August 23, 2019

 

Global Commentary

Asian markets finished mixed on Thursday, despite a strong overnight session on Wall Street, and better than expected earnings from retailer Target that helped alleviate recession worries. Japan’s Nikkei managed a slight gain of 0.05% on the day following data showing manufacturing activity contracted for a fourth consecutive session. On mainland China, the Shanghai Composite edged up by 0.11%, but over in Hong Kong the Hang Seng was down 0.84% as the ongoing protests weighed on sentiment. Australia’s S&P/ASX 200 posted a 0.29% gain on strength from basic material stocks, but in South Korea the Kospi fell 0.69%.

In Europe markets fell as investors took a more cautious approach to risk as they awaited the upcoming speech by Federal Reserve chairman Jerome Powell, and the Jackson Hole summit that would bring together global central bankers. The pan-European Stoxx Europe 600 closed lower by 0.40% and the DAX in Germany was 0.47% lower, but the CAC 40 in France led losses for a second consecutive day as it finished 0.87% lower. London’s FTSE dropped 1.05% too as the Pound firmed on optimism that an orderly Brexit might still be possible.

In the U.S. markets ended mixed following PMI data that indicated U.S. manufacturing is slowing, and investors awaited news out of the Jackson Hole summit. The Dow Industrials finished 0.19% higher, helped by a 4.2% gain in shares of Boeing, while the S&P 500 edged lower by 0.05% and the Nasdaq closed down by 0.36%.

 

Cryptocurrencies

Cryptocurrencies were mostly higher Thursday, although Bitcoin ended the day flat, but still above the $10,000 level. In the top ten altcoins only Binance Coin and Bitcoin fell, and both were down less than 0.1%. EOS was the best performer, with a 4.2% gain, followed by number two coin Ethereum, which gained 3.4%. Overall 82 of the top 100 cryptocurrencies finished with gains, making it a very good day for cryptocurrency enthusiasts.

 

FOREX

GBP/USD – The pair surged higher on Thursday, slicing through the 1.2200 level and closing around the 1.2250 level as traders began to hope that a no-deal Brexit could be avoided. The optimism came as Prime Minister Boris Johnson met with German Chancellor Angela Merkel, and she commented that it should be possible to solve the backstop issue on the Irish border by the October 31 deadline. With little in the way of nearby resistance it looks as if the 1.2500 level is now in focus as the next area of resistance for the pair, although it could drop back to test the 1.2200 area for support first.

AUD/USD – The pair settled at the bottom of a nearly three week old range, closing at the 0.6750 level. The top of the range isn’t far above at the 0.6800 level, and the pair has remained in this tight range since August 5, with no real catalyst coming forward to bust it out of the range. It’s possible that comments from the Jackson Hole summit could be just what’s needed for the pair to begin trending in one direction or another.

 

Commodities

Metals – Precious metals fell on Thursday in response to rising bond yields, and gold finished at its lowest level in two weeks. December gold fell $7.20, or 0.5%, to settle at $1,508.50 an ounce, while September silver lost $0.111, or 0.7%, to finish at $17.04 an ounce.

Oil – Crude fell on Thursday as demand worries reared their heads again. West Texas Intermediate crude for October delivery fell $0.33, or 0.6%, to settle at $55.35 a barrel. Meanwhile October Brent crude shed $0.38, or 0.6%, to finish at $59.92 a barrel and log its first decline in five sessions.

 

Indices

FTSE 100 – London’s benchmark equity index closed lower by 1.05% as investors turned cautious ahead of the Jackson Hole summit, and a rising Pound weighed on British exporters. The firming of the Pound came on investor optimism that the Brexit could still go off in an orderly fashion. The FTSE had been clawing back from losses in mid-afternoon trade, but the news that U.S. PMI came in weaker than expected and a negative open on Wall Street pushed the FTSE lower in the final hours of the trading session.

Hang Seng – Hong Kong’s benchmark equity index led losses across Asia on Thursday, falling 0.84% as ongoing political protests continue to weigh on sentiment, as does the weak earnings coming from Hong Kong companies this quarter as the U.S.-China trade war is beginning to cut deep into earnings and profits for Hong Kong companies. Real estate, services and consumer staples sectors posted some of the worst losses as they are seen as vulnerable during the protests. The Hang Seng properties index dropped 1.9%, with a 3.7% loss from Henderson Land Development leading the slide.


Stocks

Sony – Shares of Sony fell 2.4% in overnight trade in Japan, and then the U.S. ADRs fell 3.6% as investors dumped the stock following news of its ending its relationship with Disney in regard to the Spiderman franchise. Disney had been producing and distributing the Spiderman movies, although Sony owns the rights to the Spiderman character. The sticking point was that while Sony paid 100% of the production costs for the Spiderman movies, they also collected 95% of the box office haul, leaving just 5% for Disney. Now Disney has suggested a 50/50 split for production and profits, but Sony has declined the offer. Removing Spiderman from the Marvel universe is seen as a bad move by investors, both for Sony and for Disney, which is why Sony shares are moving lower. 

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