European stocks decline fueled by trade war, Brexit and Hong Kong
European stocks declined today as investors continued to focus on the ongoing trade tensions between the United States and China. The trade war is happening at a time when global growth is going through systemic weakening. For example, automobile sales around the world are weakening. The automobile sector is one of the biggest employers in Europe. Other industrial sectors too are going through a challenging period, which has caused stocks to decline. In Germany, France, and UK, the DAX, CAC, and FTSE declined by 0.21%, 0.40%, and 0.40% respectively.
Hong Kong was also making headlines today as the anti-government protests continued. These protests have been going on for more than three months now. They were inspired by a government proposal to allow extradition of fugitives in Hong Kong to mainland China and Taiwan. Residents believe that the bill would expose them to the Chinese justice system. Today, the protesters went to the main airport. In response, the government cancelled all the flights to the airport, which processes more than 1,000 flights every day.
The price of crude oil was relatively unmoved after Saudi Aramco announced that it will acquire 20% of Reliance Industries’ refining and petrochemicals unit. The transaction, which valued the company at $75 billion is the latest action of the company. Aramco is the world’s biggest crude oil exporter while India is the fastest growing market of crude oil. As part of the deal, Aramco will provide Reliance with 500k barrels of crude oil every day.
The EUR/USD pair declined sharply to an intraday low of 1.1165 in the morning hours. This was the lowest level since August 5. The pair then pared the losses and is currently trading at 1.1195. On the hourly chart below, the price is trading along the 14-day and 28-day moving averages. The RSI, which reached the oversold level of 30 has moved upwards and is currently trading at 50. The pair will likely remain along this channel ahead of the US CPI data expected tomorrow.
The XBR/USD pair was relatively unchanged today even after Aramco announced a major deal. The pair is trading at 57.92, which is slightly higher than last week’s low of 55.68. On the hourly chart, this price is along the 28.6% Fibonacci Retracement level and along the 14-day and 28-day moving averages. The 14-day RSI has been moving slightly lower and is currently at 50. The pair will likely move higher to test the important resistance level of 60.
The GER30 index rose to a high of €11,835 in the morning session. It then pared back those gains and is currently trading at €11,670. On the hourly chart below, the pair is trading below the short, medium, and long-term moving averages while the RSI remains above the oversold level of 30. With so much negative news, and with US stocks set to open lower, the index could continue moving lower.