MTS News

MTS Futures News_PM_20180720

20 Jul 2018

• The S&P 500 pulled back a little bit during the trading session on Thursday initially, but found enough support at the 2800 level to turn around and form a hammer. This is obviously a very bullish sign, but I believe that there is a lot of supply near the 2825 handle, so it’s not until we break above there that I think the market will take off to the upside, so in the short term we may continue to see volatility and sideways action overall. I’d be a buyer of dips, and I think there is a significant amount of support down to at least the 2775 handle on the daily chart. Longer-term, I think we would go looking towards the 2880 handle, and then eventually 2900, followed by 3000 on the longer time horizon.

• Shares in Europe traded lower on Friday following remarks from President Donald Trump about the Federal Reserve.

The pan-European Stoxx 600 was off by 0.2 percent with nearly every sector in the red. Basic resources were the worst-performers, closely followed by auto and bank stocks. Banking shares were particularly under pressure amid comments from President Trump that he was not “thrilled” about the policy the Fed has followed.

• Asian shares pushed higher on Friday, clawing back earlier losses in volatile trade as China’s stocks recovered sharply and the yuan bounced from a one-year low with market participants suspecting state support for the currency.

The yuan took a beating earlier in the day after the central bank set a weaker fixing for the currency for the seventh straight session, adding to the anxiety in Asian markets, which remain sensitive to any sharp moves in the yuan.

MSCI’s broadest index of Asia-Pacific shares outside Japan was last up 0.55 percent after falling as much as 0.4 percent earlier.

The yuan’s latest bout of weakness, catalysed by concerns over the brewing China-U.S. trade war and a slowing Chinese economy, has seen the it shed 7.6 percent of its value against the dollar since the end of the first quarter of this year.

“There are several channels through which the yuan’s weakening is hitting Asian stocks. First, a weaker yuan challenges the competitiveness of other Asian economies,” said Shusuke Yamada, currency and equity strategist at Bank of America Merrill Lynch in Tokyo.

“The weaker currency also causes fears of capital leaving China and disrupting their capital markets, which could have knock-on effects on Asia. Lastly, a weaker yuan deepens trade war concerns.”

China’s stocks bounced back after the yuan made its about turn, its depreciation arrested after major state-owned Chinese banks were seen selling dollars in an apparent bid by authorities to prevent a rapid fall in the currency.

• Japanese stocks ended weaker on Friday as an earlier decline in the Chinese yuan rekindled worries about the stability of the world’s second largest economy, which faces rising risks from a major trade conflict with the United States.

Japan’s Nikkei share average fell 0.29 percent to 22,697.88 while the broader Topix shed 0.26 percent to 1,744.98. However, both indexes posted their second straight weeks of gains.

Reference: Reuters,CNBC, DailyForex

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