Global Market Insights - Forex, Futures, Stocks

Stock rout deepens on chipmaker selloff as dollar bounces back

Duration:: 3m
Broadcast on:: 19 Jul 2024
Audio Format:: mp3

Wall Street headed for weekly slump amid China trade war fears. Dollar stages dramatic reversal on safety bids but gold loses out. Euro slips after ECB decision, yen steady but off week’s highs.

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Welcome to another episode of Global Market Insights, brought to you by XM.com, where we provide meaningful and informative content about the events that affect market trends and shape global markets. This is the Market Common Podcast for Friday, July 19th, by Rathbuyajian. I'm Cristina Marukas and thank you for joining us at XM.com. Equity markets were mostly in the red on Friday, adding to the weekly losses after a torrid week that began with optimism that a Fed rate cut is nearing, but ended on heightened fears of a fresh trade standoff between China and the United States. It's easy to interpret this panic as the market's reaction to Trump's increased prospects of winning the November presidential election. After all, Trump's campaign is proposing to slap tariffs of at least 60% on all imports from China. But it is the current administration's plan to tighten the rules for all chip makers that use U.S. technology to sell to China that has sparked this week's route. The Nasdaq is the worst hit as the tech heavyweights were already looking overstretched ahead of their earnings releases and had additionally come under pressure from the rotation out of tech to small caps and companies benefiting from the Trump trade. But yesterday's better than expected earnings by Netflix may help ease the panic and raise optimism ahead of next week's results by Tesla and Google parent Alphabet. For equity markets globally, a second Trump presidency has seen much more of a lose-lose situation as Trump wants to impose a 10% tariff on all imports. Adding to the gloom is the disappointment from China's third plenum that ended without any major policy announcements to shore up consumers or the beleaguered property market. An IT outage affecting airlines, banks and several other businesses also hurt sentiment. Hong Kong's Hang Seng Index is one of the week's worst performers, although shares in mainland China buck the trend on suspended ETF purchases by the Chinese government. As for the U.S. dollar, it's been on a rollercoaster ride, having slid at the start of the week on Da Vesh Fed rhetoric, but then reversing sharply higher on the back of the safe haven flows as risk aversion set in. The greenback is on track to finish the week with small gains. Gold, on the other hand, has wiped out almost all of its earlier gains from earlier in the week when it surged to new all-time highs. Although some safety flows did go in the precious metals direction and the aftermath of Trump's shooting, the current risk of trades seemed to be mostly benefiting the world's favorite reserve currency. Elsewhere, the euro extended its losses for a second day following the European Central Bank policy meeting yesterday, where, as expected, interest rates were kept on hold. However, whilst President Lagarde did not commit to any rate cut decision for the September meeting, she sounded downbeat about the euro zone's growth outlook. For investors, this was enough to reinforce expectations that further cuts are likely later in the year. The yen was another currency giving up some of its weekly gains, but its losses were more contained and may yet manage to end the day slightly up on the week. The Bank of Japan is thought to have intervened on at least two occasions this month, and fears of further intervention are keeping traders on their toes. This was today's Market Comment Podcast at XM.com. Have a great weekend. (upbeat music)