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Asian Market Update – Monday: Equities Mixed over Hurricane in the US

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Hurricane Harvey

The Big Question: Why EU and US officials kept mum about monetary policy direction in Jackson Hole?

Major equity markets in Asia started the week’s trading off in a mixed mode, as investors are keeping a close eye on the impact of a severe hurricane hitting several US states and looking for policy direction after central bankers refrained from hinting any monetary policy direction.

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In the early hours of the Asian trading session on Monday, stock indexes in Japan, Australia and South Korea, which tend to track markets in the US, saw minor losses, while indexes in Greater China gained slightly.

In Japan, the Nikkei 225 was down 0.11 percent, trading at 19,430.65 before midday.

In South Korea, the KOSPI fell 0.38 percent to 2,369.48.

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Down under, the ASX 200 dropped 0.72 percent to 5,702.60.

In Greater China, the Shanghai Composite Index gained 0.95 percent to 3,363.21 and the Hong Kong Hang Seng Index was up 0.62 percent, trading at 28,020.48.

Big market-moving news over the weekend was Hurricane Harvey, said to be the largest in over a decade to hit the US, and the silence on monetary policy direction from a gathering of central bankers in Jackson Hole, Wyoming, the US.

Energy markets are feeling on impact of Hurricane Harvey on refineries along the US Gulf Coast. Some major energy companies, including Shell and Petrobras, have already closed refineries in Taxes due to the weather conditions. The moves send US gasoline futures as much as 6 percent higher on Monday.

Investors are also digesting what central bankers said or didn’t say during their meeting late last week in Jackson Hole.

US Fed Chair Janet Yellen kept away from commenting on monetary policy or the strength of the US economy and inflation rates, giving no indication of any potential changes in the US monetary policy. Yellen focused on the positive post-financial crisis reforms of the financial system, in an apparent move to stand up against Republican lawmakers and President Donald Trump, who are arguing the reforms hurt the market.

ECB chief Mario Draghi also stayed mum about monetary policy in the euro zone and the recent rise of the euro.

The silence gave a fresh boost to the euro, as investors are trying to digest the news and weigh in on why the central bankers kept away from giving any hint of monetary policies.

Market-sensitive news to watch this week: Economic data from Japan, the US, Hong Kong and Australia later in the week; NAFTA talks; UK’s Brexit talks with the EU; and talks of tax reform in the US.

And, by the way, North Korea fired three ballistic missiles over the weekend. Though the launches failed, keep an eye on tensions on the Korean Peninsula.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan-Nikkei Stock Average 225 19,430.65 -0.11%
China-Shanghai Composite Index 3,363.21 0.62%
Australia-ASX 200 5,702.60 -0.72%
Hong Kong-Hang Seng 28,020.48 0.62%
South Korea- KOSPI 2,369.48 -0.38%

Cryptocurrencies

Bitcoin saw a serious drop on Monday during Asian trading session. Before midday, bitcoin was trading at $4,200.0, plunging 3.17 percent.

Ethereum also dropped 3.42 percent, trading at $336.59. The steep fall came after ethereum rose to more than $347 over night.

Currencies

The Japanese yen gained a slight 0.14 percent against the US dollar at midday. The USD/JPY rate was at 109.17.

The Chinese yuan strengthened 0.08 percent against the greenback, trading at 6.6413 per dollar. The yuan has continued its climb from Friday, trading at 6.6413 per dollar before midday on Monday.

The Australian dollar lost 0.08 percent against the US dollar. The Australian dollar was trading at 1.2597 per dollar before midday.

Commodities

WTI Oil was down 0.31 percent at $47.68 per barrel

Brent Crude gained 0.46 percent to $52.58 per barrel

Gold was up 0.23 percent to $1,294.04 an ounce

Business News across Asia

In China, one of the richest men and real estate tycoon Wang Jianlin and his Dalian Wanda Group is under pressure after rumors are widely circulated online about the company being under investigation by Chinese authorities. Though the rumors were disputed by Wanda, it has a taken a toll on the company’s Hong Kong-listed shares. On Monday, Wanda Hotel Development Co saw its share prices drop to the daily limit of 10 percent.

