Traders Michael Milano, left, and Gregory Rowe work on the floor of the New York Stock Exchange just before the closing bell, Wednesday, April 4, 2018. After plunging 501 points at the open, the Dow Jones industrial average finished with a gain of 230 points, or about 1 percent. (AP Photo/Richard Drew)
Traders Michael Milano, left, and Gregory Rowe work on the floor of the New York Stock Exchange. The Dow dropped 3.68 per cent in March with volatility continuing this month. Richard Drew / AP

Optimism returns to the markets but volatility is far from over



Risk appetite was severely eroded across financial markets as Donald Trump ramped up his tough trade rhetoric, this time targeting China with tariffs on $100 billion worth of Chinese imports. This action follows Trump’s earlier action in March when he introduced aluminum and steel tariffs. If history hasn’t taught us valuable lessons already, trade wars do not work.

Since the announcement, the Dow dropped 3.68 per cent in March and the volatility has continued this month in the US equity markets. The Chicago Board Options Exchange (CBOE) Volatility Index, also known as the VIX, moved above 21 levels for the first time since August 2015. The VIX, commonly referred to as the “fear gauge” is a widely used measure of the stock market’s expectations of upcoming volatility, formed by data compiled by S&P500 index options.

Since the start of this week, optimism has returned as Trump fired a more friendly Tweet towards China, while his treasury secretary Steven Mnuchin reiterated that he doesn’t expect a trade war. This was followed by Chinese President Xi Jinping saying on Tuesday that his government would significantly lower tariffs on vehicle imports. As a result, markets twerked higher with equities and the dollar gaining on the welcome developments.

However, watch for market volatility to continue, driven by these developments, and expect to see US equities and the Dollar Index remain particularly fragile should things escalate further. Neither the index or US equities have sustained a long enough rally and we expect the index to range between 88 and 90.50 levels through the middle of April.

Similarly in US equity markets, the Dow Industrial still looks primed for further downsides. The Index recently hit five-month lows and the daily swings don’t bode well on the daily charts. Watch for 23344 as a key support level on the Dow Jones through the next week or so.

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Read more from Gaurav Kashyap:

US dollar weighed down by trade and interest rate policies

Fed has enough ammunition to fire up interest rates once again

US dollar breaks its three-month losing streak

US dollar weakness to continue due to political gridlock

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US nonfarm payroll data released last week came in with an abysmal 103,000 new jobs added in March - well below the forecast 193,000 new jobs. The sharp losses in jobs were attributed to weather-related causes. Perhaps the diamond in the number was the increasing average hourly earnings, which increased to 0.3 per cent - up from estimates of 0.2 per cent. The news was a bit of a non-factor as markets instead focused on the developing trade war theme.

Looking at how markets will respond to US data in the upcoming weeks, we can expect the data points to drive markets in the immediate short term, however the longer term will be driven by future policy from Washington. Markets are all but pricing in two more rate hikes from Fed chair Jerome Powell, and unless the interest rate picture drastically changes, the Fed theme won’t be a major driver of forex pricing in the months ahead.

My dollar bearish bias continues through this month as I expect to see a move towards 1.25 in Dubai Gold & Commodities Exchange (DGCX) EUR/USD contract. This move could materialise before the European Central Bank rate decision and Mario Draghi conference takes place on April 26. Similarly, look for more upsides in the British pound against the greenback, with DGCX’s GBP/USD contract set to make another test of those 1.43 levels. The Canadian dollar has made up some ground on the US dollar over the past few weeks;  I maintain my medium-term short position in USD/CAD with a move towards 1.23 by the summer.

Some of the key numbers due out on the economic calendar include Wednesday's US inflation reading, followed by the Federal Open Market Committee meeting minutes. Inflation data from the UK is due out on April 18, while the Bank of Canada will also be announcing their interest rate decision on the same day.

It may prove prudent to see further developments pan out between the US and China before building any positional trades; instead perhaps the attached volatility would provide good intraday trades.

