S&P500: 400 points and counting...

Published date: 23/05/2019
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If Wall Street’s traders thought that the last few days had been painful, then they were totally not ready for today’s psychological shock. At the time of writing, S&P is 400 points down!

The pressure of the US-China trading war was gradually increasing, but today it made its great eruption. IMF statement during the day did not help the situation at all, making it even worse. “Consumers are unequivocally the losers in US-China trade war” was a concerning phrase to hear during the announcement.

Restrictions on Huawei by the US administration went from brusque and permanent on Monday,  to temporary and gradual on Tuesday. However, today investors could not hold back their concerns. Trade talks seem to be leading the discussion nowhere, with global supply chains and business taking major losses this week.

On top of that, today’s economic releases were far from good. US New Home Sales were below projections (673K vs 723K on April). PMI’s followed the same trend,  with the Purchasing Managers Index dropping below 51 (versus 53 on previous monthly figures).

Traders were also hoping to see a recovery after FED minutes yesterday, unfortunately, it did not happen. Everything points to the fact that safe haven assets will gain some ground.

Gold is up 1.00% today, strongly fulfilling the 1270-1276 zone.  The Yen and the Swiss Franc have recovered the strength and seem to be the perfect strategy for investors during the turmoil.

Dollar Index sharply declining at the moment, rejecting the 98.30 zone as expected.

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