Market Commentary - 04th April 2018

Indices

DOW30 +0.96%,   S&P500 +1.16%,    NASDAQ +1.45%,   DAX30 -0.37%,    FTSE100 +0.05%,   NIKKEI225 +0.13%

In a wild US trading session, equity markets closed comfortably higher with the DOW30 rallying more than 700 points from session lows to close out at 24,264.30 – a gain of 0.96%. The S&P500 and Nasdaq closed 1.16% and 1.45% higher, respectively.

The morning’s losses came after China's announcement of new tariffs on US goods sparked fears of a trade war. China's Ministry of Commerce said the $50bln worth of annual tariffs would hit goods like soybeans and cars. The DOW30 hit a low of 23,400 before staging a remarkable recovery on the back of the White House dampening fears of a trade war breaking out. Larry Kudlow, Trump's chief economic advisor, said “He wants to solve this with the least amount of pain. I can't emphasize that enough”. Stocks hit their session highs after reports that President Trump would soften his stance on key NAFTA negotiation points.

DOW30 in a breakout of the bullish falling wedge pattern. Target approx. 25,300

FX

EURUSD +0.07%,    GBPUSD   +0.16%,    USDJPY +0.16%,   AUDUSD +0.40%,   EURGBP -0.08%,  USDCAD -0.29%

The USD put in a mixed performance on Wednesday, strengthening against the safe haven currencies – JPY & CHF – amid risk appetite in equity markets but generally falling against other major currencies as continued trade war fears cap USD gains.

In US economic data, private sector jobs growth exceeded market expectations with an additional 241,000 jobs created last month. Non farms payroll data is released this Friday. The services purchasing managers' index slipped to 54.0 in March from 55.9 in February. The non-manufacturing ISM index missed expectations, coming in at 58.8 for last month.

USDJPY currently capped by the 23.6% Fib at 1070.011 post trend line break

Commodities

XAUUSD  +0.03%,    XAGUSD -0.61%,    WTI Crude -0.22%,    Brent Oil +0.16%

WTI Crude oil dipped slightly on Wednesday, clawing back earlier losses on the back of China’s announcement of $50bln worth of tariffs being applied to US goods. Both WTI and Brent hit two-week lows on the news. The recovery came amid data from the Energy Information Administration (EIA) which showed US crude inventories dropped by 4.6m barrels last week. This far exceeded market expectations, which were set for a rise of 246,000.