CFD Indices – Trade War Re-escalated

Market News

  • Dow Jones plummeted more than 600 points, closing 623 points lower, after Trump ordered American manufacturers find alternatives to their operations in China. S&P 500 index declined 75 points and Nasdaq Composite index fell 239 points, led by the fall in Apple shares.
  • Trump announced a 5% additional tariff on $550 billion in targeted Chinese goods, hours after Beijing unveiled retaliatory new tariffs last Friday on $75 billion worth of U.S. products. He said that he regretted not raising tariffs even higher, adding that he could declare the U.S.-China trade war a national emergency at the G-7 summit over the weekend in France.
  • The tit-for-tat escalation shows how unlikely a trade deal and de-escalation have become. The existing and planned trade restrictions will unlikely to be removed any time soon, while other kinds of restrictions may also be introduced, said Louis Kuijs, head of Asia economics at Oxford Economics.

Market Views

  • Stocks in Asia Pacific were a sea of red on Monday morning as the latest salvo in the Sino-U.S. trade war shook confidence in the world economy and sent investors steaming to the safe harbours of sovereign bonds, gold and the Japanese yen. Hang Seng index sink 704 points and Nikkei 225 index lost 451 points.
  • The critical spread between the 2- and 10-year Treasury yields inverted multiple times throughout Friday’s trading session after Trump ordered U.S. companies to steer clear of trade with Beijing. The movement in the Friday’s bond market was largely pegged to Trump’s social media barrage, sparking fears that the trade war between the two powerhouses could worsen over the next few months.

Dow Jones Index
(CFD Symbol: US30)

Trend :
Recommendation :
Last : 25,564
Target price:
Protective stop:

Outlook

The index’s rebound was capped by the 50EMA, which is also near to the mid-June low resistance level, marking the end of the corrective rally. A bearish long red candlestick followed after a spinning top candlestick formed on Thursday, reinforcing the bearish trend. Price is likely to head towards its previous low point at 24,603 again. Stochastic could turn down in the coming session. MACD is still bearish and the fast line is turning down soon.

Trading Idea

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Hang Seng Index
(CFD Symbol: HK50)

Trend :
Recommendation :
Last : 25,494
Target price:
Protective stop:

Outlook

The declining 20EMA is acting as a resistance, capping price’s rebound and marking the end of the consolidation for the past four days. We expect the index to trend lower and test its previous low at 24,941 again with the steep slope of the 20EMA hinting at the strong downtrend. A move below 24,941 could bring the index lower to 23,890. Stochastic is still rising but MACD is still bearish.

Trading Idea

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Nasdaq 100 Index
(CFD Symbol: USTec)

Trend :
Recommendation :
Last : 7463
Target price :
Protective stop:

Outlook

Price tested the downtrend line again as it  could not break above its previous high of 7780, after breaking above the Triangle pattern without a strong follow through last Wednesday. Should price stay below the downtrend line, we could see a decline to targets at 7220 or 7195. Stochastic is likely to turn down again. MACD is still bearish at the moment and the fast line is turning down.

Trading Idea

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S&P 500 Index
(CFD Symbol: US500)

Trend :
Recommendation :
Last : 2839
Target price:
Protective stop :

Outlook

The index has been rebounding from the low since last Thursday. However, the rebound was capped by its previous high resistance level at 2940. Price is heading towards the target point at 2775 unless it can move above 2940. Stochastic is turning down at the moment. MACD is still bearish and a bearish crossover is likely in the coming session.

Trading Idea

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