Take away: Chinese authorities have taken strict measures to curb what they consider irrational investments in overseas real estate, entertainment companies, etc. So far, officials are silent on the Wanda rumors, but surely the company and its outspoken boss is under some serious pressure.

In Japan, embattled Prime Minister Shinzo Abe’s approval rating is recovering from earlier plunges after a series of scandals and missteps. Abe’s approval rating has reached 46 percent, improving 4 percentage points from earlier this month. The recovery came after a major shake-up in cabinet members, but Abe still faces serious doubts among some Japanese voters, per Nikkei Asian Review.

Take Away: With Abe’s approval rating recovering but still facing serious doubts, the future of his economic policies, dubbed “Abenomics”, is still under a cloud of uncertainty.

In India: McDonald’s is under pressure from its employees, suppliers and mall operators after the US fast-food chain decided to close 169 restaurants across India. McDonald’s is in the middle of a legal battle with Indian partner Vikram Bashi. The closures could result in the layoff of more than 6,000 employees, per Times of India.

Take Away: The episode in one of the largest markets for McDonald’s could have a serious impact on its business operation in the country and its share prices.

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Week in Review: Bitcoin Returns to Record Highs, Stocks Falter Amid Volatility

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The battle of the bitcoins raged on this week, with the original blockchain gaining the upper hand en route to new highs. Bitcoin’s record-setting run took the broader cryptocurrency market to new peaks, with the total market cap surpassing $230 billion for the first time.

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Equity markets were choppy this week, as investors mulled a controversial debate over U.S. tax reform. Earnings have been mostly positive, with Wall Street wrapping up another quarter of solid year-over-year gains.

Energy markets rebounded sharply on Friday after a soft week. Precious metals also popped as the dollar lost ground against a basket of world currencies.

Bitcoin Hits $8,000

Bitcoin once again dominated the spotlight this week as prices crossed $8,000 for the first time . BTC/USD reached an intraday high of $8,011.19 on Friday, and was last seen trading at $7,716 for a weekly gain of 17%.

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Bitcoin Cash (BCH) settled at $1,185 on Friday for a weekly gain of 21%. Most of the advance occurred on Friday as bitcoin’s alternative regained momentum. At this time last week, BCH was trading near record highs after backers of Segwit2x abandoned their hard fork. Since the hard fork was shelved, BTC and BCH have had multiple instances of inverse trading.

Altcoins Gain Momentum

The market’s leading altcoins also made a move higher this week, with Litecoin reaching two-month highs. LTC/USD broke above $73 on Thursday before paring gains over the next 24 hours to trade around $66.72. The coin returned more than 13% for the week.

The ether blockchain also caught a tailwind, with ETH/USD reaching a high of $345. By Friday, Ethereum was trading at $331 for a weekly return of 11%.

Ripple, another highly active altcoin, spiked more than 45% in the week through Thursday before it too pared gains the following session. XRP/USD climbed 10% over the five-day period to settle around 0.2221.

Stocks Slip in Volatile Trade

U.S. stocks booked narrow weekly losses as the threat of a technical reversal loomed large for investors. Concerns about President Trump’s tax bill also weighed on investor sentiment amid signs that corporate tax cuts will be phased in gradually over a two-year period.

The large-cap S&P 500 Index closed down 0.3% on Friday to settle at 2,578.85. The Dow Jones Industrial Average fell 100.12 points, or 0.4%, to 23,358.24 on Friday. That was its second triple-digit loss of the week.

Both indexes recorded their second straight week of declines.

A measure of 30-day volatility known as the CBOE VIX spiked to three-month highs during the week, but eventually settled relatively flat. Vol briefly traded above 14.00 on Wednesday, before reversing most of those gains in the back half of the week. The VIX, which trades on a scale of 1-100, closed at 11.43 on Friday.

