. Christmas and Lunar New Year are getting closer, and the politicians would like to resolve their differences before the holiday season kicks in. The US debt has reached the $23 trillion mark for the first time, while the federal budget deficit has almost reached $1 trillion. A new recession could be around the corner.

What’s next?

09.00 Germany: industrial orders for September
17.00 Canada: business activity index
17.30 US crude oil supplies


Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

 

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.