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GLOBAL MARKET WEEKLY REPORT
U.S. MARKET WEEKLY SNAPSHOT
Summary for the week past
Most of the major indexes ended the holiday-shortened week with modest gains. The technology-heavy Nasdaq Composite Index performed best, helped by strength in semiconductor stocks early in the week. Better-than-expected results from Hewlett-Packard gave a further boost to tech shares on Friday.
The Dow Jones industrial average closed 347.51 points higher at 25,309.99, with Intel as the best-performing stock. The S&P 500 gained 1.6 percent to end at 2,747.30, with utilities and energy as the best-performing sectors. The broad index also broke above its 50-day moving average — a key technical level — in afternoon trade.
Entering Friday’s session, the Dow and S&P 500 were on track to close down by 1 percent for the week. They finished the week with gains of 0.4 percent and 0.6 percent, respectively.
The Nasdaq composite advanced 1.8 percent to 7,337.39 as shares of Facebook, Amazon, Netflix and Alphabet all rose. For the week, the index rose 1.4 percent.
It was a volatile week for stocks, with the major averages posting strong gains in early trading before closing off those highs in the previous three sessions. On Friday, the Dow, S&P 500 and Nasdaq bucked that trend.
The Fed released its monetary policy report Friday morning, which said the central bank sees the U.S. economy past full employment, albeit with only “moderate” wage gains. The report serves as a blueprint for new Fed Chair Jerome Powell’s testimony next week.
EUROPEAN AND ASIA – PACIFIC WEEKLY MARKET OUTLOOK
European stocks ended the week flat to mixed amid relatively low volume. Despite a heavy week of corporate earnings reports and positive economic indicators, major indexes in the region were subdued. European shares shifted between small gains and losses while searching for direction during a time when the U.S. and some Asian markets were closed early in the week for holidays.
The pan-European index STOXX 600 index was essentially flat as investors seemed to be on guard about the prospect of rising inflationary pressures. After shifting between small gains and losses through the day, the Stoxx Europe 600 index ended 0.2% higher at 381.16. That helped swing the pan-European benchmark into positive territory for the week, ending with a 0.1% weekly gain.
The German DAX 30 ended marginally higher following reports of solid demand for German exports. Britain’s FTSE 100 ended marginally lower, weighed down by some disappointing corporate earnings and a report that the unemployment rate rose slightly in the fourth quarter of 2017.
The major Japanese stock market benchmarks rose modestly for the week. The bellwether Nikkei 225 Stock Average ended the week at 21,892.78, a gain of 0.79% versus the prior week. The Nikkei average has lost 3.83% since the beginning of 2018. Chinese stocks advanced in thin trade on a holiday-shortened week after domestic financial markets were closed for the week-long Lunar New Year holiday. The big news took place in China’s corporate sector the previous Thursday, when the government unexpectedly took control of a well-known insurer and signaled it would prosecute the insurer’s former chairman for fraud.
WEEKLY FOREX UPDATE
The dollar edged higher against a basket of major currencies on Friday, extending its recovery from a three-year low last week, as the potential for a more aggressive U.S. Federal Reserve prompted investors to pare bearish bets against the greenback.
The dollar index, which measures the greenback against a basket of six other major currencies, was up 0.19 percent at 89.904. The index hit a three-year low of 88.253 on Feb 16, 2018.
Rising Treasury yields, a view that the dollar’s sell-off had been overdone, and minutes from the Fed’s January rate-setting meeting that offered a relatively upbeat tone helped the index notch a gain of 0.9 percent this week.
WEEKLY CRYPTOCURRENCY UPDATE
Bitcoin settled below $10,000 on Friday for the first time in a week, on track for a weekly decline amid renewed concerns over potential official clampdown and increased global regulations on cryptocurrencies.
Bitcoin slipped to $9,860 from the opening of $9,843, with an intraday high at $10,026 on Tuesday, and the lowest since February 15 at $9,600. Bitcoin lost 5.8% on Thursday, the second daily loss in a row as investment demand slows down on cryptocurrencies while traders assess new regulations all over the world.
Bitcoin is down 5.5% so far this week, on track for a weekly loss after recovering last week away from three-month lows.
Ethereum rose over 8% on Friday away from two-week lows hit earlier, on track for the first profit in four days as risk appetite returns to the market. At Bitstamp, Ethereum raised $65, or 8.1% to $870 from the opening of $805, with a session-high at $878, and a February 11 low at $787. Ethereum dipped 4.2% on Thursday as investment demand declined on Ethereum in favor of other cryptocurrencies. Despite Ethereum’s solid recovery today, it’s still down 5% so far this week, heading for the third weekly decline in a month.
