September 20, 2019


Global Commentary

Major indices across Asia were mostly higher Thursday following the U.S. central bank rate cut overnight, and the Bank of Japan holding firm on their monetary policy as expected. The Nikkei in Japan finished the session 0.38% higher after the BoJ monetary policy decision, which had been widely anticipated by investors. On mainland China, the Shanghai Composite rose 0.46%, but over in Hong Kong the Hang Seng gave up an early lead to trade down by 1.07% by the close. Australia’s S&P/ASX 200 tacked on 0.54%, and in South Korea the Kospi was 0.46% higher at the close.

European markets closed broadly higher, with banks pacing the gains, as investors had their first opportunity to respond to the Fed rate cut from the previous day. The Bank of England also weighed in with their monetary policy decision, keeping rates unchanged as Brexit uncertainty is lingering. The pan-European Stoxx Europe 600 closed the session 0.61% higher, with Germany’s DAX gaining 0.55% and the CAC 40 in France added 0.68%. London’s FTSE finished 0.58% higher as well, with the bank subindex leading as it tacked on 1.4% in response to the overnight Fed rate cut.

In the U.S. markets opened to gains in response to better than expected housing and manufacturing data, but saw gains fizzle out in the afternoon to finish mixed and flat. The Dow Industrials fell 0.19%, while the S&P 500 was basically unchanged with a gain of 0.09 points, and the Nasdaq closed 0.07% higher.



The rally in altcoins paused on Thursday, although Ethereum still gained 4%, and Bitcoin perked up as it advanced 0.7% after falling all week. The other altcoins in the top ten found themselves pulling back however, putting the rally that’s lifted most this week on hold. Number three coin Ripple has seen the best gains in the top ten this week, excepting new arrival Stellar, but on Thursday it also saw the worst losses as it dropped 4.1%. Overall there was a decidedly bearish sentiment, with 71 of the top 100 cryptocurrencies ending lower.



USD/JPY – The pair fell in response to the drop in U.S. interest rates, slipping below the 108 level intraday. There was support for the pair under that level though, and it rebounded enough to get slightly back above the 108 level by the close. That indicates we still have good support at this level, although we haven’t seen enough strength to lift the pair to the next resistance level just below the 109 handle.

USD/CAD – After closing higher for six consecutive sessions the pair slipped lower on Thursday to close back below the 1.3300 level. It wasn’t too surprising as the 1.3300 level reached in the prior session is a good resistance level. It doesn’t mean we won’t get another test of the 1.3300 level, but even if we do the pair is going to struggle to get through the band of resistance that stretches up to the 1.3380 level.



Metals – Precious metals fell on Thursday as investors considered the rate cut from the Federal Reserve to be a “hawkish cut”, primarily because the guidance indicated there won’t be any more rate cuts in 2019, and perhaps not even in 2020. Gold for December delivery fell $9.60, or 0.6%, to settle at $1,506.20 an ounce, while December silver lost $0.035, or 0.2%, to $17.884 an ounce.

Oil – Crude rose early Thursday following reports that Saudi Arabia is contacting trade partners to fill holes in its crude production, but gave up the gains later in the day as tropical storm Imelda is expected to shut down Gulf Coast refining production, cutting into crude demand. October West Texas Intermediate oil rose just $0.02 to settle at $58.13 a barrel, but November Brent crude, the global benchmark, added $0.80, or 1.3%, to end at $64.40 a barrel.



FTSE 100 – London’s benchmark equity index gained 0.58% on Thursday, with banks front-running the gains following the U.S. central bank rate cut from the previous day. Gains accelerated in the afternoon following the widely expected Bank of England decision to keep interest rates unchanged at this time. Retailer Next led losses as shares fell nearly 6% following news that the autumn fashion lineup has seen a tepid response from consumers, likely because of unseasonably warm weather. At the other side of the spectrum British Airways parent IAG gained 3.8% after Morgan Staley initiated coverage with an overweight rating.

Nikkei – Japan’s benchmark equity index added 0.38% on Thursday, holding onto early gains after the Bank of Japan voted to keep its ultra-loose monetary policy unchanged, while also hinting at lowering interest rates further into negative territory when it meets in October. One of the best performers of the day was Sony Financial, which jumped 3.38% higher after parent company Sony responded to activist investor Daniel Loeb’s suggestion to sell Sony Financial by saying they would keep their stake in Sony Financial as it had contributed “substantially” to profits. 


Target – Shares of retailer Target rose 0.84% on Thursday following the announcement of a $0.66 a share quarterly dividend. That’s the 209th consecutive quarterly dividend paid out by Target. Dividends began in 1967 when the company first became publicly held. While the consistent and predictable dividend is one reason to buy the stock it isn’t the only reason. Investors have been piling into the stock this year, leading to a gain of 63.4% since the start of 2019, primarily because Target has been delivering the kind of growth that makes investors drool. In addition to the quarterly dividend and growth, Target also announced a $5 billion stock buyback for the coming year, adding a bit more fuel to the upward momentum for the stock.

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