(30 AUGUST 2019) DAILY MARKET BRIEF 1：Risk aversion decreases amid easing tensions on trade war front
Despite a clear improvement of the overall market sentiment over the last couple of days, the good mood failed to spread to all asset
classes. Most equities extended gains on Friday morning amid positive news over trade war negotiations between China and the US. S&P
500 futures are on their ways to test the 2,940 resistance area once again. That level has been able to hold since the beginning of August; it
would therefore requires more than a vague enthusiastic headline to break it to the upside. Indeed, market participants are becoming less
and less sensitive to positive announcements from the Trump administration. Over the last year, Donald Trump has been feeding the market
with extremely positive/negative tweets about the ongoing trade negotiation with China but it would appear that no progress has been made.
In Europe, equity futures are also blinking green with the EuroSTOXX 50 climbing towards 3,430, while German DAX futures are currently
testing the 11,933 resistance (50% Fibonacci on February 2018 – January 2019 sell-off).
In the FX market, investors are more cautious as they continue to favour less risky assets (or are just trying to avoid paying a carry).
The greenback continued to strengthen against most of its peers. The dollar index climbed to 98.60, up 0.10% on the session. At the time of
writing, only the Japanese yen was able to resist the buck’s appreciation. USD/JPY stabilised below the 106.75 resistance at around
106.45. Given the high level of uncertainty, mostly generated by the trade war, we believe that cautions still applies, especially ahead of
the week-end as Trump may drop a tweet of two during the weekend
.
By Arnaud Masset