Ripple rose 6%, or $0.06 on Friday away from February 9 lows on short-covering after South Korean financial authorities stated that the government will support cryptocurrency platforms and encourage banks to facilitate their transactions, soothing fears of a ban in the world’s largest cryptocurrency trading hub.
Ripple is heading for the first weekly loss in two weeks after rebounding from December 22 lows earlier this month on short-covering operations, which in turn came after tumbling 80% away from record highs hit earlier this year at $3.30 on global official clampdown.
COMMODITY WEEKLY UPDATE
Crude Oil: Oil futures rose nearly one percent to February 7 highs even as the dollar index advanced for the fifth session out of six away from December 17, 2014 lows, following earlier data from China and the US.
U.S. West Texas Intermediate rose 0.89% to $63.33 a barrel from the opening of $62.77, while Brent futures due on April 15 added 0.84% to $66.95 a barrel from the opening of $66.39, as the dollar index climbed 0.13% to 89.86 from the opening of 89.74.
Earlier Chinese data showed the CB leading Index accelerated to 1.6 in January from December’s 1.4 reading.
Gold: Gold futures tilted lower from January 25 highs for the fifth session out of six as the dollar rebounded also for the fifth session out of six from December 17, 2014 lows, following earlier data from China.
Federal Reserve Chair Jerome Powell will testify before the Senate Committee on Banking, Housing, and Urban Affairs and to the House Committee on Financial Services and submit a report on monetary policy and Fed’s outlook.
Silver: Silver futures fell in American trade as the dollar index rose for the fifth session out of six from December 17, 2014 lows, following earlier data and developments from China and the US.
Copper: Copper slides 1% as dollar shakes off dust. Copper futures gave up over one percent in American trade as the dollar index rebounded from December 17, 2014 lows for the fifth session out of six, following earlier data from China, the world’s largest metals consumer, and ahead of the biannual testimony of Federal Reserve Chair Jerome Powell before Congress.
The Week ahead (26th Feb – 2nd march):
Following a holiday-shortened week that featured very little economic data, reports next week include consumer confidence on Tuesday, pending home sales on Wednesday, and Manufacturing PMI and vehicle sales on Thursday.
In the week ahead in European market, there are a few items on the calendar worth paying attention to; Advanced Goods Trade Balance, Durable Goods Orders, and Consumer Confidence on Tuesday, Wednesday brings GDP and the Fed’s Powell testimony before the House of Financial Services Committee, followed by Core PCE and ISM Manufacturing on Thursday. With the market undergoing stress lately, there will be larger reactions to news events, so more of that could be in store for the week ahead.
Next week brings German CPI on Tuesday and February employment data for Germany and Eurozone CPI on Wednesday. The one-month correlation between the DAX and euro is around +40% when it has typically been negative, how much longer that will last is anyone’s guess. But keep an eye on the relationship as it may return to ‘normal’, either helping or hurting Eurozone stocks.
In London, next week will bring a light calendar in terms of ‘high’ impact data events, so the focus will be on ‘Brexit’ headlines. Risk trends, in general, will also be impactful we may see a one-way move develop.
Friday’s Federal Reserve monetary policy report failed to have a significant impact on the dollar. Many hoped that it would be a blueprint for Fed Chair Jerome Powell’s testimony on the economy and monetary policy next week but it provided very little fresh insight. We fear that this lack of new information will also be the main take away from the Fed Chair’s speech next week. The monetary policy report was slightly more cautious than the FOMC minutes, which focused on stronger growth and the likelihood of further hikes.
Oil production in Southeast Asia and East Asia will decline by 20 percent between 2017 and 2025, according to a new report from Rystad Energy.
Natural depletion from mature oil fields will significantly erode oil production in the region, and new projects will not be able to make up for the decline. Rystad Energy expects total oil production in Southeast Asia and East Asia to decline to 10.4 million barrels of oil equivalent per day (boe/d) by 2025, down from 13.1 million boe/d in 2017.
Looking ahead in the Gold market the focus will be on the second read on U.S. 4Q GDP figures with consensus estimates calling for a downward revision to an annualized 2.5% QoQ from 2.6 QoQ. For gold, prices may yet have lower to go but we’re generally on the lookout for support heading into the March open.