Search LOGIN

DAX & Nikkei indices eye breakouts

JPN225 – Daily Candlesticks
Source: GKFX / MT4 (September 2, 2020)

The Nikkei index is attempting a breakout above 23,400- which has acted as resistance since early June. Should the breakout be successful the natural upside target would be the 2019 high at 24,200.
 

TAKEAWAYS


•    Biggest oil price slide since June after US refineries close early
•    Big move up in the DAX & Nikkei indices to challenge July peaks
•    Ethereum reverses all of yesterday’s breakout 
•    DraftKings shares pop after Michael Jordan joins as special advisor
•    DAY AHEAD: US jobless claims, Services PMIs, Broadcom earnings
 

MARKETS


The dollar built on a late rally Tuesday through Wednesday, sending EUR/USD back to a 1.18 handle, having touched 1.20. The dollar-strength came in the face of weak US economic data. There was a big miss in ADP payrolls at 428k when 950k in private US job creation was expected. The strength comes on the back of four consecutive months of weakness in the greenback. The Aussie dollar was a notable FX underperformer after GDP data confirmed Australia entered a technical recession in Q2 for the first time in 28 years.

European and Asian stock markets came to life on Wednesday. Germany’s DAX index rose back up towards its July peak, helped by the slide in the euro and the benefit to earnings it offers German exporters. Japan’s Nikkei (see chart) challenged a 3-month old price ceiling, presumably buoyed by the disclosure of Warren Buffet’s $6 billion bet on five Japanese equities.

The price of oil saw one of its biggest daily slides since June after an unexpectedly big draw in US oil inventories as reported by the EIA. The drawdown was bullish but it was the accompanying news that many US refineries will halt production early because of sluggish summer demand that sent prices lower. The refineries will typically shutdown in the autumn after the US summer driving season, but not this year with the impact of the coronavirus on American’s driving plans. The continued dollar strength saw gold and silver turn lower.
 

GURU WISDOM


“Get rich fast and get poor fast are opposing sides of the same coin.”
― Daniel Crosby
 

Michael Jordan & DraftKings


Basketball legend Michael Jordan has taken an equity stake in sports betting company DraftKings in exchange for being a special advisor to the board. It’s unclear what specific duties Jordan will perform but having his huge personal brand onboard is enough. Live sport is almost a write-off this year because of the pandemic but in the years to come, the peeling back of strict US sports betting laws is a game-changer with many potential beneficiaries, of which DraftKings could be one. The company’s shares rose double digits after the news.
 

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. See our full Risk Disclosure and Terms of Business for further details.