Today’s Key Market Drivers: 10th May 2019

Financial markets await trade talk results.


US stock markets once again closed in the red and financial markets continue to take their pulse in anticipation of an announcement following two days of trade talks between China and US officials in Washington DC. The talks are Thursday and Friday this week and at the stroke of midnight, Friday trade tariffs on Chinese goods that were previously at 10% will jump to 25%. Has the market priced in the expectation of how these tariffs will impact global markets? I don’t think so because the wider issue of a comprehensive trade deal has not been announced. Anyone trying to price anything in is simply guessing at this point.

CNBC said on Thursday. “China claimed it will retaliate if the higher levies are imposed. Yet the White House claimed on Wednesday China still wanted to make a deal, which kept the market temporary afloat for a day.” It didn’t close that way.

The Dow Jones fell for a fourth straight day and whilst buyers are desperately trying to hang on the sellers are ultimately winning the battle this week. Extreme volatility could happen at any moment and I am more than comfortable to be sitting on the bench until the latest trade winds pass.

The Yen is a good guide as to what the top end of town is thinking.


The Japanese Yen has rocketed higher in the last 48 hours and the buying up of the safe haven currency is a good indication to the top end of town’s nervousness surrounding the US and China trade talks. The US Dollar was not spared with the USD v JPY falling all through the trading week even after President Trump said it was possible to get a trade deal done with China this week.

Whilst speaking at a rally in Florida yesterday Trump said. “By the way, you see the tariffs we’re doing? Because they broke the deal. They broke the deal. So, they’re flying in, the vice premier tomorrow is flying in, good man, but they broke the deal. They can’t do that, so they’ll be paying.

High impacting data mostly ignored this week.


No less than 5 pieces of high impacting economic data were released in the last 24 hours and 3 significantly high data numbers will be released today. But no mention of any of them amongst the headline financial news. It’s all about the China-US trade talks.

Today sees the release of UK first quarter GDP which is expected to show the UK is growing at 1.8% annually. Canadian Unemployment numbers for April and US Inflation figures are also set for release today and the only one that I think will rate a mention is the US CPI number which is due at 10.30pm AEST. Inflation is the #1 barometer a Central Bank uses to determine if it will raise or lower interest rates and with the market so closely watching US Fed interest rate expectations if today’s inflation reading is higher or lower than expected the US Dollar will react with increased volatility.

The best traders are saying no, far more often than yes.


In one of my Sunrise videos this week I mentioned a phrase Warren Buffett uses. He says the difference between successful people and really successful people is that the really successful ones say no to virtually everything. Novice retail traders are constantly allowing their willpower to be beaten and overrun because they keep watching charts, see price move and get sucked in. The punter equates price movement with profit opportunity and lacks clarity of a specific trading plan that can be replicated again and again. A trading plan that doesn’t have the potential for consecutive stop outs and financial and emotional drawdowns.


Have the courage to do what needs to be done.

AB

 

About the Author: Andrew Barnett

Andrew is a professional trader and successful investor who has a strong focus on education. He is a regular Sky News Money Channel Guest and one of Australia’s most awarded and respected financial experts and is regularly contacted by the Australian Media for the latest on what is happening with the Australian Dollar. Director at LTG GoldRock, Andrew Barnett, guides thousands of traders around the world in the live market on a daily basis, advising them on buy and sell directions, as well as trading his own personal account. Andrew, a regular keynote speaker at trading and wealth-creation events throughout the Asia Pacific region, is an authorized representative registered with the Australian Securities and Investment Commission (ASIC).

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