Brief: U.S. Stocks See Sharp Sell-Off, Oil Higher on OPEC Pledge

Asian stocks pulled back modestly on Tuesday, driven by yesterday’s sell-off in the United States indices. Stocks are on the backfoot as hopes fade for a second U.S. stimulus deal before the election.

Japan’s Nikkei 225 declined -0.44%, while the Australian ASX 200 was off by -0.71%. The Hang Seng was flat on the day and the Shanghai Composite SHCOMP managed to buck the selling with a 0.45% gain as traders price in a stronger economy in the country after yesterday’s GDP figures.

U.S. stocks were hit hard yesterday with the Dow Jones off 400 points and the S&P500 lower by almost 57 points. Earnings season in the U.S. has been lacklustre so far with some banks struggling, while the stimulus deal hype begins to fade. Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin are said to be making progress, but the former had set a deadline of today for progress and the deal still hangs in the balance.

Netflix Earnings Due

Netflix will dominate the post-market analysis as the company gets set to release earnings after the close. Analyst estimates are for revenue of $6.4 billion and earnings per share of $2.13 a share, but net new subscribers may be the key metric. After adding 15.8 million subscribers in the March quarter and 10.1 million in June, the company forecasted only 2.6 million for the September quarter.

Gold Drops, Oil Gains

Gold was lower by 0.20% as traders reduce their bets on a further stimulus package. Crude oil was higher by 0.50% after yesterday’s meeting of OPEC. The committee pledged action to support oil prices after a recent commitment to cut production in December.

Saudi Energy Minister Prince Abdulaziz said: “Nobody in the market should be in any doubt as to our commitment and our intent”.

In Forex markets, the U.S dollar index was lower with the euro capitalizing, but the pound was able to see substantial gains due to the ongoing Brexit stalemate. The U.K. is looking for a change of attitude from the EU but the time for a deal to be legally approved before the year-end.

Crude Oil Technical Outlook

Crude oil was pressing the $41.00 level and was looking at a test of the $41.44 resistance. The ultimate target is $43.50 which capped prices in late-August. A stop loss on longs could be placed near $40.00.

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Crude Oil Daily Chart

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