October 15, 2019

 

Global Commentary

Asian markets climbed broadly higher Monday morning in response to last Friday’s news from the U.S. that a tentative trade deal had been reached with China. Japan’s stock markets remained closed for a public holiday. In mainland China, the Shanghai Composite jumped 1.15% higher, and over in Hong Kong the Hang Seng added 0.81%. Those gains came despite data showing September exports in China fell 0.7%. In Australia, the S&P/ASX 200 advanced 0.54%, with miners and banks both making good gains. South Korea’s Kospi finished 1.11% higher, with index heavyweight Samsung advancing 1.73%.

European markets closed broadly lower after investors learned Chinese negotiators want another round of talks before signing off on phase one of the trade deal struck last week. There were also questions about the details of the deal as negotiators have been vague regarding what’s been agreed to. The Pan-European Stoxx Europe 600 finished 0.49% lower, while Germany’s DAX fell 0.20%, and the French CAC 40 was off by 0.40%. In London, the FTSE 100 retreated 0.46% as investors are awaiting more details regarding Brexit.

In the U.S., markets edged lower at the close as investors weighed the realities of the U.S.-China trade deal, and caution over upcoming earnings kept investors from making any big bets. At the close the Dow Industrials were 0.11% lower, while the S&P 500 edged down 0.14%, and the Nasdaq inched lower by 0.10%.

 

Cryptocurrencies

Cryptocurrencies edged higher on Monday, with Bitcoin gaining 0.4% and all of the other top ten cryptocurrencies posting gains as well. Number ten coin Stellar was the best performer as it added 4.8%, but number three coin Ripple wasn’t far behind with a 4.2% gain. Number two coin Ethereum also advanced 2.6%, while the rest of the top ten altcoins saw gains between 1% and 2%. Overall markets were somewhat mixed, with 64 of the top 100 cryptocurrencies ending the day in positive territory.

 

FOREX

USD/JPY – The pair gapped lower at the open and looked to retreat on news that the U.S.-China trade deal still faces hurdles, but by the end of the day trader worries had receded and the pair was back at the stiff resistance of the 108.40 level. It wasn’t able to get past that resistance, and if it does on Tuesday it will face another strong resistance level just above at the 108.90 level.

GBP/USD – Brexit concerns pulled this pair lower at the open as the Pound was broadly weaker versus rivals. It was able to recover the early losses, but still finished the day below Friday’s closing levels as it was unable to get above the 1.2650 level. Brexit news will continue to drive the Pound Sterling for the rest of October as traders worry that the October 31 deadline will arrive without a deal in place between the U.K. and the European Union.

 

Commodities

Metals – Precious metals rose as phase one of the U.S.-China trade deal seemingly hit a snag, and the Federal Reserve announced it was embarking on a massive bond buying program. December gold climbed by $8.90, or 0.6%, to settle at $1,497.60 an ounce, while December silver added $0.166, or 1%, to finish at $17.71 an ounce.

Oil – Crude fell on demand worries after the U.S.-China trade deal was called into question. West Texas Intermediate crude for November delivery fell by $1.11, or 2%, to settle at $53.59 a barrel, while global benchmark December Brent crude lost $1.16, or 1.9%, to settle at $59.35 a barrel.

 

Indices

FTSE 100 – London’s benchmark equity index fell 0.46% on Monday as investors looked for signs of progress in Brexit negotiations. Natural resource shares led losses after China reported weaker than expected September exports. On the London Stock Exchange shares of BHP fell 2.64%, Rio Tinto was 2.24% lower, and copper producer Antofagasta shares lost 1.03%. Shares of Tullow Oil were also down 0.96% and BP was nearly flat as it fell 0.16%.

S&P/ASX 200 – Australia’s benchmark equity index rose 0.54% on Monday, with miners posting particularly good gains. BHP Group saw its shares rise 1.98%, and Rio Tinto gained 2.16%, while Fortescue Metals finished 1.59% higher. Oil producers also outperformed and Woodside Petroleum advanced 2.50%, while Santos surged 5.65% after acquiring ConocoPhillips’ northern Australia interests. The big four banks also firmed moderately, gaining in the range of 0.4% to 0.7%.


Stocks

Goldman Sachs – It’s expected that Goldman Sachs could take a write down of $264 million on its 1.4% stake in WeWork after the company has seen its value plummeting following the cancellation of its IPO plans. Goldman has also seen $250 million in losses from purchases of IPOs from earlier this year, such as Uber, Tradeweb, Headhunter Group, and Avantor. These four stocks make up roughly 55% of Goldman’s $2.6 billion portfolio as of mid-year. These losses are expected to impact the third quarter results when Goldman Sachs reports on Tuesday. Investment bank Jeffries has already taken a $146 million write down for its stake in WeWork. Overall expectations are for Goldman to post a 23% decline in third quarter profits to $4.81 a share versus the same quarter last year. Shares of Goldman rose 0.6% on Monday and are 23.1% higher since the start of the year.

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