Investing.com | Aug 05, 2019 07:06AM ET
Futures on the S&P 500, Dow and NASDAQ 100 plunged with global stocks this morning on a spike in trade risk. U.S. Treasurys, the yen and gold reached long-term highs on investors' flight to safe havens, while oil dropped on fears the U.S.-China dispute will further strain global demand.
Contracts on the Dow and the SPX extended a selloff to the fifth day, while those on the NASDAQ and Russell 2000 entered their sixth falling session.
While all four contracts slipped below their 50 and the 100 DMA, small-cap futures also crossed beneath the 200 DMA, where they were trading at the low of the session. Overall, they extended the penetration following July’s double-top.
Europe's STOXX 600 opened lower and sharply extended Friday’s decline with mining and tech stocks, amid the highest volumes since June 21. The trade is at the bottom of the session, within one percentage point from the lowest price since February. The May 31 low is supported by the 200 DMA—just over half a percentage point lower than the current price.
In the earlier Asian session, stocks tumbled to a six-month low, posting the steepest daily plunge in 10 months. Investors' exodus from equities pushed the yuan to a ten-year low against the dollar as Chinese policymakers refused to defend the key 7.000 level—which has historically marked the line in the sand for intervention—likely weaponizing the renminbi in retaliation to U.S. President Donald Trump's 10% tariff blow on all remaining untaxed Chinese imports, worth $300 billion.
Moreover, the Chinese government reportedly urged its state-owned enterprises to halt imports of U.S. agricultural products, in response to the U.S. administration's latest tariff salvo.
China's Shanghai Composite (-1.62%) still managed to fare better than other regional markets, as the weakest currency in a decade in turn provided stocks with some cushioning.
Hong Kong’s Hang Seng gave up 2.85% as protracted civil unrest compounded heightened market uncertainty. Australia’s S&P/ASX 200 suffered a 1.9% loss after traders were reminded the country, which is China's biggest two-way trading partner and is already suffering from an economic contraction, stands to be hit harshly by further trade headwinds.
h2 Global Financial Affairs/h2
U.S. shares suffered their worst weekly loss of the year on Friday. Meanwhile, the yield on 10-year Treasurys hit the lowest level since October 2016, wiping out all gains from the Trump Trade that followed that year's presidential elections. We have been discussing for some time about the dichotomy of equities' record highs versus multi-low bond yields, arguing that sooner or later one asset will drag the other into the opposite direction—as of now, it seems that bonds are winning the battle.
The USD/JPY pair dropped to the lowest level since March, as the 50 DMA found resistance by the 200 DMA, a bearish sign.
Gold jumped to the highest price since May 2013, extending an upside breakout of a massive bottom dating back to 2014.
The U.S.-China trade war also overshadowed escalating Mideast tensions for the oil market, which slid lower despite the fact that Iran seized another foreign tanker in the Persian Gulf.
h2 Up Ahead/h2Stocks
Currencies
Bonds
Commodities
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.