Worsening Italian Crisis Gripped U.S. Equity Market
By: Eddy Peng May 30, 2018
U.S. shares looked set for a sharp fall on Tuesday as Italy’s political crisis provoked a sell-off on Wall Street, sent the euro to a 10-month low and spiked borrowing costs for the government in Rome with Italian Ten-year Treasuries Tumbling. Besides, the monthly biggest loss is due to the renewal of trade tensions between the U.S. and China.
The United States said on Tuesday that it still holds the threat of imposing tariffs on $50 billion of imports from China and will use it unless Beijing address the issue of theft of American intellectual property. After that, Chinese Commerce Department has replied with a strong position, saying that it will never sacrifice its own core benefits to compromise on U.S. threat.
U.S. equities are expected to fall further as a worsening trade tension between U.S. and China, and a strong performance of DXY tends to bring money backflow to the dollar from the stock market, undermining recent and upcoming movement.
The Dow Jones Industrial Average fell to 24384.7 on Tuesday, with intraday low reaching as low as 24221.9 but later got support from 38.2% Fibonacci retracement. The daily movement of the index has been fluctuating upwards in an ascending channel which began on late March. It seems to continue to fall before having an attempt to break out lower. A successful breakthrough will expose a support line placed by the lower channel line; Otherwise, a reversal can bring the index in front of 50.0% retracement.
With analysing by Bears oscillator, if the indicator for today will not be longer than the previous, meaning that it turns upwards, it shows a potential trend reversal and a signal to buy. So investors should be patient and await to next day’s move.
Chart 1: US30 Daily
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