April 18, 2019

Global Commentary

Asian markets finished mixed and little changed after China reported its economy grew 6.4% on an annual basis in the previous quarter. The result was better than expectations and indicates Beijing’s efforts to halt a slowdown are working. In mainland China the Shanghai Composite edged up 0.29%, while the Hang Seng in Hong Kong finished 0.02% lower. Japan’s Nikkei kept early gains to close up 0.25%. Meanwhile the Kospi in South Korea edged lower by 0.12% and Australia’s S&P/ASX 200 led losses in the region as it fell 0.33% on the back of weakness from mining shares.

European markets finished broadly higher, with autos and banks leading the rally after Chinese economic data boosted investor optimism. The pan-European Stoxx Europe 600 was 0.10% higher, but Germany’s DAX gained 0.43% and the CAC 40 in France was 0.62% higher at the close. One of the day’s big winners was Commerzbank after it was rumored that ING had made an informal takeover offer for the bank. In London the FTSE finished up a very slight 0.01% as mining shares weighed on the broader index. In the U.S. markets closed slightly to modestly lower, with the healthcare sector weighing on the broader market as investors worried that policy changes would hurt future profits. The S&P 500 ended the day 0.23% lower, while the Dow Industrials shed 0.05% and the Nasdaq edged down by 0.01%.

 

Cryptocurrencies

Cryptocurrency markets were mixed, with six of the top ten altcoins falling, even as Bitcoin gained 0.7% and climbed back above the $5,250 level. Number two coin Ethereum and number three coin Ripple also gained, rising 0.4% and 4.4% respectively. Bitcoin Cash had the biggest loss in the top ten as it fell 2.3%, but Litecoin was close behind with a 2% fall. Overall markets were nearly evenly split, with 54 of the top 100 altcoins ending the day in positive territory.

 

FOREX

USD/JPY – For a third consecutive day the pair remained in an extremely tight range, ending just slightly above the 112.00 level. That level seems to be acting as support, but the market is equally averse to sending the pair higher as it is to drop below the support. The longer this continues the more violent the eventual move will be, no matter which direction the pair eventually takes.

USD/CAD – This pair remains range bound as well, but in a far larger range, with much greater volatility. Today was an example of that as the pair crashed lower, peeking below the 1.3300 level before rebounding and finishing the day nearly unchanged. All told the daily range was 100 pips, and the pair remained in a range that’s held throughout April.

 

Commodities

Metals – Precious metals were mixed, with gold reaching a new 2019 low as traders seemed uninterested in haven assets in light of a stable U.S. dollar and steady growth from China that’s put growth worries on a back burner. Gold for June delivery lost $0.40, or 0.03%, to settle at $1,276.80 an ounce, but May silver added $0.024, or 0.2%, finishing at $14.939 an ounce.

Oil – Crude fell despite the signs of steady growth in China and the first weekly drop in U.S. crude inventory levels in a month. West Texas Intermediate crude for May delivery fell $0.29, or 0.5%, to settle at $63.76 a barrel. Meanwhile the global benchmark June Brent crude lost $0.10, or 0.1% to finish at $71.62 a barrel.

 

Indices

FTSE 100 – London’s benchmark equity index edged up by just 0.01%, managing to climb out of negative territory despite weakness from major miners, and amid investor worries that the first quarter growth in China is unsustainable. Both Rio Tinto and BHP Group have cut their iron ore production forecasts for the year, leading to losses for the miners. While gains were nearly non-existent for the index it did remain at a six-month high.

S&P/ASX 200 – Australian investors were more concerned about lowered iron ore production forecasts from BHP and Rio Tinto than with the steady growth data from China, leading to a loss of 0.33% for the S&P/ASX 200 as mining shares led the way lower. Shares of BHP Group finished the day 2.72% lower, while Rio Tinto plunged 4.74% and Fortescue Metals plummeted 8.52%. The drop in mining shares came after BHP and Rio Tinto both lowered their iron ore production forecasts for 2019 following tropical cyclones that have affected their mining efforts.


Stocks

Commerzbank – Shares of the second largest German bank gained 2.01% after rumors emerged that ING had approached the bank with a tentative takeover offer. Commerzbank refused to comment on the rumors and the bank is currently in talks with Duetsche Bank regarding a potential merger of the two banks. Analysts feel drastic job cuts would be necessary to make a merged Deutsche Bank / Commerzbank work. That makes it questionable if the German government would want to allow such a merger, although they have seemed in favor of the merger previously, as it is seen as a way to get a massive German banking giant. Commerzbank shares have gained 40% so far in 2019 as investors have been positive regarding the prospects for a merger.

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