Stocks in the United States suffered their largest monthly loss in 7 years during the month of October 2018.
While that's certainly big news, it shouldn't overshadow the fact that other niches of the global financial markets have experienced heightened volatility, as well.
Looking at some of the events that will (or could) unfold during the balance of 2018, it's hard to see the markets slowing down much soon.
Aside from US midterm elections, some of the other important narratives to follow through the end of the year have been:
The resumption of Iran sanctions, crude oil boycott
Continuation of US-China trade negotiations
The "conclusion" of Brexit negotiations
Meeting of the G20
It should be noted that the passing of one of the above-mentioned events doesn't necessarily mean the fun is over. For example, let’s consider crude oil.
While the Iran sanctions restarted in early November, we don’t know their full impact yet. As of now, the United States has issued some exemptions to big importers of Iranian oil - that means they can keep buying without being penalized by the US. But no one knows for sure how long those exemptions will remain in place.
If you are looking to learn more about different niches of the financial markets that have been moving in recent weeks, such as crude oil, a new episode of Closing the Gap - Futures Edition is well worth a few moments of your time.
Another important market narrative explored on the show is soybeans.
This important global agricultural commodity has seen its price plummet in 2018, largely because of the US-China trade war. Recent data suggests that China has purchased roughly 94% less soybeans from the United States in calendar year 2018, as compared to calendar year 2017. That’s seismic in terms of impact on the soybeans market.
When rumors swirled at the start of November that China and the US may have had a breakthrough in resolving their tariff conflict, soybean prices rallied 7% in two days.
As you can see in the price chart below, soybeans would probably have plenty of room left to run if a favorable trade pact was reached between the US and China prior to year-end:
If currencies are more your cup of tea, then developments in Europe are worth watching. The British Pound bounced sharply at the start of November due to growing expectations that “Brexit” negotiations with Europe could be finalized.
The Pound has been a big currency mover over the last several years, after it got annihilated in the wake of the Brexit vote. The Pound was pressured along with everything else in October, and declined toward 52-week lows - but may now be poised to claw back some of those losses. Brexit negotiations with the European Union are winding down, and that bring more volatility to the Pound in coming weeks.
Another important barometer to watch these days is the US Dollar versus Chinese Yuan exchange rate. The Yuan has been depreciating at a steady pace against the US Dollar throughout 2018. However, a conclusion of the trade spat between the world's two biggest economies could catalyze a big rally in the Chinese currency, as well.
Trading action in the the American and Chinese currencies has followed a very clear pattern in recent months. Any rumor suggesting the trade war may finally be over has seen an appreciation in the Yuan versus the Dollar, while the opposite news has produced the inverse effect.
No matter what you're trading, this particular episode of Closing the Gap will provide you with broadened perspective on worldwide financial markets, and may even help you identify new trading opportunities that fit your strategic approach and risk profile.
We welcome you to reach out and tell us about any other stocks, commodities, or other assets you might be following. Just send us a message on Twitter (@tastytrade) or email (email@example.com) - or leave a comment in the space below.
We look forward to hearing from you!
Sage Anderson has an extensive background trading equity derivatives and managing volatility-based portfolios. He has traded hundreds of thousands of contracts across the spectrum of industries in the single-stock universe.
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