Good news was bad news for risk markets on Friday night as the April 2 deadline looms with Trump’s call with PM Carney presenting no change in the deadlock as the Canadians announce retaliatory tariffs. The latest US PCE print came in better than expected, but this wasn’t enough to pull USD back against Euro and Pound Sterling as Wall Street slumped back into the doldrums, pulling other stocks down with it.
10 year Treasury yields reversed course swiftly with a 12 point drop back down to the 4.2% level while oil prices pulled back after making gains all week with Brent crude retracing back to the $72USD per barrel level. Gold remains the standout as it made another new record high after holding above the magical $3000USD per ounce level all week, hitting the $3080 level proper on Friday night.
Looking at stock markets from Asia from Friday’s session, where mainland Chinese share markets fell steadily throughout afternoon trade with the Shanghai Composite down 0.6% while the Hang Seng Index was off by nearly 1% before a slight recovery at the close, finishing 0.6% lower at 23426 points.
The Hang Seng Index daily chart shows how this recent move looked unsustainable to the upside after recently setting up for another potential breakdown around the 20000 point level. Momentum has retraced from being well overbought after beating the previous monthly highs at the 21500 level and is moving into the negative zone with support firming at the 22000 point level:
Japanese stock markets continued to reverse their recent gains with the Nikkei 225 slumping more than 2% lower at 37006 points.
Price action had been indicating a rounding top on the daily chart for sometime now with daily momentum retracing away from overbought readings with the breakout last month above the 40000 point level now in full remission. Yen volatility remains a problem here, with a sustained return above the 38000 point level still unlikely with futures indicating further losses on the open this week as the dead cat bounce rolls over:
Australian stocks were the only ones to make headway with the ASX200 closing just 0.2% higher but still below the 8000 point level.
SPI futures are down at least 1% due to the deep falls on Wall Street from Friday night. The daily chart pattern suggests entrenched resistance overhead at the 8500 point level is far too heavy for the market to overcome with short term momentum oversold with price action setting up a nice dead cat bounce here. Watch for a return to the 7700 point level this week:
European markets continue to give up their previous gains with more falls across the continent with the Eurostoxx 50 Index finishing 0.9% lower at 5331 points.
This was setting up for a breakdown with short term support taken out and the ATR support from the recent uptrend now under threat as momentum went into oversold mode but I still contend looks like another launching pad to buy more European defense stocks as they decouple from Wall Street – but watch for a potential overshoot here:
Wall Street got wrecked by more Trumpian nonsense on Friday night with the NASDAQ falling more than 2.7% while the S&P500 lost nearly 2% to close at 5580 points.
The Trump pump and dump scheme is back in business as the April 2 tariffs come on line soon, with another reversal in the works here as the recent lows are probably going to be probed this trading week:
Currency markets are hitting back against King Dollar mood amid the growing trade wars with most undollars pushing back against USD on Friday night. Euro is trying to get back on trend as it manages a small bounce to get back above the 1.08 level after recently breaking weekly support.
The union currency is barely holding on despite the tariff trade war with short and medium term support building at higher levels. Momentum was overextended earlier in the week and has now flipped to oversold setting with the 1.08 handle possibly turning into resistance here:
The USDJPY pair was doing well to remain on trend however with a new high above the 151 level but this was swiftly reversed on Friday night as USD lost ground against everything, pulling back to the start of week position below the 150 handle.
Short term momentum was extremely oversold before the start of week bounce but USD is finally weakening as expected here so we could see a more sustained run lower as Yen firms dues to internal inflation troubles:
The Australian dollar is really trying to get back into the swing of things but was thwarted yet again as it remains under the pump versus the other undollars – and gold – with another poor showing on Friday night following the election call.
The recent follow through to the high 62’s and low 63’s was always high risk going into the live February RBA rate meeting and after the Trumpian tariff crusade although price action has now breached the 200 day MA (moving black line) which could turn into resistance:
Oil markets are trying to create a new uptrend as Brent crude finally made some headway above the $72USD per barrel level during the week but failed to convert this into anything sustainable above the $73 zone on Friday night.
The daily chart pattern shows the post New Year rally that got a little out of hand and now reverting back to the sideways lower action for the latter half of 2024. The potential for a return to the 2024 lows is building here, although there is some more buying support slowly building:
Gold had a small hiccup on the previous Friday night but has now turned this into a new record high as it built steadily above the $3000USD per ounce level all week, exceeding the $3080 level on Friday night.
Price action has always found a lot of resistance just under the $2960 zone so that was the likely target in any upside potential but that has been deftly pushed aside without any substantial pullback thereafter, finding a very solid bid up here at new historic highs. Watch for support to hold at the $3000 level:
Glossary of Acronyms and Technical Analysis Terms:
ATR: Average True Range – measures the degree of price volatility averaged over a time period
ATR Support/Resistance: a ratcheting mechanism that follows price below/above a trend, that if breached shows above average volatility
CCI: Commodity Channel Index: a momentum reading that calculates current price away from the statistical mean or “typical” price to indicate overbought (far above the mean) or oversold (far below the mean)
Low/High Moving Average: rolling mean of prices in this case, the low and high for the day/hour which creates a band around the actual price movement
FOMC: Federal Open Market Committee, monthly meeting of Federal Reserve regarding monetary policy (setting interest rates)
DOE: US Department of Energy
Uncle Point: or stop loss point, a level at which you’ve clearly been wrong on your position, so cry uncle and get out/wrong on your position, so cry uncle and get out!