Stocks fall as Chinese media turns hostile against trade talks
The sterling dropped sharply after Labour leader, Jeremy Corbyn said that talks with the government had gone ‘as far as they can’, effectively killing chances of a deal with Theresa May. He left doors open for a deal, only if the prime minister can make ‘significant changes’. The breakdown of talks came a day after it was reported that May was in the last days of her job as the prime minister. The hopes are that a new prime minister will help build the bridges between the conservatives and Labour party with the goal of ending the impasse over Brexit. Still, with all the division in parliament, this will be a tough call.
World stocks declined after Chinese state-run media started criticising the trade talks with the US. Economic Daily, a leading state-owned paper said that it would be meaningless for Chinese officials to meet with those from the US. Another agency said that there was no need to talk with a country that is using ‘little tricks’ in the negotiations. The new attitude is different from the earlier optimism expressed by the Chinese media. The attitude change comes a day after the US announced that it would ban Huawei from the country.
The euro declined after the European Union released the latest CPI data. The numbers showed that in April, the core CPI rose by an annualized rate of 1.3%. This was better than the 1.2% that investors were expecting. On a MoM basis, the core CPI remained unchanged at 0.9%. The headline CPI remained unchanged at 1.7% while CPI ex tobacco rose by 1.7%.
The EUR/USD pair declined to an intraday low of 1.1158, which was the lowest level since May 3. On the hourly chart below, the price is lower than the 50-day and 25-day moving averages. The momentum indicator has eased a bit after rising yesterday. In addition, the accumulation/distribution indicator has moved slightly lower. The pair will likely continue moving lower to the important support of 1.1150.
The GBP/USD pair declined sharply after Brexit talks ended. The pair reached a low of 1.2740, which is the lowest level since January 18. On the daily chart, this price is along the lower line of the Bollinger Bands. It is also below the 50-day and 100-day moving averages. The 14-day RSI has moved to below the oversold level of 30 while the accumulation/distribution indicator is heading lower. The pair will likely continue moving lower, to test the important support of 1.2600.
The price of crude oil continued to rise as traders continued to watch ongoing tensions between United States and Iran. Brent reached a high of $72.66. On the chart below, this price is along the upper line of the Bollinger Bands and is slightly above the 50-day and 25-day moving averages. The price is also above the green support shown below. The pair could be volatile in the US session and early Monday morning, depending on what happens during the weekend.