Investing.com - Financial Markets Worldwide

Early Dollar Strength Holds Markets Down, Can It Last

Published 03/04/2012, 01:58 AM
Updated 07/09/2023, 06:31 AM
NDX
0.38%
UBSN
0.00%
SINA
345.00%
GC
0.39%
SI
0.09%
CL
0.95%
BIG
-0.11%
AGQ
-1.69%
UCO
-0.83%

This morning, the S&P 500 Index e-mini futures (ES-H2) are trading lower 4.00 points to 1370.50 per contract. The real catalyst for the early morning weakness in the S&P 500 Index is the fact that the U.S. Dollar Index is trading higher. As you should all know by now, a stronger dollar usually means a weaker stock and commodity market. Today before the opening bell, traders and investors can see the early weakness in the SPDR Gold Shares (NYSEARCA:GLD), ProShares Ultra Silver ETF (NYSEARCA:AGQ), and the ProShares Ultra DJ-UBS Crude Oil (NYSEARCA:UCO). It is important to remember that whenever the U.S. Dollar Index is strong before the opening bell it will have a tendency to fade shortly after the opening bell helping to inflate asset prices. We shall see if this phenomenon happens again as if often does.

Last night, the Asian markets were mostly higher across the board. The big winner last night was the Shanghai Index (China) finishing higher by 1.42 percent. This tells us that the Chinese ADR's will likely be strong at the start of the trading day. If the U.S. market is weak at the open and remains weak throughout the trading session then traders should not expect the Chinese ADR's to do all that much. Leading Chinese ADR's such as Sina Corp (NASDAQ:SINA), and Baidu Inc (NASDAQ:BIDU) are already slightly higher in the pre-market.


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