Australian Stocks Dip as Trade War Tensions Rise 20/11/19

Australian stocks dropped by 1.28% as the market worried about trade. The dip also followed a decision by the People’s Bank of China (PBOC) to slash interest rates from 4.20% to 4.15%. This decision was unexpected and came a week after the country released weak fixed asset investment, industrial production and manufacturing production data. It also came a day after China’s central bank lowered the seven-day reverse repurchase rate to 2.50% from 2.55%. This decision came two weeks after the bank lowered the cost on its medium-term lending facility (MLF) that is used by banks for longer-dated funding needs. Today’s cut came after Trump warned that he would raise tariffs if a deal did not happen.

AUS200 Technical Analysis

AUS200 declined sharply from $6835.28 to a low of $6718.30. This was the lowest level since Friday. On the four-hour chart, the price is above the 61.8% Fibonacci Retracement level. The price is along the lower line of the Bollinger Bands. It is also below the 14-day and 28-day moving averages. The RSI has moved from a high of 69.20 to a low of 38.50. The index may continue to move lower to below $6681.36.

Japan Stocks Slide on Weak Trade Data

The Japanese yen was relatively unchanged while stocks tanked after the country reported weak trade data. Both exports and imports tanked to the lowest level since 2016. The country’s exports declined by 9.2% in October, more than the 7.6% drop that was expected by economists. The drop was driven by plummeting shipments of cars and aircraft engines to the US and plastics to China. Imports declined by 14.8% after falling by -1.5% in September. All this led to a jump in the country’s trade surplus to more than $17.3 billion. These numbers come at a time when the world is going through a China and US trade war. Japan is also engaged in a trade war with South Korea. Also, Japan suffered a major typhoon that affected trade in the month.

JP225 Technical Analysis

The Nikkei dropped by 80-basis points following weak trade data. The index declined from Monday’s high of ¥23492 to ¥23020, which provided important support. The index is trading below the 14-day and 28-day moving averages, while the RSI has been declining. The MACD has also been moving lower. The index may stay in a holding pattern as the market waits for more information on trade.

Crude Oil Tanks Ahead of Inventories Data

Crude oil price dropped sharply as the market waits for US inventories data. Data will be released by the Energy Information Administration (EIA). The market expects inventories to rise by 1.543 million barrels. There’s a concern about the demand of crude oil if there will be no trade deal. Also, the market is worried about increased supply in the coming year as more US pipelines come online.

XTI/USD Technical Analysis

The XTI/USD pair declined sharply from a high of 58.13 to a low of 55.15. The price is between the lower and the middle line of the Bollinger Bands. The RSI has moved from a low of 18 to above 30. The price is also above the two lines of the Envelopes indicator. The signal and histogram of the MACD indicator have been declining. The pair may see some significant movements as the market waits for inventories data.