Trading Market Commentary August 10 2017

Commentary

The North Korean conflict with the US  has transformed this vacation season into a roller-coaster trip for traders as well as investors, as all the markets are aiming to assess the actual probability of a potential war. Although daring remarks have been tossed around by each party, the likelihood of a real US involvement continues to be no event, regardless of the latest risk-off turn in the markets.

Stocks were in a wide-ranging downfall worldwide, although commodities and currencies became very volatile in the midst of the escalation, with the whole lot worse than anticipated US PPI (Producer Price Index) data adding more pain. 

With climbing volatility, as one can expect, the VIX (CBOE Volatility Index) has risen once more, upward of  44.73% on the day (BTW this a three month high) is likewise showing the unfavourable sentiment since overseas investment capital is relocating to US bond market as a safe sanctuary.

American Market

North American trading markets understood the seriousness of this situation by extending losses on Thursday, The markets were stricken, with the S&P500 moving lower off its all-time high levels following a period of extremely low volatility, by plunging down 35.81 or 1.45%. The DowJones was down 204 points or 0.93%. And once again the NASDAQ Index contributed to the down move with the decline of 2.13%.  In Canada, the Toronto Stock Exchange Composite Index (TSX) experience slippage of 143 points or 0.94%.

European Markets

All Eurozone markets ended up lower, with most within the range of 1.25% for the day for the German DAX30 and Spanish IBEX35. While the UK’s FTSE100 was off 1.44% however, the Franch CAC40  slipped just minus 0.6% lower.

The Brits had lagging and weaker data than estimated, with industrial output in Q2, outlined by lower auto production posting minus 6.7% the most detrimental data ever since the year of 2013. In Germany, it turned out the Banks and Industrials that contributed towards a drop in Index with Deutsche Bank shedding off 3%. The attention-grabbing fact is that the Eurozone markets have endured probably the most in yesterday's decline, most likely giving back earlier seven months upside bounce. 

Asia-Pacific Market

Although Asian-Pacific key averages all finished lower, it wasn't that bad as it seems in the Asian cash time zone. It was subsequently the larger capitalization Hang Seng Index in Hong Kong that appeared to be more nervous in late trading with the biggest downfall once sellers showed up, with the higher volumes. The broad Index closed more than 1% lower with financials, insurers, and real estate, contributing to the decline. The economic data from Japan were not that inspiring either showing the machinery orders falling a lot more than predicted, which found Nikkei225 Index edging down by 0.1% on the day. 

The  China's core SSEC (Shanghai Stock Exchange Composite) Index shed 0.4%, but most had been talking that the Yen is trading its most robust level ever since October of 2016. SENSEX (Bombay Stock Exchange Sensitive Index) also has contributed to this downturn with an ending down minus 0.8% as funds are taken out of the table considering the concerns of the latest of the geopolitical outlook.

Other Markets

On the foreign currency side, the Japanese Yen has been playing once again the safe-haven zone, being up another 0.73% on top of the 0.33% increase on Wednesday. The Yen traded higher than the 110 handle as funds rebounded at the closing time. 

With the gold and silver, silver was once again leading the way, beaming up another 1.20% on top of the 2.89% increase on Wednesday's session. But the Yellow metal was shining as it ever was on Thursday, as the rare metal has been elevated by safe-haven status accumulations and the weaker US Producer Price Index release. 

Yellow metal currently is shy of the long-term level of resistance at $1300, and I nevertheless count on the level to be toppled after hitting our T/P $1292 trade (See "Live Signal" page: Position Trade Table). With the long-term fundamental principles being extremely bullish for the Gold.


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