Australian Dollar, Snapchat Earnings, S&P 500, Chinese Yuan and Tariffs – Asia Pacific Open Markets
- Aussie rally likely to reverse along with S&P 500 index on Tuesday
- Snapchat earnings disappoint, sending social media shares tumbling
- Chinese yuan in focus as US President Joe Biden promises tariff review
Monday Market Summary – Sentiment is improving, or at least it has been
Global risk appetite was improving to begin the new trading week. S&P 500, Dow Jones and Nasdaq 100 futures rose 1.85%, 2.01% and 1.64%, respectively. As a result, the Australian and New Zealand dollars tied for opinions outperformed. The weakness of the US dollar linked to a safe haven, especially with the rise of the euro after the news that The European Central Bank raised expectations for a rate hike forward for the third quarter.
Or at least that’s what it looked like. Right after the shares closed for trading on Wall Street, Snapchat announced its latest earnings report. The social media company estimated that revenue and adjusted Ebitda (earnings before interest, taxes, depreciation and amortization) would be below the minimum guidelines. Snape also said that the macroeconomic environment “deteriorated more and faster than expected.”
As a result, Snap Inc. A massive 30 percent drop in its share price is in after-hours trading – see chart below. There was a domino-like effect on other corners of the market. Facebook/Meta shares fell about 7.5%. This also sent S&P 500 futures into the red, evaporating much of the gains seen from Monday’s trading session.
Impact of SNAP on the market after earnings
Chart created in TradingView
Tuesday’s Asia Pacific Trading Session – Australian Dollar, ASX 200, Chinese Yuan
A shift in risk appetite put the Australian and New Zealand dollars at risk during the Asia-Pacific trading session on Tuesday. Anti-risk currencies such as the US dollar and the Japanese yen can benefit. This is also for what will be a quiet day in terms of economic event risk, with traders focusing on overall risk appetite.
This could also leave regional bourses vulnerable, putting the ASX 200, Nikkei 225 and Hang Seng indexes at risk. The Chinese yuan has also received some attention lately. USD/CNH is down 1.47% in its worst drop since November 2020 last week. US President Joe Biden announced overnight that he would review the previous administration’s Chinese tariffs. The yuan rose more. This could increase demand for Chinese goods, leading to increased capital inflows and strengthening the local currency.
Australian dollar technical analysis
On the daily chart, AUD/USD has broken above the descending trend line from April. Further confirmation of the upside could point to more gains to come, with focus on the early May high at 0.7269. The 50-day simple moving average is also not far from there. Otherwise, a return lower could open the door for a resumption of losses from April to June 2020 lows.
AUD/USD daily chart
Chart created in TradingView
– By Daniel Dobrovsky, strategic for DailyFX.com
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