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Signs of Slowing China Rattle U.S. Stocks; Cryptos on the Verge of New Lows

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U.S. stocks sold off anew Friday after Chinese retail sales data pointed to a severe slowdown in the nation’s consumption-oriented growth, triggering fresh concern over the health of the global economy. Meanwhile, the cryptocurrency market approached $100 billion for the first time since August 2017, a level that would have seemed unfathomable just six months ago.

Learn more about the factors that influenced the market in our weekly review.

Hard Fall on Wall Street

The benchmark U.S. indexes fell hard in the final session of the week. The Dow Jones Industrial Average plunged 496.87 points, or 2%, to close a 24,100.51. The Dow 30 is down a staggering 2,700 points from its October peak.

The much broader S&P 500 Index fell 1.9% to 2,599.95, the lowest in over eight months. All 11 primary sectors finished in the red, with health care and energy stocks leading the market lower. Health stocks plunged by an average 3.4%. Shares of energy companies were down 2.4%. Information technology and consumer staples also posted heavy losses.

A hard slide for information technology dragged the Nasdaq Composite Index sharply lower. In doing so, the tech-heavy index nearly joined its counterparts in negative territory for the year. The Nasdaq closed at 6,910.67, having lost 2.3%.

The CBOE Volatility Index, also known as the VIX, rose in the final session of the week, painting a grim picture for Wall Street over the next 30 days. VIX climbed 4.8% to close at 21.63 on a scale of 1-100 where 20 represents the historic mean. The so-called “fear index” has gained a whopping 87% this year.

Investors are exiting U.S. stocks in nearly record fashion, according to Bank of America Merrill Lynch. In a note obtained by Bloomberg, the bank said U.S. equity funds have experienced their second-biggest run in history, bleeding $27.6 billion through Dec. 12. As Bloomberg notes, the bloodbath on Wall Street has erased up to $4 trillion in U.S. stocks since the end of September, a period that was characterized by record highs.

China’s Cause for Alarm

Once again, China was at the center of the selloff on Friday after Beijing reported the biggest slowdown in retail sales in over 15 years. Receipts at Chinese retail stores rose just 8.1% annually in November, which was well below forecasts calling for 8.8%. Industrial production also languished, rising just 5.4% annually during the same month.

The world’s second-largest economy is in the midst of a multi-year cooldown marked by slowing industrial output and a gradual shift away from export-oriented industries. This is part of a much broader strategy to transform China into a consumer-oriented economy. However, heavy reliance on traditional smokestack industries remains a focal point to the nation’s short-term economic well-being.

China remains heavily dependent on exports, which means it relies on a strong U.S. economy as a destination market. This has given the Trump administration considerable leeway in pressuring Beijing to reform its trade policies. China and the U.S. have made considerable progress on trade talks in recent weeks but a comprehensive deal has yet to be reached.

Cryptos Locked in Bearish Retreat

Cryptocurrency prices on Friday touched new lows for the year, offering little doubt that a new bear-market bottom was around the corner. The combined value of all coins in circulation fell to $102 billion, the lowest in 16 months.

Bitcoin’s price briefly fell below $3,200 for the first time this year, extending its daily loss to more than 4%. The leading digital currency is down roughly 5% for the week, though its share of the overall market continues to grow amid a mass exodus from altcoins.

XRP, Ethereum and EOS each recorded declines of at least 3% on Friday; Stellar XLM was down 9%, falling below 10 cents for the first time this year.

With the exception of Tether, a dollar-backed stablecoin valued at $1.00, all cryptocurrencies in the top-20 were down at least 4% during the session. Twentieth ranked Maker (MKR) was the biggest laggard, falling 13% on the day.

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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4.7 stars on average, based on 739 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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Market Overview

U.S. Stocks Surge as Trump Administration Weighs Ending Trade War With China

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U.S. stocks turned higher Thursday afternoon amid reports that Washington was considering lifting tariffs on Chinese goods to expedite a trade deal with Beijing. Cryptocurrencies headed for another mediocre session overall, though altcoins showed modest upside toward the end of the session.

Stocks Extend Recovery

All three of Wall Street’s major indexes finished in positive territory, extending their winning streak to three days. The Dow Jones Industrial Average gained 163.08 points, or 0.7%, to 24,370.24, its highest settlement since Dec. 13.

The broad S&P 500 Index climbed 0.8% to finish at 2,635.96. All 11 primary sectors finished with positive results, with materials and industrials leading the way higher.

A strong performance in technology shares lifted the Nasdaq Composite Index to gains of 0.7%, where it finished at 7,084.46.

