China Unhappy with Pelosi Trip
Reports suggest that US House of Representative Speaker Nancy Pelosi will visit Taiwan. In response, Chinese foreign ministry spokesman Zhao Lijian commented that this would be "a gross interference in China's internal affairs" and lead to "serious developments and consequences."
NAS100/US30 and NAS100/SPX500 - Hourly Charts
This escalation has introduced an added element of risk, which is being felt mainly by the tech-heavy Nasdaq. Since the news was released, the NAS100 has underperformed the US30 and SPX500. This market action is hardly surprising, given that around 90% of the world's advanced chips come from Taiwan.
Chips from Taiwan Semiconductor Manufacturing (TSM.us) are integral to Apple, Qualcomm and AMD.us products. To add to this complexity, China is a significant customer of US tech companies, with iPhones generally manufactured on the mainland.
NAS100 Hourly Momentum
The hourly FXCM Nasdaq CFD, NAS100, shows the deterioration in the index. Its stochastic has dropped below 20, suggesting an entrenched bearish momentum. As long as the indicator holds these levels, the NAS100 will be under pressure. The risk premium is adjusting as the market digests how Pelosi's trip will affect US/China relations.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.