December 14, 2018

Global Commentary

Asian markets moved broadly higher for a second consecutive day Thursday as optimism over trade talks between the U.S. and China remained at high levels. Mainland China’s Shanghai Composite gained 1.23% as investors there were encouraged by positive news regarding U.S.-China cooperation on trade issues so far. Hong Kong’s Hang Seng led the region, gaining 1.29% as banks and property developers remained strong. A weaker Yen helped lift Japanese equities, giving the Nikkei a fourth consecutive winning session as it rose 0.99%. In South Korea the Kospi was 0.62% higher, and the S&P/ASX 200 in Australia lagged as it edged up by 0.14%.

After two sessions of outsized gains European markets took a break Thursday, ending the session modestly lower across the board. News from the ECB of the end of bond buying didn’t help sentiment as it also promises an end to easy money. The broad based Stoxx Europe 600 finished down by 0.16%, while the DAX in Germany lost 0.04% and the CAC 40 in France slipped 0.26%. London’s FTSE finished 0.04% lower as investors are taking a wait-and-see attitude after Prime Minister Theresa May survived the no-confidence vote yesterday. In the U.S. markets were mixed and the Nasdaq snapped its three session winning streak after flipping between gains and losses throughout the day. At the close the Dow Industrials were up by 0.29%, while the Nasdaq fell 0.39% and the S&P 500 edged lower by 0.02%.

 

Cryptocurrencies

Bitcoin slumped further on Thursday, hitting a 15-month low as it fell another 5.5%. The rest of the market followed the lead of the leading cryptocurrency and headed lower as well. In the top ten altcoins Ripple was the best performer as it dropped just 2.9%, while Bitcoin Cash was the worst performer with a loss of 11.8%. Losses were extremely broad based, with just seven of the top 100 cryptocurrencies rising.

 

FOREX

USD/JPY – The pair continued creeping higher on Thursday, but remained away from the elusive 114.00 level. That level has been resistance over the past month, and traders seem reluctant to test the level again. Heading into the weekend it’s likely the pair will remain below the 114.00 level.

AUD/USD – The pair continued creeping higher for the fourth session in a row, although it finished off its session high as the 0.7250 level presented resistance. We believe the pair could make a move as high as the 0.7270 level, but will face enough resistance to get pushed back from that level.

 

Commodities

Metals – More USD strength weighed on precious metals, and saw gold building on its losses for the week, although silver managed a slight gain. Gold for February delivery lost $2.60, or 0.2%, to settle at $1,247.40 an ounce. Week to date, it has lost 0.4%. March silver settled at $14.855 an ounce, up just under $0.005 for the session.

Oil – Crude rallied late in the session after news came out that Saudi Arabia is planning on cutting shipments of crude to U.S. refineries to avoid an expansion of U.S. inventories. January West Texas Intermediate oil rose $1.43, or 2.8%, to settle at $52.58 a barrel, and on ICE Futures Europe global benchmark February Brent crude added $1.30, or 2.2%, to end at $61.45 a barrel.

 

Indices

S&P500 – The S&P 500 traded back and forth in a tight range all day before edging lower by 0.02% as investors are taking a wait-and-see attitude towards U.S.-China trade relations. The index was also mixed on a sector basis, with six sectors rising and five sectors falling. Not surprisingly the defensive sectors outperformed, with the utilities sector rising 0.88% and the consumer staples sector gaining 0.69%. On the downside the materials sector was by far the worst performer as it fell 1.13%.

Nikkei – The benchmark Japanese equity index gained for the third out of the past four sessions on Thursday, adding 0.99% as the Yen continued to soften versus major rivals. Major exporters saw good gains on the Yen weakness, and Japanese domestic issues continue climbing on investor optimism over trade talks between the U.S. and China. Banks and insurers have also performed well this week as bond yields have been on the rise.


Stocks

Facebook – Shares of the social media company are on track for their first down year ever, but JPMorgan analysts say 2019 will be far better. In fact, the company said Thursday that Facebook is its “best idea” for internet stocks next year, expecting the company to climb the wall of worry that’s been building in 2018. Facebook shares are down 18% in 2018, so they are in a good position for a rebound, assuming they can halt the flow of negative news, and deliver on the potential for increased ad revenue from Stories and the WhatsApp and Messenger platforms. Thursday saw shares finish 0.28% lower.

 

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