ZuluTrade Blog

FED spoiled the market party

Market View | Thursday, June 11, 2020 12:33 PM GMT

Even though the market was expecting the FED to maintain the interest rates steady, the sellers have stepped in and the major indices are losing steam today. Further to FED’s meeting, they confirmed that rates will stay close to zero until 2022 while they project a 6.5% negative growth in GDP in 2020. Additionally, they expect a 9.3% unemployment rate and its decrease to 6.5% within 2021. 

EU opening is bearish with DAX dropping 2.92%, FTSE 100 2.71%, CAC 40 3.36%, IBEX 3.85% due to the pessimistic outlook by the FED. Reviewing EU top news, France's payroll employment dropped by 2% at the end of the 1st quarter of 2020 according to INSEE. The Italian industrial production dropped by 42.5% compared to April 2019 based on Istat. Similarly, the Asian market recorded major losses with Nikkei losing 2.82%, Kospi 0.86%, Shanghai 50 1.10%, and Nifty 50 1.10%. China’s car sales were increased by 14.5% year to year in May 2020 which is the second positive consecutive month. Also, market participants are monitoring the increasing tensions among North and South Korea following Pyongyang’s decision to end the communication with Seoul.  

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US pre-opening is following the negative momentum as SP500 is currently falling by 1.85%, NAS100 -1.40%, and US30 2.22%. It is worth mentioning that Nasdaq is already moving in new all times high outperforming compared to the rest indices. Reading major US news, Trump claims that “professional anarchists”  are behind the latest civil unrest and Senate Democrats ask the FBI’s confirmation to publish any related information.
Crude futures are recording a major drop around 3.6% as traders worry about the US stockpiles increase to record-high of 538.1 barrels the previous week based on EIA.

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In focus today (economic calendar):

Traders must be really cautious as major events are expected later today and they are able to create significant volatility.

UnitedStates - Initial Jobless Claims (Jun 5)


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