January 20, 2020

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Global Commentary

Asian markets tracked higher on Friday following the overnight gains on Wall Street, and in response to the 6.1% GDP growth reported by China for the fourth quarter. Mainland China’s Shanghai Composite opened to losses, but turned higher and added 0.05% following the GDP results. In Hong Kong, the Hang Seng had a stronger reaction, rising 0.60% by the close. Australia’s S&P/ASX 200 rose for a fourth consecutive session, adding 0.32% and closing at a new record high. In Japan the Nikkei advanced 0.45%, helped by weakness in the Yen. South Korea’s Kospi struggled around unchanged levels, but still managed a modest 0.11% gain.

Strength from Wall Street and data showing China’s economy grow at the expected pace in 2019 helped lift sentiment, leading to gains for European markets on Friday. The pan-European Stoxx Europe 600 rose 0.96%, while Germany’s DAX gained 0.72% and the CAC 40 in France jumped 1.02% higher. In London, the FTSE 100 rose 0.85% with some weakness from the Pound for the first time in four days helping boost the index. 

In the U.S., markets edged up to new record closing highs, supported by good corporate profits seen thus far for the fourth quarter, and by economic data which indicates the U.S. economy remains healthy. The Dow Industrials closed with a gain of 0.17%, while the S&P 500 advanced 0.39% and the Nasdaq was up 0.34%.



Cryptocurrencies climbed higher once again on Friday with Bitcoin flirting with the $9,000 level as it added 2.3% for the day. Bitcoin SV was the only top ten altcoin to fall, losing 10.5% as it corrected somewhat after doubling earlier in the week. Rival Bitcoin Cash picked up strength though, rising 12.6%. And the battle for the number ten spot continued as Stellar returned to that position with a 12.7% gain. Traders are watching Ethereum Classic as well as the original Ethereum chain gained 22.9% and slid into the twelfth spot by market cap. Overall 75 of the top 100 cryptocurrencies finished with gains.



EUR/USD – The resistance at the 200 day moving average proved too much for the pair, sending it crashing down on Friday. Four days worth of upside evaporated as the pair sliced through the 1.1100 level to settle around the 1.1085 level. That also had the pair closing below the 50 and 20 day moving averages for the first time in six weeks, making a solidly bearish statement heading into the weekend.

GBP/USD – The strength in the U.S. dollar also erased nearly three days of gains for the Pound on Friday. By the close the pair had edged below the 1.3000 level as well, closing at 1.2996 and leaving the door open for further downside when traders return on Monday.



Metals – Precious metals gained Friday, but slipped lower on a weekly basis as haven demand has been dented by the decreased tensions in the Mid-East and the phase one trade deal between the U.S. and China. February gold rose $9.80, or 0.6%, to settle at $1,560.30 an ounce. For the week gold was $0.20 lower, which is somewhat positive given the increased risk appetite seen in equity markets. March silver, meanwhile, picked up $0.134, or about 0.8%, finishing at $18.073 an ounce and losing 0.2% for the week.

Oil – Crude edged higher Friday as traders continue to weigh the potential impact of the phase one trade deal between the U.S. and China. West Texas Intermediate crude for February delivery ended little changed, up $0.02, or 0.03%, to settle at $58.54 a barrel, and March Brent, the global benchmark, advanced $0.23, or 0.4%, to end at $64.85 a barrel. However, for the week both contracts suffered declines for a second week. Brent saw a weekly loss of about 0.2%, while WTI saw a nearly 0.9% weekly drop.



FTSE 100 – London’s benchmark equity index rose 0.85% on Friday, helped higher by Chinese GDP that was in-line with expectations, strength from other global equity markets, and weakness from the Pound versus the U.S. dollar. British Airways parent IAG rose 5.11% after announcing they were lifting restrictions on non-EU investors buying its stock. Miners also gained on the good Chinese GDP data, with BHP finishing 2.30% higher, while Rio Tinto gained 2.75%, Anglo American added 3.22%,and Antofagasta rose 1.11%.

S&P/ASX 200 – In Australia, the benchmark S&P/ASX 200 rose 0.32% on Friday. It was the fourth consecutive winning session for the index, and the second consecutive record close as investor sentiment was boosted by overnight records on Wall Street and by Chinese GDP data. Major miners posted solid gains, with BHP rising 1.17%, Rio Tinto adding 1.78%, and Fortescue Metals up 3.73%. The tech sector continued its gains, and the big four banks closed higher in a range of 0.4% to 0.9%. Oil stocks capped gains somewhat however, with Woodside Petroleum losing 1.22%, and Santos falling 0.79%.


Pinterest – Shares of the social media stock have had an outstanding week, rising more than 17% as good news has been piling up around the stock. The rally kicked off on Tuesday, with the stock rising 10.5% after it reported a larger user base than Snapchat. That jump took the stock back above its $19 IPO price for the first time since this past October, when the stock plunged more than 20% in one day after missing revenue expectations. The rally was extended on Friday after a Wells Fargo analyst upgraded the stock to overweight from equal weight, citing material underperformance in the shares despite solid fundamentals and audience engagement. He also said he sees better performance from Pinterest going forward as the company improves its monetization, increases user engagement with more video on the platform, and brings in a larger international base as it is investing in an overseas sales force. Shares finished Friday at $23.00 for a 0.22% gain.

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