Daily Markets Broadcast 2018-10-25

Daily Markets Broadcast

2018-10-25

Wall Street closes below 2018 opening levels

Selling on Wall Street accelerated yesterday amid weak corporate earnings and disappointing data. The US30 and SPX500 indices wiped out any gains made in 2018, while the NAS100 index fell the most in two weeks.

US30USD Daily Chart

Source: OANDA fxTrade

• The US30 fell the most in two weeks yesterday as weak housing data, this time it was new home sales, adding to pressure from disappointing corporate results
• The index looks poised to close below the 55-week moving average for the first time since March 2016. Minor support level may be found around the 24,388 level, which is the upward-sloping trendline from the Feb 6 low
• New home sales were weak yesterday, and today it is the turn of pending home sales. They are expected to fall 0.1% m/m in Sep after dropping 1.8% in Aug. A weaker number would likely pile more pressure on the index.

DE30EUR Monthly Chart

Source: OANDA fxTrade

• The Germany30 index fell to the lowest level since December 2016 yesterday, fueled by sentiment on Wall Street and a disappointing flash Markit PMI reading for October. The reading fell to 52.3, its lowest since June 2016
• The index closed below the 55-month moving average for the first time since September 2011. The index is still on track toward the measured objective of a head-and-shoulders reversal pattern on the monthly chart just below the 10,000 mark
• Germany’s IFO surveys for October are due today. Given the fall in the equity index and other soft data, a weaker number is expected. The expectations index is seen dropping to 100.3 from 101.0.

CN50USD Daily Chart

Source: OANDA fxTrade

• The China50 index has given back more than 50% of the gains made after the support announcement almost a week ago. Sentiment on Wall Street suggests the downside still remains vulnerable, unless official money comes in to support the market
• Minor support may be found at 11,074, the 61.8% Fibonacci retracement of the three-day rally from October 18. The 55-month moving average is at 10,557
• US financial press has reported that two China funds sold all bond and stock holdings worth $4b in Q3, though no explanation why has been given.

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