IT Selloff Continues: Twitter and Facebook Still Did Not Find Support, Global Stocks Steady

By:

Updated: Jul 31, 2018, 09:22 UTC

Current sale of IT shares should be considered as a correction as this sector was the key driver of the market in the previous months. Eurozone annual inflation rises 2.1%, slightly above expectations, while growth in the Eurozone grew by 2.1%, below analysts expectations.

Sale off of technological stocks continued yesterday. Twitter and Facebook, the biggest movers last week, could not find support yesterday; moreover, they fell by 7.7% and 2%, respectively. Both shares are in the oversold area, according to the RSI index that fell below the signal level 30 on the daily charts. However, the technical analysis points out that the proper moment to buy will only be when the current sales impulse will lose power and the RSI will return above 30.

Current sale of IT shares should be considered as a correction as this sector was the key driver of the market in the previous months. Twitter lost 27% in the latest three trading sessions, but this huge move returned the company’s capitalization to the levels of May.

Despite the tech sale on Monday, global stocks are trading steady on Tuesday morning with the European and Asian markets slightly higher.

Suggested Articles

The currency market

In the currency market, the dollar was under some pressure following the data that indicated a weakening of the inflation in the Eurozone. The slowdown in prices in Germany and Spain can be seen as a harbinger of the inflation easing in the entire euro region, the preliminary statistics on which will be published later today. Low inflation increases the real value of the investment in the euro and makes it a bit more attractive to invest in this currency at a time when the ECB intends not to raise the rate for at least a year. Against this backdrop, the single currency returned to the area above 1.17 and returned back almost completely its fall after the ECB press conference last week.

The currency market on Tuesday morning managed to avoid serious fluctuations. The Bank of Japan made only minor tweaks in its monetary policy, promising more flexibility in carrying out QQE and promising to keep the rates “very low” for some time, as the inflation is still far from the target 2%. The markets had feared that the Bank of Japan would start curtailing incentives aggressively, along with the ECB, which is reducing its asset purchases to the balance and with the Fed, which raises rates and reduces its balance. The simultaneous winding down of incentives from the “big troika” would be an even more serious test for markets that are already concerned about the uncertainty surrounding international trade policy.

This article was written by FxPro

About the Author

Ed Andersoncontributor

Ed Anderson has over 35 years of experience in the financial markets, having worked in London, New York, Toronto, Singapore and Australia. Ed provides in-depth Fundamental and Technical Analysis, as well as frequent market insights on multiple asset classes, to the benefit of FxPro clients.