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GLOBAL MARKET WEEKLY REPORT
U.S. MARKET WEEKLY SNAPSHOT
Summary for the week
Stocks rebounded from the previous week’s losses, bringing all of the major indexes back into positive territory for the year to date. The technology-heavy Nasdaq Composite Index fared best and managed to set a new intraday high on Friday.
The Dow Jones industrial average rose 440.53 points to close at 25,335.74, with Goldman Sachs among the biggest contributors of gains to the index. The 30-stock index also closed above its 50-day moving average, a key technical level. The S&P 500 gained 1.7 percent to end at 2,786.57, with financials as the best-performing sector.
“This jobs report was the perfect slice of pizza,” Kevin Mahn, president and chief investment officer at Hennion & Walsh, told CNBC’s “Power Lunch” on Friday”. The U.S. economy added 313,000 jobs in February, according to the Bureau of Labor Statistics. Economists polled by Reuters expected a gain of 200,000.
Wages, meanwhile, grew less than expected, rising 2.6 percent on an annualized basis. Stronger-than-expected wage growth helped spark a market correction in the previous month.
President Donald Trump signed two declarations on Thursday, which would implement tariffs on steel and aluminum imports. The tariffs are expected to take effect in 15 days and will put a 25 percent charge on steel, and 10 percent on aluminum. Canada and Mexico however are exempt.
Weekly Change U.S. Major Indices
EUROPEAN AND ASIA-PECIFIC WEEKLT MARKET OUTLOOK
Major European indexes ended the week firmly in positive territory, as investors seemed to shrug off geopolitical uncertainties—notably, the possibility of heightened trade frictions with the U.S. One notable exception was Germany’s DAX 30, which ended the week lower. Germany is a heavy exporter of steel products, automobiles, and machinery and is particularly exposed to the new tariffs. The Italian election that was held the previous weekend featured gains for anti-establishment parties and resulted in a hung parliament in which no single party or alliance won enough seats to easily form a coalition government.
The pan-European STOXX 600 provisionally rose 0.43 percent by the close, but off session highs. On the week, the STOXX 600 popped 3.05 percent.
Looking to European bourses, the U.K.’s FTSE 100 rose 0.3 percent, while France’s CAC 40 rose 0.39 percent. Germany’s DAX however came under slight pressure, closing down 0.07%.
The large-cap Japanese stock indexes ended higher after a volatile week. The Nikkei 225 Stock Average gained 1.4% and closed on Friday at 21,469.20. However, all of the major Japanese market indexes remained underwater for the year to date. The Nikkei and the broad-based, large-cap TOPIX is down 5.7%, and the TOPIX Small Index, which was about flat for the week, is off 5.4%.
Japanese gross domestic product (GDP) growth expanded faster than the earlier estimate for the final quarter of 2017. According to the government’s latest estimate released on March 7, Japan’s economy grew at a 1.6% pace, up from the month-ago estimate of 0.5% for the final quarter of 2017.
China set an annual economic growth target of about 6.5% this year, one of several key targets unveiled at an annual legislative meeting as the country seeks to maintain steady growth while curbing financial risk.
The 2018 GDP growth target is broadly in line with last year’s target of about 6.5% or higher. China reported its economy expanded 6.9% in 2017, marking its first pickup in annual economic growth since 2010. Other targets released at the National People’s Congress in Beijing included an annual deficit target of 2.6% of GDP, down from 3% in the past two years, signaling the government’s concern about the risks of rampant borrowing by local governments.
Major Indices Weekly Change
WEEKLY FOREX UPDATE
The U.S. dollar weakened against many of its main rivals on Friday, following a February jobs report that showed stronger jobs growth but weaker wage growth.
The US Non-Farm Payrolls was mixed: no less than 313K jobs were gained, but wage growth retreated to 2.6% y/y, a significant setback. The Fed is still likely to upgrade its dot-plot in the March meeting, but the path may be more complicated, not only by wages but also because of trade fears.
Dollar Index DXY, was 0.1% down at 90.121, set for a modest 0.2% weekly advance, that would mark a third straight week of gains for the index.
The British pound held on to modest gains at $1.3848, up slightly from $1.3812 on Thursday. Sterling gained 0.3% on the week.
