Data out overnight showed that Japanese Q3 GDP contracted by 0.3 per cent dragging down the annualised rate to -1.2 per cent from +3.0 per cent in Q2. The blame can be put on natural disasters, declining exports, and above all, a drop in domestic demand. Grim all round. In Germany Q3 GDP also shrank, and by a bigger than expected 0.2 per cent, the first negative reading in over 3 years, taking the annualised growth in the economy to 1.1 per cent from 2.0 per cent in the previous quarter. Leading the drag were automakers and generally slowing exports.
General Electric (GE), which used to be among the bluest of blue chips many moons ago, saw its shares slump another 10 per cent at one point yesterday, trading at levels last seen in 1995, just above the March 2009 low of $6.66. CEO Larry Culp says the company will sell assets with ‘urgency’, including Baker Hughes which it bought in July 2017. It plans to repay debt through these disposals. The firm has been locked out of the commercial paper market after a recent credit rating downgrade made its name ineligible to most investors.
DAX 30
Momentum might turn bearish today. Yesterday in Strasbourg Chancellor Merkel said, ‘’we have to work on the vision of one day creating a real European army’’, echoing calls from President Macron. This will probably further anger President Trump as well as antagonising nations who believe EU centrism has gone too far.
SHORT TERM TRADER: Short at 11200; stop above 11700. Target 10400.
POSITION TAKER: Short; stop above 11755. Next target at 10700.
FTSE 100
Another index where momentum looks set to turn negative, helped along by a stronger pound which has dipped this morning to £0.8665.
SHORT TERM TRADER: Short at 7080; stop above 7200. First target 6865.
POSITION TAKER: Short at 7095; stop well above 7200. First target 6900.
S&P 500
US traders disappointed that Wall Street didn’t really manage a bounce yesterday.
SHORT TERM TRADER: Small short at 2798; stop above 2825. Target 2630.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Not quite sure where IG get their volume data from but what I’m trying to show is that Brexit talk and rumours are increasingly putting people off this market. And while some people are moaning about volatility, the reality is that cable’s been stuck 6 cent range since the summer.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
EURO/US DOLLAR
Yesterday’s inside day has corrected the oversold situation and hints that the drop below 1.1300 was in some way a false break. We’ll watch price action today to see whether the euro might be worth buying.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
GOLD
Surprisingly trend line support taken from this summer’s low held, forming a little doji candle and easing bearish pressure.
SHORT TERM TRADER: Tiny short at 1227; stop above 1220. Target 1190.
POSITION TAKER: Square.
