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Market Overview

Asian Market Update – Thursday: Ethereum Extends Rally; Asian Stocks down After US Rates Hike

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Janet Yellen

The Big Question: Is ethereum finally catching up with bitcoin?

Bitcoin, ethereum and litecoin were all pointing higher on Thursday morning in Asia, with large gains seen in ethereum, and slight gains in bitcoin and litecoin.

By midday, ethereum had edged up 5.68 percent to $752. Although a bit more subdued than litecoin, ethereum has also made huge gains over the past a few days. Etheruem is now up about 67 percent over the course of the week.

Litecoin also surged 1.22 percent to $316 as of midday Thursday in Asia, following a correction yesterday that brought the prices on Coinbase and Bitfinex closer together.

Litecoin gained more than 130 percent on Monday and Tuesday, reaching as high as $420 at one point on Coinbase, before falling back. On Wednesday, litecoin dropped about 11 percent on Coinbase while it was up around 1 percent on Bitfinex.

Bitcoin was also up 0.66 percent to $16,799 at midday on Thursday. The slight gain came after big losses on Wednesday. The virtual currency dropped about 6 percent on Wednesday, after a 16 percent increase over the previous two days.

Outgoing US Fed Chair Janet Yellen voiced criticism against bitcoin on Wednesday, saying the cryptocurrency is a “highly speculative asset” and “not a stable source of value,” according to media reports.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 22,704 -0.24%
China-Shanghai Composite Index 3,296 -0.20%
Hong Kong –Hang Seng 29,216 -0.02%
South Korea-KOSPI 2,503 0.92%
Australia-ASX 200 6,020 -0.02%
S&P 500 E-Mini Futures 2,670 0.06%

Major Asian equities were narrowly down on Thursday morning, following the US Fed delivering a much-anticipated US rate hike, but voicing concern over inflation next year and rate hikes in China and Hong Kong.

In Japan, the Nikkei 225 Index was off 0.24 percent to 22,704 at midday. The loss, though small, came even after fresh data out on Thursday suggested positive signs in the Japanese economy.  The Markit/Nikkei Japan Manufacturing Flash Purchashing Managers Index rose to 54.2 in December, up from 53.6 in November – the highest reading in more than three years.

On the Chinese mainland, the Shanghai Composite Index edged down 0.20 percent at midday on Thursday to 3,296. That came after the People’s Bank of China raised the country’s short- and medium-term interest rate by 5 basis points on Thursday morning, in response to the US rate hike. Though the move was unexpected, the increase was minimal and will likely not make any significant impact.

In Hong Kong, the Hang Seng Index was down 0.02 percent to 29,216 at midday. The Hong Kong Monetary Authority also raised the base rate by 25 basis points on Thursday after the US Fed’s rate hike.

Down under, the ASX 200 was down a slight 0.02 percent to 6,020 after midday in Australian trading.

Stocks in South Korea edged up on Thursday morning. At midday, the Kospi was up 0.92 percent to 2,503 at midday.

The S&P 500 E-Mini Future was up 0.06 percent to 2,670.

The Fed on Wednesday raised interest rates for the third time this year as expected, while maintaining a projection of three more rate hikes in 2018. However, the thing that got the attention of investors was concerns raised by the Fed about the low inflation, downplaying expectations for a tightening in 2018.

Currencies

The Japanese yen lost 0.04 percent against the US dollar at midday Thursday, changing hands at 112.56 per dollar.

The Chinese yuan firmed 0.07 percent against the US dollar to 6.62084 per dollar.

The Australian dollar firmed 0.43 percent on the dollar, changing hands at 1.3035 per dollar at midday.

Commodities

WTI Oil gained 0.09 percent to $56.70 per barrel.

Brent Crude edged up 0.22 percent to $62.79 per barrel.

Gold was up 0.24 percent to $1,258 an ounce.

News across Asia

In China, investment in the real estate sector cooled in November, following a slew of measures from the government to crack down on speculation in overheated real estate markets. New figures out on Thursday showed that property investments grew 4.6 percent in the month, slower than the 5.6 percent growth in October.

