The S&P500 closed below its 200- day moving average
FANG stocks are leading the losse
Current environment could easily dampen the demand for oil
The beginning of a new quarter for the global equity market is on the back foot, especially for the S&P500 index as the US stock market suffers from more pain yesterday. The selloff momentum activated by the US stocks yesterday is weighing on the European markets today.
It is mainly the tech sector which triggered the selloff and we are expecting this rout to continue as a major correction seems like on its way. The NASDAQ index was the strongest among its peer and the S&P500 index without any doubt is the weakest index. The S&P500 closed below its 200- day moving average yesterday and the index has six down sessions in the past eight sessions. Closing below the 200-day moving average gives us the signal that the broader equity market in the US has changed its trend.
Tech giants, FANG stocks are leading the losses and the E-commerce giants like Amazon, one of the best-performing stocks of 2017, is battered due to the Trump’s tweets influence. President Trump made clear in his tweet on Saturday that Amazon is scamming the US Postal Service. Although, there is a clear evidence that the US postal service has benefited from Amazon’s business. In summary, Trump wants to change the Tax structure for Amazon. Trump believes that Amazon is killing the brick and mortar retailer business and hence change in the tax treatment in his eye could bring the traffic flow back to the traditional businesses.
Oil prices have been holding its ground to some extent and this has saved the day for the energy stocks from a brutal sell-off. However, the current environment could easily dampen the demand for oil which would remove the support for the energy stocks. The risk-off sentiment hasn’t started to bleed fully yet, but if that occurs, the current sell-off would shake many smaller investors out of the market.
Trump’s trade tariff on China has created its first causality over in the US. Prices for the raw material paid have soared already, thanks to clever businesses which are taking advantage of the levies. Companies have started to quote a higher price while some are providing quotes which are valid for only 24 hours.
