DOW JONES FALLS ON ESCALATING SINO-U.S. TRADE TENSIONS
DJ 30 futures are currently trading at 25666- lower by 2.08% as compared to the previous close. The contract, however, closed in the positive territory in the last trading session.
In the Cash Markets, the DJIA fell about 135 points at the time of writing. U.S. equities dropped today after the country’s President said that U.S. manufacturers should find alternatives to their operations in China.
The spread between the 10-year Treasury yield and the 2-year Treasury yield inverted again today after President Trump’s comment.
The VanEck Vectors Semiconductor ETF fell 3.5% as stocks of Broadcom and Nvidia plunged. Caterpillar and Apple lost 2.89% and 4.14% respectively at the time of writing.
The U.S. president’s statement comes after China announced earlier today that it will slap retaliatory tariffs against about $75 billion worth of U.S. goods. The tariffs will be implemented in two batches 1st September and 15th December. The tariffs will range between 5% and 10%.
Meanwhile, the Federal Reserve Chairman said in its speech from an annual central banking symposium earlier today that the U.S. central bank will do what it can to sustain the current economic expansion. Chairman Powell also said that after a decade of progress toward price stability and maximum employment, the economy is close to both goals.
Bank shares also fell on Friday. Goldman Sachs was down 2.60% at the time of writing.
Other top losers in the Dow Jones include American Express (down 3.26%), Intel Corp (down 3.78%), and 3M Co (down 3.24%) at the time of writing.
The 30-stock index is down about 0.5% for the week. The benchmark index is also down 4% in the month to date in August.
On the economic front, New Home Sales for July released earlier today came in at 635K. Sales were below the consensus estimates of 649K.
On the technical front, the RSI is currently at 40.56% and suggests that the market can move in the downward direction. The current price is below the MA5. The current price is below the middle line of the Bollinger Bands and is heading downwards.
Overall Bias is Negative and short-term trades can be initiated with tight Stop Loss and Take Profit targets.
Trade Suggestion-Limit Sell At 25700, Take Profit At 25570 Stop Loss At 25765