Dow index posted its best day since August 2015
China is still seeking compensation from the US
Twitter joined this trend to ban cryptocurrency advertisements
The bulls returned to the market with vengeance as the Dow index posted its best day since August 2015 – with more than 700 points of gain. There is nothing surprising. When the equity markets fall thick and fast, a small correction usually takes place. The relief rally for the equity markets is global as traders have less concern about the trade war between the US and China. China is keeping its pledge to keep its market open to foreign companies – at least for now.
The US is still keeping the upper hand in the recent developments and has asked China to lower tariffs on US cars and to open their market for US financial services. Meanwhile, China is still seeking compensation from the US for the loss of trade, which occurred on the back of Trump’s tariff imposition on Aluminium and Steel.
The situation is still very sensitive and we do think that the relief rally in the equity market is purely due to the heavy sell-off. It is more of a dead cat bounce than anything else; if the underlying fundamentals aren’t addressed, we could see the sell triggered again. It would be more than likely that we would break this year’s low.
But for now, investors have reacted positively to the surprise visit of North Korea’s leader Kim Jong Un to China. This is his first trip outside his country since he became the leader of his country. Traders are considering this event as a further evidence of de-escalation of tensions in the Asia region.
The Last Straw
Advertisement bans have haunted crypto-markets for some time. First, Google banned all the crypto advertisements, with Facebook closely following. Now, Twitter joined this trend as well. Of course, the initial reaction is supposed to be adverse for the cryptocurrencies: Bitcoin dropped below the 8000 mark today. However, the move to the downside wasn’t intense, it was more of a gradual move. There is no doubt that we are way oversold when you look at the price curve for Bitcoin or any other major cryptocurrency and a corrective move is strongly on the card. The reality is that all the negative news in the cryptocurrency space has started to have less impact, it appears that the industry has become immune to this kind of developments. Most of the investors that we are talking to, they only want to buy at current price.