Stocks rise despite retaliatroy Chinese tariffs; US100 leads the charge

18 September 2018

This content has been created by X-Trade Brokers Dom Maklerski S.A.

Summary:

  • US indices hit HOD not long after Wall St. open

  • Markets look through Chinese retaliatory tariffs

  • US100 leading the charge higher

 

They say that markets don’t top on bad news, and this seems to be clearly evident in the US today with a strong recovery seen so far today after the major US indices took a swift swoon late last night on the unveiling of further US tariffs on China. The tariffs are undoubtedly a negative development as far as the world’s two largest economies are concerned, but despite this the market reaction has been quite positive for stocks. There are several explanations for this such as that the tariffs were widely expected or possibly that investors still question whether this is simply a posturing tactic by the Trump administration, but what can’t be argued is the market has clearly took this in its stride. An ability to look through negative news and still rise is a common characteristic of bull markets - as the old saying goes bull markets climb a wall of worry - and despite several reasons to the contrary the bulls still remain firmly in control of the tape.

The US100 dropped lower shortly after the US announced tariffs last night (1.) but the market made a low of 7422 now long afterwards and barely blinked when the Chinese announced retaliatory measures this lunchtime (2.). The Wall Street open (3.) was met with some strong buying which saw the market push back up above 7500 and reach its highest level of the day and in doing so print a bullish cross on the EMAs. Source: xStation    

 

Around this lunchtime China struck back in the trade war by announcing new tariffs on $60B worth of US goods - this didn’t come as much of a shock after the commerce minister in Beijing said this morning that they had little choice but to retaliate. This caused very little by the way of a negative reaction for the US100 and the market rallied strongly out the gate on the cash open. The recent lows around 7400 now become more important as they broadly coincide with the lows seen last week. So long as price remains above here then the downside is limited and longs may now look to push on and make the most of this momentum with 7625 and the all time high of 7700 possible targets to the upside.

The longer term trend remains clearly intact with 7400 now key support. The EMAs are bunched on a D1 chart but price is looking to push back above them this afternoon. If it can and end the day above, then a retest of 7625 and even the all-time peak of 7700 in the coming days is entirely possible. Source: xStation

 

 

 

This service is provided by X-Trade Brokers Dom Maklerski S.A. (X-Trade Brokers Brokerage House joint-stock company), with its registered office in Warsaw, at Ogrodowa 58, 00-876 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. X-Trade Brokers Dom Maklerski S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

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