Commodities Return to Strength

Commodity markets finished the week on a positive note thanks in part to a weaker dollar. The U.S. dollar index (DXY) settled down 0.3% in the final session of the week.

U.S. West Texas Intermediate (WTI) crude for December settlement rose 2.6% on Friday to close at $56.55 a barrel, largely overcoming a three-day skid. Brent crude, the international futures benchmark, closed up 2.2% on Friday to settle at $62.73 a barrel.

Precious metals surged on Friday, with December gold fast approaching the all-important $1,300 price level. The futures contract climbed $18.30, or 1.4%, to settle at $1,296.50 a troy ounce on Friday.

Comex silver futures also shot up on Friday, adding 30 cents, or 1.8%, to $17.37 a troy ounce. Gold’s premium over silver declined sharply as a result.

In addition to a slumping dollar, speculation that the Federal Reserve may hold off on raising interest rates next month also appears to have factored into the rally in precious metals. Although the chances of a rate hike are extremely high, traders are lowering their bets slightly in anticipation of economic data. The 30-day Fed Fund futures prices imply a 91.5% likelihood of liftoff next month.

Earlier this month, President Trump appointed Jerome Powell to head the Fed at the conclusion of Janet Yell’s  term in February. Although Powell will provide a sense of continuity, he is also looking to reform the Fed’s communication process. This could mean adjusting or doing away with the now infamous “dot plot” chart of interest rate expectations.

The Week Ahead

With bitcoin continuing to flirt with all-time highs, investors can expect another active week for the crypto market.

On the economic calendar, a steady stream of market-moving events headlined by European and U.S. data will make headlines Market volumes are expected to dip somewhat during the latter half of the week as U.S. investors break for the Thanksgiving long weekend.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. 

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Cryptocurrencies

Robbing from the Poor to Feed the Rich

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As we see the astonishing rate of bitcoin adoption accelerate throughout the globe, one of the key things to watch are region specific updates.

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Japan is already well on their way to full integration but several small countries have already outlawed it outright. In my opinion, the key region to watch right now is India.

It’s been one year since Prime Minister Modi took the drastic step to basically outlaw cash and the citizens are still struggling to adjust. So far they’re mainly relying on credit cards but some are still using old bank notes on the black market.

So this headline is particularly interesting at the moment.

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Of course, the government doesn’t necessarily have to respond to the court’s wishes with any real action but it’s comforting to know that they’re pushing it forward.

The price of bitcoin climbed to a new all time high of $7,965 following this announcement before pulling back slightly this morning.

@MatiGreenspan
eToro, Senior Market Analyst

 

Please note: All data, figures & graphs are valid as of November 17th. All trading carries risk. Only risk capital you’re prepared to lose.

Market Overview

All stocks are green this morning. Wall Street gave an appropriate salute to Washington DC and the stocks went higher.

Republicans were easily able to get their new tax bill through the House of Representatives and now face a tough battle when the bill reaches the Senate. House Republicans have now proved that they’re willing to sell their souls for a win. This bill, on the face of it will have the effect of depriving 4 million of the poorest Americans of their healthcare in order to drastically reduce taxes on the wealthy.

This is the definition of robbing from the poor to feed the rich.

Of course, many souls on Wall Street are already involved in a long-term lease with the Devil. We can see here that the S&P500 was able to erase five days of losses in about five hours.

Ripple + American Express

Ripple caused waves yesterday as two major financial firms announced that they will now start using their service. American Express and Santandar Bank will use the Ripple blockchain to open a blockchain payments wormhole between the US and the UK.

The price of Ripple’s XRP tokens spiked on the announcement. However, the excitement wore off pretty quickly when it became clear that the new payments channel will likely not use XRP in the initial stages.

Here we can see the initial spike from a stable rate of 20.5 cents per token to as high as 27.1 cents per token in just under an hour.

