Australia: S&P/ASX 200 (.AXJO) to sink as Donald Trump threatens to impose tariffs on Brazil and Argentina metal imports
ASX futures were down 87 points or 1.3 per cent.
Meanwhile, the Australian dollar jumped to 68.2 US cents, up about half a cent since early-Monday.
This was due to some upbeat economic data from Beijing showing a surprise rebound in Chinese manufacturing activity.
The Reserve Bank board will meet today but most economists are not expecting an interest rate cut at 2:30pm (AEDT).
US widens its trade war
Mr Trump opened up a new front in his trade war by tweeting that he would reinstate tariffs, effective immediately, on all steel and aluminium shipped into the United States by the two South American nations.
Brazil and Argentina were exempted from steel tariffs (25 per cent) and aluminium tariffs (10 per cent) last year when Mr Trump was attempting to avoid a trade war with those nations.
However, the President accused them, on Monday (local time), of “presiding over a massive devaluation of their currencies” and harming US farmers in the process.
He also urged the Federal Reserve to cut interest rates further “so that countries, of which there are many, no longer take advantage of our strong [US] dollar by further devaluing their currencies”.
This surprise announcement came as investors paid close attention to the main trade war — between the US and China.
Both economic superpowers are aiming to sign a so-called “phase one” deal, in an attempt to de-escalate their long drawn out trade dispute.
On Wall Street, the Dow Jones index dropped 213 points, or 0.8 per cent, by 3:20pm (local time), and is on track for its steepest loss in almost two months.
The benchmark S&P 500 and tech-heavy Nasdaq indices fell by 0.7 and 1 per cent respectively.
European trading losses were even more severe as Germany’s DAX and Paris’ CAC indices sank by 2 per cent each, while London’s FTSE lost 0.8 per cent.
Overall, the bias in prices is: Upwards.
By the way, prices are vulnerable to a correction towards 6,662.93.
The projected upper bound is: 7,004.31.
The projected lower bound is: 6,724.79.
The projected closing price is: 6,864.55.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 31 white candles and 19 black candles for a net of 12 white candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 82.8187. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 8 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 61.75. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 105 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 122.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 6 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 3 period(s) ago.
Rex Takasugi – TD Profile
S&P/ASX 200 closed up 16.300 at 6,862.300. Volume was 23% below average (neutral) and Bollinger Bands were 16% narrower than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 6,786.11 6,699.42 6,514.14
Volatility: 13 13 13
Volume: 622,268,544 585,042,560 637,101,504
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
S&P/ASX 200 is currently 5.3% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into .AXJO (mildly bullish). Our trend forecasting oscillators are currently bullish on .AXJO and have had this outlook for the last 25 periods.