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Market Overview

U.S. Stocks Break Even for August; Global Equities Record Tenth Month of Gains

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Wall Street and European stocks booked solid gains Thursday, with Asian markets following closely in their footsteps Friday. With the advance, U.S. stocks avoided monthly losses, while global equities notched their tenth consecutive monthly gain.

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August Market Wrap

Before this week, the S&P 500 Index was on track for a monthly decline. But then a string of upbeat data bolstered confidence in the U.S. economy. The large-cap S&P 500 Index rose 0.6% on Thursday, closing at 2,471.65. That was the highest settlement in three weeks. The benchmark posted the narrowest of gains in August, edging up 0.1%.

The Dow Jones Industrial Average rose 0.3% on Thursday for a settlement of 21,948.10. For the month, it was down 0.1%.

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Meanwhile, the Nasdaq Composite Index climbed 1% to close at 6,428.66 on Thursday. It was up 1% for the month.

Globally, the FTSE All World Index has gained in four of the last five sessions, pulling the benchmark into positive territory for August. The August rally was the index’s tenth consecutive monthly advance.

 

Stronger Economic Signal from China

Chinese factory data came in better than expected this week, with a recent survey of small- and mid-sized manufacturers showing faster growth. The Caixin China manufacturing purchasing managers’ index (PMI) recorded 51.6 in August, up from 51.1 and confounding expectations of a slight drop.

On Thursday, the official manufacturing survey of large and state-run companies showed a PMI of 51.7.

The Chinese economy is coming off a solid first half, with GDP expanding at a faster than expected 6.9%. Policymakers are trying to engineer a consumer-driven recovery, but continue to rely on debt and traditional smokestack industries to fuel the expansion.

China’s expansion is part of a synchronized global recovery that extends to Japan, Eurozone and other advanced industrialized states.

September: A Difficult Month for Equities

The month of September is notoriously difficult for equities, especially Wall Street. Various studies have confirmed that September is the worst month for the benchmark indices.

Since 1950, the Dow Jones Industrial Average has declined by an average of 1.1% during the month, according to the Stock Trader’s Almanac. The S&P 500 has averaged a 0.7% drop over the 30-day period.

The downtrend has been confirmed by Bespoke, an independent research firm. The firm reported last year that September is the only month in which the Dow has been lower on average over the past 20, 50 and 100 years.

Market volumes are set to rise next week, as investors return from the Labor Day holiday. In North America, Labor Day marks the unofficial end to summer. It occurs on the first Monday of the month.

Monetary policy will be front and center in coming weeks. The Federal Reserve, European Central Bank, Bank of Japan and Bank of England are all scheduled to hold policy meetings.

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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.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Market Overview

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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