February 19, 2019

 

Global Commentary

Asian markets finished broadly higher on Monday as investors were anticipating positive results from the ongoing trade negotiations between the U.S. and China. On mainland China the Shanghai Composite surged higher by 2.68%, while Hong Kong’s Hang Seng advanced 1.60%. Chinese investors were especially upbeat after learning the U.S. and China planned on extending their two day negotiations last week into the current week. In Japan the Nikkei jumped 1.82% as investors were optimistic over trade relations between the U.S. and China and a softer Yen helped give an added boost. South Korea’s Kospi finished 0.67% higher and in Australia the S&P/ASX 200 advanced 0.39%.

European markets finished mixed, but the broad based Stoxx Europe 600 managed to end at a four month high as it gained 0.23%. Germany’s DAX bounced back and forth over unchanged levels before finally finishing down 0.01% due to pressure from the automobile sector. In France the CAC 40 added 0.30% while London’s FTSE fell 0.24%. Shares of miners were strong, but that was offset by losses from major U.K. banks after a major stakeholder sold $1 billion worth of Barclay’s stock ahead of its quarterly earnings results.

U.S. markets were closed in observance of Washington’s birthday.

 

Cryptocurrencies

Cryptocurrencies surged higher on Monday with Bitcoin nearing $4,000 as its adding 7.9%. Market watchers are claiming the bulls may be coming back in force as they see the release of JPMorgan’s JPM Coin last week as a sign of wider institutional acceptance of cryptocurrencies on the horizon. As good as Bitcoin’s gain is, its child Bitcoin Cash is doing far better, gaining 17.5% today. Also surging are Ethereum and Litecoin, with both up more than 11%. Overall there are just seven of the top 100 cryptocurrencies trading lower today, and the rally has seen the broader market add more than $10 billion to its market capitalization.

 

FOREX

EUR/USD – After printing the large bullish hammer candle last Friday, this pair continued higher Monday. The move took it back above the 1.1300 level and it closed above that level as well, which is a bullish sign. The pair had been quite oversold, and even with its move on Monday it remains well below the 20 day moving average, with the RSI in bearish territory under the 50 mid-point.

GBP/USD – The Pound also showed strength against the U.S. dollar on Monday by gapping higher at the open and continuing to make steady gains all day. The move took the pair above the 1.2900 level and it closed above that level as well, which is a bullish sign for the Pound. The close around 1.2925 has the pair sitting right at the 20 day moving average, so we’ll have to see if that acts as resistance and pushed the pair back, or if we get a breakout.

 

Commodities

Metals – Precious metals markets in the U.S. remained closed for Washington’s birthday, but were still trading on Globex. Gold was up marginally thanks to a weaker U.S. dollar, adding 0.1% to $1,324.50 an ounce, while silver was up 0.25% at $15.81 an ounce.

Oil – Crude markets were also closed in the U.S. on Monday, but London trading continued, as did electronic trading. Brent futures were down $0.17 at $66.08 a barrel late Monday in London, while U.S. futures added $0.30 at $55.89 a barrel. Crude is up 25% already in 2019 and is on track for its best first quarter performance since 2011.

 

Indices

DAX – Germany’s benchmark equity index bounced back and forth over unchanged levels on Monday as the broader market showed strength on hopes that the U.S. and China would finally resolve their trade issues, while the automotive sector kept any gains in check as investors worried about the possibility of U.S. tariffs on automobiles and automobile parts. Shares of Volkswagen finished the day 1.41% lower, while Daimler dropped 0.57%.

Nikkei – Japan’s benchmark equity index climbed 1.82% higher on Monday, supported by a weaker Yen against the U.S. dollar and by the optimism over trade negotiations between the U.S. and China. Also helping was economic data showing machinery orders in December dropped just 0.1% from the previous month. Economists had expected a 1.1% drop. Shares of Fast Retailing were up 3.90% and Bridgestone advanced 4.93%, while Japan Steel saw its shares rise 4.35%.

 

Stocks

Rio Tinto – Shares of the Australian miner closed at $92.60 a share on Monday in Sydney, approaching its highest level in the past 52 weeks, and hitting an intra-day multi-year high of $93.50 as well. Shares have been rallying on the back of a surge in iron ore prices. Traders are betting on more gains for iron ore as they see the U.S. and China nearing a trade deal that is hoped to reignite Chinese imports of the commodity. The last time iron ore prices surged like this was in 2008, and Rio Tinto shares traded up to $146 at that time. Investors are hoping for a repeat.

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