Market News & Analysis

Market Brief: Powell a Dud, Traders Terrified of Trade Tensions


  • The day’s (week’s? month’s?) marquee event, Fed Chairman Powell’s speech at the Jackson Hole Symposium, was a bit of a damp squid, with Powell emphasizing the central bank’s data dependence and the risk of protectionism escalating. These comments proved timely in the wake of this morning’s announcement that China would be imposing additional tariffs on US exports.
  • Shortly after Powell’s remarks concluded, President Trump went off on twitter, asking whether Powell (his hand-picked Fed Chair) or China was a bigger enemy to the country, ordering US companies to stop doing business with China, and teasing a big announcement in the afternoon. As of writing, investors remain on edge to see if more headlines cross over the weekend.
  • FX: The US dollar and risk-sensitive aussie were the weakest major currencies on the day. Predictably, the safe haven Japanese yen and Swiss franc were the strongest major currencies.
  • The Chinese yuan also dropped to test its 11-year low against the US dollar near 7.14.
  • Commodities: Gold tacked on 2% while oil fell nearly 3% in classic risk-off trade.

  • US indices closed sharply lower on the day to approach the lower end of the recent 2-week range.
  • Defensive Utility stocks (XLU) were the strongest sector while Energy (XLE) was the weakest.
  • See the key data releases and market trends we’ll be watching in the week to come!
  • Stocks on the Move:
    • Foot Locker (FL) dumped 19% after missing sales and revenue forecasts, bringing the string of strong retail reports to an end. Proposed tariffs on Chinese-manufactured shoes heading into the holiday season could hurt sales further moving forward.
    • HP (HPQ) shed 6% after matching earnings estimates and appointing a new CEO.
    • Both Intuit (INTU, +1%) and Salesforce.com (CRM, +2%) reported strong earnings and were able to buck the relentless selling pressure in broader indices.

From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.