EUR/USD had a turbulent week that it eventually ended slightly lower and it is still looking for a new direction. While Germany will finally have a government, Italy’s elections ended with an inconclusive outcome that initially weighed on the euro. Euro/dollar started off the week with a drop towards the 1.2260 level mentioned last week. It then recovered nicely hitting a high of 1.2447 before falling back to the middle of the range.
The Australian dollar managed to recover mostly thanks to hopes that the Trump tariffs are not so bad and despite not-so-great Australian data. The Australian economy grew by only 0.4% in Q4 2017, worse than had been expected, but the RBA expects stronger GDP numbers in 2018. Other figures were mixed: building approvals increased by a whopping 17.1% while retail sales disappointed with a rise of only 0.1%. In the US, Trump eventually signed off the tariffs and lost his top economic advisor Gary Cohn.
Major Currencies Weekly Change
WEEKLY CRYPTOCURRENCY UPDATE
Bitcoin’s (BTC) repeated failure to beat inverse head-and-shoulders neckline resistance saw bears come in full force, pushing prices to a one-month low of $8,371 Friday. As of writing, the world’s largest cryptocurrency by market capitalization is trading at $8,970, according to CoinDesk’s Bitcoin Price Index.
But the 28 percent drop from BTC’s March 5 high of $11,660 had broader implications, pushing the market capitalization below $350 billion for the first time since Feb. 14.
The sell-off in BTC seems to have roiled broader markets, a trend evident by the fact the top 25 cryptos by total value are all reporting weekly losses.
Top 5 Cryptocurrencies Weekly Change
WEEKLY COMMODITY MARKET UPDATE
CRUDE OIL: The WTI Crude Oil market went back and forth during the week, showing signs of volatility yet again. We have recently broken below a major uptrend line, we show signs of weakness. At this point, it looks as if the $60 level is offering support, and that support extends down to the $58 level.
Brent markets went back and forth during the week, testing the $65 level. The $65 level is a bit of a magnet, and I think there is plenty of support underneath, but I also recognize that if we break down below the $63 level, we will probably reach down to about the $57.50 level.
GOLD: Gold prices continue to mark time at familiar support in the 1312.36-16.50 area (range floor, 38.2% Fib retracement). Breaking this barrier on a daily closing basis sees the next downside threshold at 1301.19, the 50% level. Alternatively, a push above range resistance at 1341.04 exposes the 38.2% Fib expansion at 1352.40.
SILVER: Silver markets initially tried to rally during the week but gave back quite a bit of the gains. The US dollar has strengthened a bit, especially considering that the jobs number was so strong from the month of February. The shooting star competes directly with the hammer from the previous week, meaning that we will probably continue to see sideways action in general.
COPPER: Copper futures spiked lower on Thursday after the European Central Bank hinted it would end its stimulus in September. The central bank kept interest rates unchanged. However, it appeared to drop its easing bias in a released statement.
Major Commodities Weekly Change
The Week Ahead (12th-16th march):
US consumer price index (CPI) and retail sales dominate the next week, along with the Spring Budget statement in the UK.
With inflation weakening in the euro zone, the US figures will command plenty of attention, given the speculation about a faster pace of US tightening and the recent appreciation in the US dollar index. Corporate news in the UK focuses on full-year figures from Morrisons and Prudential, plus a half-year update from pub operator JD Wetherspoon.
Major U.S. Macro Data
In the Forex market – The US Dollar continues to struggle with strength; and next week brings inflation figures ahead of a widely-expected rate hike in the week after. Sterling continues to tread water as Brexit discussions continue with little in the way of market-moving UK data around. And next week the data calendar is bare, leaving Sterling at the whim of other currencies.
The Japanese Yen may continue to retreat as market-wide sentiment improves and the Bank of Japan loudly asserts its dovish policy position. The Australian Dollar will run up against a lack of big, domestic cues this week which will probably leave the US Dollar and global risk appetite very much in charge.
Looking ahead in commodity market, Gold said that he expects precious metals to follow its familiar pattern of selling off ahead of the Federal Reserve’s monetary policy decision and then rally once investors gauge the underlying trajectory of interest rates for the rest of the year. Gold’s comments come following economic data that showed that the U.S. saw 313,000 new jobs created in February, well above expectations of gains of around 200,000.
In silver the $16 level is the beginning of massive support, and if it extends down to the $15 level. The $15 level is a massive “floor” in the market longer term, and if the market break down below there. The $17 level, the market will then go to the $17.50 level, and then eventually the $18 level.