The indexes have gained more than 11% since Christmas Eve, when they traded at more than one-year lows. The S&P 500 and Nasdaq briefly entered bear-market territory in one of the worst quarters since the financial crisis.

End of the Tariff War?

The United States is strongly considering easing tariffs on China in an effort to broker a new trade deal before the self-imposed Mar. 1 deadline. According to The Wall Street Journal, U.S. officials would like to give Beijing bigger incentive to make bigger concessions in the next round of negotiations.

Both sides held face-to-face meetings last week, with China agreeing to open up its domestic market to U.S. companies and purchase more American-made farm and energy commodities. Further talks are planned in the coming weeks.

The Mar. 1 deadline reflects the 90-day truce period agreed to by President Trump and China’s Xi Jinping in December. After meeting on the sidelines of the G20 summit in Buenos Aires, both leaders committed to ending the trade war and returning to the negotiating table.

Cryptos See Modest Upside

The cryptocurrency market saw the narrowest of gains Thursday thanks to a late rally by altcoins and tokens. Bitcoin cash rose 1.3% to $130.63, EOS added 3% to $2.51 and Tron gained 4% to $0.0258. Outside the top ten, IOTA, Binance Coin and Ethereum Classing gained between 2% and 5%.

Bitcoin, the largest cryptocurrency of all, rose 0.6% to $3,667.38. As we reported earlier, bitcoin continues to cling to $3,600 but a failure to extend gains beyond $3,750 could set the tone for another downward correction.

Cryptocurrencies as a whole reached a value of $122.4 billion, according to CoinMarketCap. That represents a gain of about $800 million from 24 hours earlier.

In roughly one month’s time, the crypto bear market will become the longest in history, according to CNBC’s Ran NeuNer. Thursday was day 391 of the bearish trend. The previous record, set in 2015, was 420 days. Relevant reading: Longest Bear Market in Crypto History?

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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4.7 stars on average, based on 739 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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Market Overview

Hit the Road Jack

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Hi Everyone,

Never thought I’d be writing an obituary for the founder of one of the largest asset management firms in the world, but Jack Bogle was one of the good guys.

He was always looking out for the little guy. Back in the 70s when the financial markets was an even more closed nit racket than they are today, Bogle introduced the first index funds as a tool for individual investors to reduce risk and fees. At that time the idea was laughed off as ludicrous but it soon became the industry standard saving average joes billions, probably trillions of dollars over the last half century.

Though he wasn’t too fond of bitcoin, he probably would’ve appreciated the HODL ethos. Bogle firmly believed that stock picking and day trading was a terrible long-term strategy. So he advocated strongly that people should ignore short-term movements of the markets and simply stay the course of their investments.

Our generation could certainly use someone like him. So long Jack!

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Shutdown: Day 27 | Days to Brexit: 71
  • Global Uncertainty at Record Levels
  • Cryptos are Cool as a Cucumber

Please note: All data, figures & graphs are valid as of January 17th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Our two headline issues are no closer to being solved today. Washington DC remains in gridlock and the UK is back to square one. Stock indexes are declining today but not by much. Despite all the geopolitical and economic uncertainty, there are still some screaming BTFD!

Cramer’s call comes after an astonishing 4th quarter earnings report from Goldman Sachs, which turned out to be their best earnings reaction since 2008. Check out that fantastic floating marubozu daily candle yesterday.

Aside from GS, the banker’s earnings were rather pretty solid with some hitting and some missing their marks but overall good vibes. Not all is peaches in cream in the markets though, as is evidenced by the Global Economic Policy Uncertainty Index, which is now at its highest level since inception.

Netflix Earnings

The first of the FAANGs will be reporting tonight after the closing bell. I must say, out of all the top tech stocks on Wall Street, NFLX was probably hit the hardest by the recent stock market declines, but it was also the quickest to recover.

This graph shows all the FAANG stocks, with Netflix in white.

Famous eToro stock trader Wes Nolte says that he’s closed out some of his positions in preparation of this announcement as it could be the bellwether that affects the wider market for the next few days.

Cryptos Keep Cool

Despite the apparent volatility in the stock markets and general air of uncertainty depicted above, the crypto markets remain steady as a rock.

It’s already Thursday and many cryptoassets have moved less than 3% since the start of the week.

In fact, the crypto markets so far this year have become increasingly apathetic to what’s happening in the rest of the financial markets. This graph shows that the short-term correlations between bitcoin and gold, the US Dollar, and the stock markets have all moved to near zero. They just DGAF.