Gaurav Kashyap is a market strategist at Equiti Global Markets

COMPANY PROFILE

Company: Eco Way
Started: December 2023
Founder: Ivan Kroshnyi
Based: Dubai, UAE
Industry: Electric vehicles
Investors: Bootstrapped with undisclosed funding. Looking to raise funds from outside

Long Shot

Director: Jonathan Levine

Starring: Charlize Theron, Seth Rogan

Four stars

COMPANY PROFILE

Company name: Klipit

Started: 2022

Founders: Venkat Reddy, Mohammed Al Bulooki, Bilal Merchant, Asif Ahmed, Ovais Merchant

Based: Dubai, UAE

Industry: Digital receipts, finance, blockchain

Funding: $4 million

Investors: Privately/self-funded

Specs

Engine: 2-litre

Transmission: Eight-speed automatic

Power: 255hp

Torque: 273Nm

Price: Dh240,000

Engine: 80 kWh four-wheel-drive

Transmission: eight-speed automatic

Power: 402bhp

Torque: 760Nm

Price: From Dh280,000

KEY DATES IN AMAZON'S HISTORY

July 5, 1994: Jeff Bezos founds Cadabra Inc, which would later be renamed to Amazon.com, because his lawyer misheard the name as 'cadaver'. In its earliest days, the bookstore operated out of a rented garage in Bellevue, Washington

July 16, 1995: Amazon formally opens as an online bookseller. Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought becomes the first item sold on Amazon

1997: Amazon goes public at $18 a share, which has grown about 1,000 per cent at present. Its highest closing price was $197.85 on June 27, 2024

1998: Amazon acquires IMDb, its first major acquisition. It also starts selling CDs and DVDs

2000: Amazon Marketplace opens, allowing people to sell items on the website

2002: Amazon forms what would become Amazon Web Services, opening the Amazon.com platform to all developers. The cloud unit would follow in 2006

2003: Amazon turns in an annual profit of $75 million, the first time it ended a year in the black

2005: Amazon Prime is introduced, its first-ever subscription service that offered US customers free two-day shipping for $79 a year

2006: Amazon Unbox is unveiled, the company's video service that would later morph into Amazon Instant Video and, ultimately, Amazon Video

2007: Amazon's first hardware product, the Kindle e-reader, is introduced; the Fire TV and Fire Phone would come in 2014. Grocery service Amazon Fresh is also started

2009: Amazon introduces Amazon Basics, its in-house label for a variety of products

2010: The foundations for Amazon Studios were laid. Its first original streaming content debuted in 2013

2011: The Amazon Appstore for Google's Android is launched. It is still unavailable on Apple's iOS

2014: The Amazon Echo is launched, a speaker that acts as a personal digital assistant powered by Alexa

2017: Amazon acquires Whole Foods for $13.7 billion, its biggest acquisition

2018: Amazon's market cap briefly crosses the $1 trillion mark, making it, at the time, only the third company to achieve that milestone

The Specs

Engine: 1.6-litre 4-cylinder petrol
Power: 118hp
Torque: 149Nm
Transmission: Six-speed automatic
Price: From Dh61,500
On sale: Now

UAE rugby in numbers

5 - Year sponsorship deal between Hesco and Jebel Ali Dragons

700 - Dubai Hurricanes had more than 700 playing members last season between their mini and youth, men's and women's teams

Dh600,000 - Dubai Exiles' budget for pitch and court hire next season, for their rugby, netball and cricket teams

Dh1.8m - Dubai Hurricanes' overall budget for next season

Dh2.8m - Dubai Exiles’ overall budget for next season

Results

Stage 7:
1. Adam Yates (GBR) UAE Team Emirates – 3hrs 29min 42ses
2. Remco Evenepoel (BEL) Soudal Quick-Step – 10sec
3. Geoffrey Bouchard (FRA) AG2R Citroen Team – 42sec
General Classification:
1. Remco Evenepoel (BEL) Soudal Quick-Step
2. Lucas Plapp (AUS) Ineos Grenaders – 59se
3. Adam Yates (GBR) UAE Team Emirates –60sec
Red Jersey (General Classification): Remco Evenepoel (BEL) Soudal Quick-Step
Green Jersey (Points Classification): Tim Merlier (BEL) Soudal Quick-Step
White Jersey (Young Rider Classification): Remco Evenepoel (BEL) Soudal Quick-Step
Black Jersey (Intermediate Sprint Classification): Edward Planckaert (FRA) Alpecin-Deceuninck

How to avoid getting scammed
  • Never click on links provided via app or SMS, even if they seem to come from authorised senders at first glance
  • Always double-check the authenticity of websites
  • Enable Two-Factor Authentication (2FA) for all your working and personal services
  • Only use official links published by the respective entity
  • Double-check the web addresses to reduce exposure to fake sites created with domain names containing spelling errors

War

Director: Siddharth Anand

Cast: Hrithik Roshan, Tiger Shroff, Ashutosh Rana, Vaani Kapoor

Rating: Two out of five stars 


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