Stocks swoon as risk-off prevails; GBPUSD dips below $1.30

Summary:

• Equities experience sizable declines; S&P500 makes 6-week low

• Risk-off flows persist as US-China trade tensions weigh

• DE30: Allianz sinks after general annual meeting

• GBPUSD drops back below $1.30

• Bitcoin smashes the $6000 level

Trade continues to dominate the front and centre of traders minds with equities falling further as the risk-off mood prevails. There’s been little by the way of fresh developments in the past 24 hours, but the market seems to be becoming increasingly concerned that additional US tariffs on China will be levied tomorrow. The S&P500 has dropped to its lowest level since March and is now back at the 50 day SMA with the gap higher from 29th March at 2839 finally being filled this afternoon.

As the Friday deadline for punitive tariffs on the Chinese imports nears, markets seem to be at the brink of panic amid zero positive news regarding trade negotiations. The Chinese delegation is in the US for the “last chance” talks but so far there is nothing to suggest the tariffs increase could be postponed.

Allianz (ALV.DE) is one of the worst performing DAX stocks on Thursday morning. This is somewhat strange given outcome of votes at the annual general meeting that took place yesterday. Shareholders decided to vote on the changes to compensation policy for senior executives for the first time since 2010. In turn, the significance of fixed salary and bonuses relating to the company's long term goals increased. As giving more weight to long-term goals makes management’s interest more aligned with shareholders’ one, such a development should be viewed positively. Moreover, 92% of shareholders backed the proposal showing strong support for current management team. Having said that, today’s drop in Allianz share price could be unjustified.

There’s been further weakness seen in the pound this morning with the currency falling back below the $1.30 handle against the US dollar to trade at its lowest level of the week. After ending last week with a flourish and hitting its highest level in a month, the current week hasn’t been so kind to sterling with Brexit concerns coming back into focus as cross-party talks appear to have stalled. GBPUSD has dropped back lower and is once more retesting the prior support around 1.2975. The market remains stuck in a relatively narrow range that has contained price for much of the year.

Bitcoin hit new 2019 high this week, rising 45% throughout the past month and nearly 100% since December lows. The cryptocurrency market suffered a bit on the back of Bitfinex issues. Let us recall, New York Attorney General sued Finex Inc - the company behind stablecoin Tether and Bitfinex for hiding loss of $850 million. Allegedly, the massive loss was covered by Tether’s cash reserves. Nevertheless, the bullish momentum remains in place as confirmed by subsequent price gains of Bitcoin. From a technical point of view, the psychological $6000 has been cracked but now the question is if the price can move forward without a pullback. The $6000 served as a strong level in 2018 and if sellers are to re-enter, this could be their best place to do so, technically speaking.