Take away: Though the government measures, which include tough mortgage rules and sales regulations, could contain the overheated housing market, it could also very well weigh on the overall economic growth in China.

In Japan, the government is reportedly expected to reduce new bond issuance for the fiscal year 2018. Total bond issuance could fall as much as several hundred billion yen in 2018 from the current 34.37 trillion yen, the Nikkei reported.

Take away: The decision is likely to have been supported by rising tax revenues from the government following a recovery in economic growth in recent months.  

Featured image from Flickr.

Disclaimer: The author owns bitcoin, ethereum and litecoin. He holds investment positions in the coins, but does not engage in short-term trading.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.3 stars on average, based on 37 rated postsFredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He closely follows stocks, forex and cryptocurrencies, and is always looking for the next great alternative investment opportunity.




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Market Overview

Fundamental Dissonance

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Hi Everyone,

As with many things in the crypto world, the methods we use to determine the value of cryptoassets is still under construction.

We did make an introductory video about this last month, take a look here. One of the thought leaders when it comes to building these fundamentals is a Venture Capitalist named Christopher Burniske.
Over the weekend, Chris put out a blog called “Bitcoin & Ethereum: Prices are Down More than the Fundamentals.”

As the title suggests, the post takes a good look at some of the network factors including the supply side (hashrate) and the demand side (daily transactions, functionality, active wallets) for two of the most popular cryptos.

Overall, these factors tend to line up fairly well with the price but Chris points out a divergence that could suggest the market is now oversold.

Here’s one graph that jumped out at me. It shows that usage of the Ethereum network has remained incredibly consistent since the beginning of 2018, yet the price has done nothing but fall in that time.

This research is a strong affirmation of our previous assessment that the volatility we’ve seen over the last month is primarily a technical sell-off and there is no fundamental reason for it.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Gaps Despite Good News
  • OPEC Strikes a Deal
  • Dash Fast Food

Please note: All data, figures & graphs are valid as of December 10th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

The Jobs numbers didn’t come in so hot on Friday and the markets ended up falling to their lows. The sentiment was so negative by the end of the week that when the futures opened last night, they opened with a large gap down.

However, headlines this morning saying that stocks are down may not be entirely forthcoming. The down they’re referring to is simply because of the gap down at the open. Since the open, they’ve been fairly mixed with some regions up, some down, and some flat.

So far this morning, the news cycle is rather gloomy but it really doesn’t seem to matter. The markets are far from reacting to the fundamentals anyway. The weaker than expected jobs numbers on Friday should probably have been taken by the markets as a positive sign. Yet, here we are.

The weaker stance taken by the Fed coupled with the recent agreement between Xi and Trump should be supporting the markets at the moment but I rest my case.

Focus has now shifted to central bank policy again. This Thursday we’ll get the interest rate decisions from the European Central Bank and the Swiss National Bank. Next week we’ll hear from the US Federal Reserve.

OPEC Strikes a Deal

Seems that OPEC was able to strike a deal on Friday to cut global production.

The market reaction shortly after the deal was announced (purple circle) was a swift rally in crude oil prices, but half the move reversed by the time the markets closed and so far this week prices are remarkably stable.

Also, keep an eye on gold today. The shiny yellow metal has been gaining on the back of a weaker Greenback.

Dash to Fast Food Adoption

Just as we noticed above, there is a great diversion between what’s happening in the news and what’s happening in the prices. An excellent example of that is Dash currency, which has had some excellent updates lately yet has fallen about twice as much as any other crypto in the last 24 hours.

Dash has been making excellent progress on the ground lately, especially where crypto is needed most. This latest headline shows they are set to vastly increase their market share of overall money in Venezuela.

KFC isn’t the first major fast food chain to go Dash either. Both Papa John’s and Subway are already successfully using Dash for fast fast-food payments.

