October 16, 2018

 

Global Commentary 

Asian markets were unable to continue the bounce began last Friday, and instead resumed their fall as investors remain concerned over potentially slowing global growth and rising bond yields. Japan’s Nikkei was hit hardest as the Yen continued firming, and the Nikkei finished the day with a 1.87% loss. Mainland China saw selling accelerate throughout the day to send the Shanghai Composite 1.49% lower. Hong Kong’s Hang Seng followed the mainland’s lead and fell 1.38%. In Australia, the S&P/ASX 200 lost 0.99% as banking shares remained weak, and mining shares came under pressure as well. South Korea’s Kospi found weakness in tech stocks, as did Taiwan’s Taiex, with the former falling 0.77% and the latter losing 1.44%.

European markets made modest gains as investors there were looking ahead to the U.S. corporate earnings season, hoping that solid results would restore the upward momentum in equities. The Stoxx Europe 600 edged up by 0.10% after shedding 4.6% last week. In Germany the DAX was a clear outperformer as it rose 0.78%, while the CAC 40 in France eased lower by 0.02%. London’s FTSE put in a strong performance, adding 0.48% on the day.

In the U.S., markets rose early, but gave back gains as losses from the tech sector piled up and pushed broader indices lower. At the close the S&P 500 was 0.59% lower, while the Dow Industrials slid 0.35%. The worst performance came from the Nasdaq, down 0.88% on the day.

 

Cryptocurrencies

Cryptocurrencies jumped higher on Monday in response to concerns from traders regarding the price of the stablecoin Tether, which is tied to the value of the U.S. dollar and is meant to remain at a 1:1 ratio. Instead, Tether traded down to $0.88 on Bitfinex, while the price of Bitcoin was at a 10% premium to the broader market. The move out of Tether occurred after Bitfinex, who shares investors and management with Tether, paused deposits of fiat currencies due to processing issues. Bitcoin finished the day 4% higher and other top ten cryptocurrencies were up in the range of 2% to 6.5%.  

 

FOREX 

USD/JPY – After pausing late last week at the 112.00 level the pair resumed its downtrend on Monday, dropping below the 112.00 level and sparking selling in Japanese exporter equities. That break could now see the pair trading down to the 110.50 level, especially as it appears that safe haven buying is picking up from traders. 

GBP/USD – The pair gapped substantially lower at the open Monday, dropping right to the 20 day exponential moving average. That technical level held as support for the pair, and it bounced higher, gaining throughout the day and returning to just above the closing level from last Friday at the 1.3150 handle. 

 

Commodities

Metals – Precious metals gained on Monday as investors continued to seek out a safe haven from current geopolitical tensions. December gold rose $8.30, or 0.7%, to settle at $1,230.30 an ounce, after posting a second consecutive weekly advance last week. Meanwhile, December silver rose $0.092, or 0.6%, to $14.727 an ounce.

Oil – Crude gained on Monday as equities stabilized, and tensions remained high between the U.S. and Saudi Arabia over the weekend disappearance of a Saudi journalist who is presumed dead. U.S. benchmark West Texas Intermediate crude added $0.44, or 0.6%, to $71.78 a barrel, while global benchmark Brent crude edged up by $0.35, or 0.4%, to settle at $80.78 a barrel.

 

Indices 

Nasdaq – The tech heavy index fell 0.88% and led losses in the U.S. as large cap tech shares fell broadly. Shares of Alphabet were down 1.61%, and Apple fell 2.14%. Microsoft and Amazon were also lower, with the former losing 1.80%, while the latter retreated 1.55%. The worst performances came from the semi-conductor group though, which has been falling all month and is now on track for its worst monthly performance in six years.

Nikkei – Japan’s benchmark equity index led losses across Asia on Monday, falling 1.87% as the strength in the Yen increased, and investor worries over global economies persisted. Exporter shares were hard hit due to the stronger Yen, and banking shares also fell sharply. Mitsubishi UFJ lost 1.98% and Mizuho Financial ended down by 1.6%.

 

Stocks

Nvidia – Shares of the graphics processor maker slipped 4.53% on Monday even as it continues to receive good press from analysts. The exception to that is Jim Cramer, who said on Saturday that Nvidia will miss its quarterly earnings, and gave that as the reason for selling the Nvidia position from his charitable trust. That said, he also admitted keeping an eye on Nvidia shares, and that given secular trends in gaming, artificial intelligence, autonomous cars and data center growth he will very likely re-purchase Nvidia shares after they bottom.

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