Many thanks to everyone for reading and for increasingly sharing your thoughts, insights, opinions, and well thought out questions with me on social media. Let’s have an awesome day!!

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:MatiGreen

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 142 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

U.S. Stocks Rise on Solid Bank Earnings; Cryptocurrencies Look for a Catalyst

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U.S. stocks continued higher on Wednesday, with the Dow rising triple digits after a blowout earnings report from Goldman Sachs. Cryptocurrencies were mostly directionless after Ethereum delayed its planned Constantinople upgrade due to security risks.

Stocks Rise

All of Wall Street’s major indexes finished in positive territory. The Dow Jones Industrial Average climbed 141.57 points, or 0.6%, to 24,207.16. The broad S&P 500 Index advanced 0.2% to 2,616.10, with financials leading the way higher. The Nasdaq Composite Index recorded a gain of 0.2% to finish at 7,043.70.

Goldman Sachs Group Inc. (GS) was the Dow’s best performer after reporting much better than expected earnings and revenue for the fourth quarter. The investment bank reported per-share earnings of $6.05 on revenue of $8.08 billion. Analysts had called for an EPS of $4.45 on $7.55 billion in sales.

Bank of America Corp (BAC) also rose after reporting a better than expected quarter. The bank beat expectations on the top and bottom lines and tripled its profit to $7.3 billion.

Brexit Uncertainty

Global financial markets were surprisingly calm in the wake of a devastating Brexit vote for British Prime Minister Theresa May, who failed to pass her proposed legislation on Tuesday. Lawmakers voted overwhelmingly against the proposed Brexit deal, setting the stage for a new round of negotiations with Brussels.

However, some members of British Parliament want Prime Minister May to step down or call a general election. The opposition Labour party pushed for a vote of no-confidence on Wednesday, which if passed, would have set the stage for a general election. The motion was rejected late Wednesday.

Under May’s proposed deal, the United Kingdom would embark on a soft Brexit in roughly two months’ time. It’s not entirely clear whether that timetable is still feasible given the latest setback in parliament.

Day 26 of the Government Shutdown

The longest government shutdown in U.S. history entered its 26th day on Wednesday, fueling uncertainty about the direction of the economy. With roughly 800,000 federal workers affected by the impasse, some analysts are beginning to worry about the potential impact on economic growth.

The latest Quinnipiac poll shows the majority of Republicans still support the shutdown because of its implications on border wall funding. President Donald Trump has been adamant that he will not cave unless Democrats make appropriations for a steel barrier on the U.S.-Mexico border. The president has warned that the shutdown could go on for “months or even years” if Democrats don’t agree to fund the wall.

With no solution in sight, attention has turned to Senate Republicans, some of which have grown frustrated with the shutdown. If enough of them defect, it could force a vote on a new measure to re-open the government.

Ethereum Hard Fork Postponed

The planned implementation of the Constantinople hard fork was delayed on Wednesday after developers identified a major vulnerability in one of the Ethereum Improvement Proposals (IEPs).

Smart contract auditor ChainSecurity on Tuesday uncovered a major issue with EIP 1283, which proposes net gas metering changes for the SSTORE opcode and new uses for contract storage. According to ChainSecurity, implementing the EIP 1283 would give attackers a loophole to steal funds.

The delayed launch of Constantinople was made official on Ethereum’s official Twitter: “Constantinople upgrade is temporarily postponed out of caution following a consensus decision by #Ethereum developers, security professionals and other community members. More information and instructions are below.”

At the time of writing, no alternative timetable has been provided. More on Constantinople: ETH/USD Price Analysis: Ethereum’s “Thirdening” Approaches.

Crypto Markets Gyrate

The cryptocurrency market saw little movement on Wednesday, as bitcoin held within a narrow range and most of the major altcoins exhibited lower volatility. The value of all coins in circulation dipped slightly to $121.6 billion despite the presence of stable volumes.

Bitcoin edged down 0.1% on the day, reaching $3,642.89. The largest cryptocurrency by market cap experienced a large bounce at the beginning of the week but has faced strong resistance near $3,700.

Learn why we believe 2019 could be the year of accumulation for bitcoin.

Ethereum had posted the biggest percentage drop in the top 20 before paring losses later in the session. EH was last down 0.6% at $122.86.

On the opposite side of the spectrum, Cardano gained 4.2% to $0.0445. Binance Coin rose 3% to $6.10. EOS added 1% to $2.43.

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.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
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4.7 stars on average, based on 739 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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