In general, Dash has been adding merchants left and right. The directory site keeping track has already counted more than 4,400 locations, especially in Venezuela.

Furthermore, the Dash Core Foundation has recently reported that they’re weathering the storm quite well and that the network’s coffers are more than sufficient to sustain operations and even expand further.
Addressing directly the bear market and the climate squeeze that we mentioned in our daily update last Wednesday (titled: Digital Natural Selection), the CEO of Dash Core Group has written this blog post explaining that the finances of DCG are in excellent shape.
Given this type of fundamental dissonance at play, it can make it difficult for the average investor to choose the projects that have a bright future and distinguish them from those that are in for a sharper downturn.
Let’s hope for some swift clarity and return to harmony.

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

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

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

eToro is a multi-asset platform which offers both investing in stocks and cryptocurrencies, as well as trading CFD assets.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,
Mati Greenspan
Senior Market Analyst

Connect with me on….

eToro: @MatiGreenspan Twitter: @MatiGreenspan LinkedInMatiGreenspan |Facebook:MatiGreenspa

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Analysis

5 Things To Watch Next Week + ChartBook

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Crucial Brexit Vote On Tuesday

GBP/USD, 4-Hour Chart Analysis

The all-important vote in the British Parliament got even more likely to fail this week, since Theresa May lost several battles already, and the math just doesn’t work for the Prime Minister, for now. Risk assets sold off sharply towards the end of the week, in part of the Brexit related fears and the Great British Pound is hovering near key technical levels ahead of the decision.

While the GBP avoided a major breakdown against the US Dollar so far, holding on near the 1.27 level, the currency remains relatively weak, and should the uncertain situation persist, the pair will likely move below the 1.25 level soon. The broader downtrend is clearly intact in the GBP/USD, and technicals support a bearish move too, following the more than three-month-long consolidation.

Stock Markets Breaking Down?

Dow 30 Futures, 4-Hour Chart Analysis

We had another crazy week on Wall to a lesser extent the global stock markets, as the swift changes in the US-Chinese relations caused wild swings in equities across the globe. While the real reasons behind the broad bearish shift in risk assets are the quantitative tightening by the key central banks and the global economic slowdown, trade headlines continue to dominate trading, together with the large moves in yields.

Even as yields fell sharply last week, that wasn’t enough to stabilize equities, and several key benchmarks hit new bear market or deep correction lows. The major US indices are trading very close to their October lows, and on a negative note the Russell 2000, the main small cap index already closed on its lowest level since February. While seasonality still favors a bounce in stocks, we still view all rallies as selling opportunities, and we expect the bearish shift to be persistent in risk assets.

Gold Finally Turning Bullish?

Gold Futures, 4-Hour Chart Analysis

We have been favoring gold as a key long-term investment for a long time now, and we continue to think that it should be a key component of a long-term portfolio, and last week, finally technicals seemed to be shifting in the precious metal’s market as well. Should gold hold above the $1250 level, a short-term trend change would be confirmed and that could open up the way to the yearly highs just above $1350.

The bearish shift in risk assets, the collapsing yields, and the Dollar’s sideways drift all helped gold in the recent period, but it’s important to note, that compared to the other major currencies, the metal already acted in a bullish fashion ever since August, and we expect that trend to continue in the coming months.

Dead Cat Bounce in Crude Oil?


WTI Crude Oil, 4-Hour Chart Analysis

The OPEC countries and Russia agreed on a larger than expected 1.2 million barrel/day production cut this week, and following a tectonic shift in the market of crude oil in the past two months, we only saw a weak intraday bounce in the crucial commodity.

The WTI contract is still only slightly above the $50 per barrel price level, and with the US turning into a net exporter for the first time in 75 years last week, thanks to the record production levels, fundamentals remain weak, even as the commodity is still severely oversold. The slowing global growth and the re-escalation in the US-Chinese relations also weigh heavily on the price of oil, and given the broad bearish technical shift the long-term trend will likely remain negative.

