August 19, 2019

 

Global Commentary

Asian markets finished mixed on Friday after China threatened to retaliate against the U.S. if they go ahead with additional tariffs. At the same time China also expressed It’s hope for a speedy trade deal. Mainland China’s Shanghai Composite rose 0.29% as investors remained upbeat. In Hong Kong the Hang Seng recovered from early losses to finish 0.94%, despite expectations for further protests in the city over the weekend. In Australia the S&P/ASX 200 wasn’t able to hold onto gains, finishing the session with a 0.04% loss. Japan’s Nikkei pared early losses to edge higher by 0.06%. In South Korea the Kospi fell 0.58%, but was off its worst levels of the day after neighboring North Korea fired two more test missiles into the East China Sea.

Risk appetite returned to European investors on Friday, capping off a tumultuous week with solid gains for the region that were led by the banking and utilities sectors. The pan-European Stoxx Europe 600 advanced 1.24%, with Germany’s DAX adding 1.31% and the CAC 40 in France ending the day 1.22% higher. A technical glitch kept London’s FTSE from opening for 2 hours, but the index turned higher once it was able to open and finished the day 0.71% higher. 

In the U.S., markets rallied strongly, but not enough to completely erase a weekly loss. On Friday the Dow Industrials added 1.20%, while the S&P 500 was 1.44% higher and the Nasdaq advanced 1.67%. For the week, however, the Dow finished 1.5% lower, the S&P 500 ended down 1%, while the Nasdaq retreated 0.8%.

 

Cryptocurrencies

Cryptocurrencies began the day with gains, but by the end of the day were flat to lower, with Bitcoin edging lower by 0.3%, but holding above the psychologically important $10,000 level. All of the other top ten altcoins were lower in the range of 1%-2%, although Litecoin lost 2.4% and Monero was just 0.4% lower. Overall just 26 of the top 100 cryptocurrencies finished the day with gains.

 

FOREX

EUR/USD – The most heavily traded pair fell for a fourth session in a row Friday, breaking below the 1.1100 level and looking as if it would make a run to test the 1.1000 level next week. If the pair breaks below that level it will be the first time since May 2017, and it will set up a potential test of the next support level around the 1.0850 handle.

GBP/USD – Despite ongoing worries over the possibility of a no-deal Brexit, the Pound recovered further against the U.S. dollar on Friday, taking this pair back above the 1.2100 level. There’s a slight resistance just above at the 1.2175 level, and it could hold next week as traders will likely be cautious ahead of the Jackson Hole symposium, where Fed chair Jerome Powell will speak on Friday.

 

Commodities

Metals – Precious metals fell on Friday as risk appetite returned to investors, but gold was still able to notch a third consecutive weekly gain. Gold for December delivery fell $7.60, or 0.5%, to settle at $1,523.60 an ounce. On a weekly basis gold was 1% higher, and so far in August it is up 6%. September silver lost $0.092, or 0.5%, to finish at $17.122 an ounce, a gain of 1.1% for the week.

Oil – Crude gained on Friday as traders were obviously unwilling to go home with short positions for the weekend given the uncertainties in the Persian Gulf and Middle East. West Texas Intermediate crude for September delivery rose $0.40, or 0.7%, to settle at $54.87 a barrel. October Brent crude added $0.41, or 0.7%, to $58.64 a barrel. For the week WTI crude was up 0.7%, while Brent crude gained 0.2%.

 

Indices

FTSE 100 – London’s equity market suffered its worst outage in eight years on Friday as the London Stock Exchange suffered from a technical glitch that kept it from opening for 100 minutes. It was the worst such delay since 2011, and the second outage for the LSE in the past 14 months. It didn’t keep investors down however, as the FTSE rebounded from the six month low hit the previous session and finished the day 0.71% higher.

Hang Seng – The benchmark Hong Kong equity index began the day sharply lower on expectations for more protests over the weekend in the city. While the threat of protests didn’t disappear, the losses for the market did, and by the close the hang Seng was trading up by 0.94% to lead gains across Asia. The recovery came as mainland Chinese investors went bargain hunting among the discounted Hong Kong shares. Banks still remained under pressure, even though property shares and pharmaceuticals led the day’s gains.


Stocks

Canopy Growth – The world’s largest cannabis company reported second quarter earnings on Wednesday after markets closed, and investors responded by sending the stock lower by more than 15%. The reason behind it was that Canopy reported a loss of over $1 billion Canadian dollars for the quarter, while also missing revenue estimates. The actual loss was C$1.28 billion, or C$3.70 a share, versus a loss of C$0.40 a share in the same quarter last year. Investors have short memories however, and Friday saw the stock rebound, rising 3.66%, presumably on bargain hunting. Shares remain up by 5.6% since the start of the year and Friday’s rebound indicates investors are willing to give Canopy at least one more quarter to prove itself.

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