After
global equities experienced their worst three months in more than two years,
retaliatory tariffs announced by China resulted in stocks suffering their worst
start to April since the great depression. Asian shares were depressed during
early trade, as jitters about a U.S-China trade war weighed heavily on
sentiment. In Europe, stocks moved lower thanks to the market caution and
ongoing concerns about technology firms. With Wall Street experiencing losses
so severe on Monday, that the S&P 500 closed below the 200-Day Moving
Average, further losses could be on the cards this afternoon.
Now
that China has fought back by imposing tariffs on 128 U.S imports worth $3
billion, investors are clearly on edge with markets questioning “what next”?
The mounting sense of unease over the ongoing trade drama between the U.S and
China is likely to promote risk aversion consequently punishing global stocks.
Sterling buoyed
by UK manufacturing data
Sterling
edged higher against the Dollar after UK manufacturing survey data for March
exceeded market expectations.
The
UK’s manufacturing sector activity reading rose to 55.1 in March, beating
expectations of 54.7 and slightly higher than the 55.0 in February. Sterling is
likely to remain somewhat supported by market expectations of the Bank of
England, raising UK interest rates in May and potential Dollar weakness.
Taking
a look at the technical picture, the GBPUSD has scope to venture higher, as
long as bulls can defend the 1.4000 level. Prices are trading above the daily
20 SMA, while the MACD has crossed to the upside. A technical breakout above
1.4100 could encourage an inline higher towards 1.4140 and 1.4230,
respectively. If bulls are unable to defend 1.4100, the GBPUSD is at risk of
sinking back towards 1.3920.
Commodity
spotlight – Gold
Gold
inched lower on Tuesday, as some investors locked in profits after the metal
punched above the $1340 resistance level.
With
escalating trade tensions between the U.S and China sparking risk aversion,
punishing global equity markets and weakening the Dollar, Gold could remain
heavily supported moving forward. Investors will be paying very close attention
to the NFP report on Friday, which will play a leading role in where the yellow
metal concludes this week.
Prior
to the NFP report, market uncertainty and overall caution is likely to inspire
bulls to push the yellow metal higher. Taking a look at the technical picture,
Gold has scope to venture higher towards $1360 if bulls are able to secure
control above $1340. Alternatively, sustained weakness below $1340 could result
in a decline back to $1324.
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