Inflation Worries Likely Taking a Back Seat

As for economic releases, the British and the US indicators will likely steal the show next week. The British GDP and Manufacturing Production will be coming out on Monday, while the British Employment Report is scheduled for Tuesday, together with the German ZEW Sentiment and the US Producer Price Index (PPI).

Wednesday will be highlighted by the US Consumer Price Index (CPI) and given the current consensus of no rate hikes in 2019, barring a huge surprise, the measure will likely have a smaller-than-usual impact on markets. The ECB’ s monetary meeting will be held on Thursday, and following the recent turmoil in financial markets, together with the clear economic slowdown, it’s hard to imagine a hawkish shift in the central bank’s stance.

The week will end with the US Retail Sales Report and the European flash PMIs, and it will be interesting to see how Europe faired in November following three months of disappointing releases.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Nasdaq 100 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

Copper Futures, 4-Hour Chart Analysis

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 411 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Market Overview

U.S. Stocks Round Out Miserable Week in the Red as Trade Fears Linger; Crypto Crash Intensifies

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U.S. stocks extended their losing skid to three days on Friday, as the S&P 500 and Dow turned negative for the year amid trade-related tensions and concerns over global growth. Cryptocurrencies also booked heavy losses, with the total market losing half its value in less than a month.

Crippling Losses

All of Wall Street’s major indexes booked heavy losses in the final session of the week. The Dow Jones Industrial Average fell 558.72 points, or 2.2%, to 23,388.95. Twenty-nine of 30 index members contributed to the decline, with tech juggernauts Microsoft Corp (MSFT), Intel Corp (INTC) and Cisco Systems Inc. (CSCO) leading the market lower. The Dow has shed nearly 1,500 points over the past three sessions.

The much broader S&P 500 Index fell 2.3% to close at 2,633.08. Ten of 11 primary sectors finished lower, with information technology shedding 3.3%. Industrials, healthcare and consumer discretionary shares all fell between 2.4% and 3% on average. Utilities, a sector known for its defensive posture, managed to rise modestly.

The technology-focused Nasdaq Composite Index declined 3.1% to close at 6,969.25.

A measure of implied volatility known as the CBOE VIX rose sharply on Friday, signaling tumultuous trading conditions over the next 30 days. VIX reached a session high of 24.71 on a scale of 1-100 where 20 represents the historic mean. It would later settle at 23.19, having gained 9.4%.

Hiring Slows

The U.S. labor market remained on solid footing last month, though signs of a cooldown emerged as employment growth lagged considerably below expectations. American employers added 155,000 workers to payrolls in November, following a downwardly revised gain of 237,000 the month before, the Department of Labor reported Friday. Analysts in a median estimate called for a November hiring pace of 200,000.

Average hourly earnings, a proxy for wage inflation, rose 0.2% month-on-month and 3.1% annually. The latter figure is encouraging for an economy that was bogged down by sluggish wage growth for the bulk of the post-crisis recovery. The 3.1% growth clip, now the second month running, is also the highest since 2009.

The national unemployment rate held steady at.3.7%, a nearly five-decade low.

Crypto Chaos

Bitcoin and altcoins resumed their rapid selloff on Friday, leaving little doubt that the bottoming process was still in force. The combined value of all cryptocurrencies reached a low of $104 billion, levels that would have seemed unfathomable earlier this year.

With few exceptions, most major cryptos were on track for heavy losses for the week. EOS has lost a staggering 45% over the past seven days, with prices approaching $1.50. Bitcoin cash has lost 43% over the same stretch, reaching its lowest level on record. Ehereum plunged 24% week-over-week, while XRP and Stellar lost 19% and 32%, respectively.

Bitcoin’s price fell 18% during the week to reach $3,277.60, the lowest in 15 months. The leading digital currency now retains 55% of the total market cap.

The latest selloff has produced favorable conditions for Tether, which has regained its dollar-pegged status. The stablecoin is trading flat for the week at $1.00. Bitcoin SV also avoided weekly losses and currently trades at $95.34.

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.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 691 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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