Still, the fact that these two very large financial institutions are partnering with this particular startup is astonishing and should be seen as a positive step both for the Ripple network and the entire crypto community.

Astonishing growth continued…

Over the past 24 hours, including a slight pullback, the value of all crypto-assets has risen by an additional $5 Billion. Over the past month, the total market cap figure has gone from $173 Billion to $225 Billion this morning for a total industry growth of 30%.

The weekends have proven to be particularly volatile in the crypto-markets so I’d like to wish you an astounding weekend ahead.

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

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Asian Market Update – Friday: Bitcoin Makes New High, Asian Stocks Jump

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Stocks jump

The Big Question: Is the war between bitcoin and bcash over?

Bitcoin once again reached a new all-time high on Friday, briefly crossing the $8,000 mark in early trading. As of midday in Hong Kong, the price of bitcoin was $7,940, up 1 percent for the day after strong gains of around 8 percent yesterday.

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The recent gains in the bitcoin price came after news that Hong Kong based exchange BitMEX has stated it will sell all “airdropped” bitcoin cash, or bcash, that was distributed to clients and instead exchange it into bitcoin. The exchange said they do not agree with the way bitcoin cash was forked, and therefore will not support the cryptocurrency going forward. Bitcoin cash dropped more than 20 percent yesterday, although it regained some ground in early trading on Friday.

Litecoin on Friday morning traded down following strong performance yesterday with a gain of more than 10 percent. Litecoin closed around the $70 mark yesterday and is trading at $68.70 as of midday in Asia Friday.

Ethereum, meanwhile, seems to consolidate just north of the $330 level that was reached on Tuesday. If the level holds, we might be looking at another run-up to test the resistance around the $340 level and beyond.

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Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 22,403 0.23%
China-Shanghai Composite Index 3,380 -0.55%
Hong Kong –Hang Seng 29,250 0.80%
South Korea-KOSPI 2,538 0.13%
Australia-ASX 200 5,965 0.37%
S&P 500 E-Mini Futures 2,582 -0.10%

 

With the exception of China, Asian stocks traded on a positive note Friday morning with gains ranging from 0.1 to 1 percent. The good mood came as a result of positive news that the US tax reform is one step closer to being passed into law, as well as strong earnings reports from US companies Wal-Mart and Cisco.

In Japan, the Nikkei 225 reacted by trading up a slight 0.23 percent to 22,403 shortly after midday in Tokyo trading.

The Shanghai Composite was the only loser among the major Asian indexes Friday, trading down by 0.55 percent to 3,380 as of midday in Shanghai. In Hong Kong, the Hang Seng Index gained 0.8 percent to around 29,250 at the same time.

In South Korea, the Kospi gained 0.13 percent to 2,538 shortly after midday.

Down under in Australia, the ASX 200 traded up 0.37 percent to 5,965.

The S&P 500 E-Mini Futures was down by a slight 0.10 percent to 2,582 at midday, after a strong day on Wall Street yesterday.

Currencies

The Japanese yen gained 0.41 percent on the US dollar at midday Friday to 112.59 per dollar.

The Chinese yuan was unchanged against the US dollar at 6.6275 per dollar. On the daily chart, the CNYUSD has been trading in a triangle pattern since early October, and a break-out in price either up or down from this level can be expected in the next few days.

The Australian dollar lost 0.24 percent on the dollar, changing hands at 1.3208 per US dollar after midday in Australia.

Commodities

WTI Oil was up 0.07 percent to $55.32 per barrel.

Brent Crude was down 0.3 percent to $61.16 per barrel.

Gold was up 0.34 percent to $1,282 an ounce.

Business News across Asia

In China, e-commerce giant JD.com is setting up a new system to improve traceability of its products using blockchain technology. JD.com is the second-largest e-commerce platform in China after Alibaba-owned Taobao.com. The new system is supposed to enable consumers to trace where the materials for each product was sourced from, according to a report from China Daily.

Featured image from Pixabay.

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