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Market Overview

Week in Review: Stocks, Cryptocurrencies and Commodities Rise

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It was a week filled with rallies on Wall Street and in the crypto sphere, as bullish investors doubled down on stocks and bitcoin. Commodity markets also rose, as the U.S. dollar fell against a basket of world currencies.

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Stock Rally Zaps Volatility

U.S. stocks settled near record territory on Friday as volatility  The benchmark S&P 500 Index closed at 2,55.17, two points shy of a new record.

The Dow Jones Industrial Average finished the week a hair below record highs after blue-chip J.P. Morgan Chase & Co (JPM) reported better than expected quarterly results. Several of the Dow 30 companies will report earnings next week, including Goldman Sachs Group (GS), Johnson & Johnson (JNJ) and Procter & Gamble (PG).

The technology-heavy Nasdaq Composite Index rose 0.2% on Friday to close at a new record high of 6,605.80.

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A measure of implied volatility that tracks the S&P 500 held in the single digits on Friday. The CBOE VIX closed at 9.61, on a scale of 1-100 where 20 represents the historic mean.

Across the Atlantic, Germany’s DAX Index logged another record close after Bayer AG (BAYRY) reached a multi-billion-euro deal to sell a portion of its business. The DAX closed at 12,991.87.

The pan-European Stoxx 600 posted minor gains for the week, but still managed to close at four-month highs.

Crude Oil, Gold Rise

The commodity markets were well supported this week, underpinned by stronger demand and a softer dollar.

In crude oil, U.S. West Texas Intermediate (WTI) rose 4.4% during the week to close at $51.45 a barrel. Brent crude, the international futures benchmark, tacked on 2.8% for the week to finish at $57.17 a barrel.

The market was propped up this week by a myriad of forces, including an improved demand outlook, bullish Chinese data and geopolitical risks from oil-rich Iran. Meanwhile, oilfield services provider Baker Hughes Inc. reported a second straight weekly decline in the U.S. oil-rig count.

In precious metals, gold prices topped $1,300 an ounce after another tepid reading of U.S. core inflation.

Gold for December delivery, the most actively traded futures contract, rose 0.6% on Friday for a weekly gain of 2.3%. The contract closed at $1,304.60 a troy ounce, the highest in almost three weeks.

The price of silver gained 3.7% during the week to close at $17.41. That’s the highest settlement on the Comex division of the New York Mercantile Exchange since Sept. 20.

U.S. economic data were far from disappointing on Friday. The Consumer Price Index (CPI) strengthened to 2.2% annually in September, while retail sales rebounded 1.6% from the previous month.

Cryptocurrencies Deliver Stellar Returns

Cryptocurrencies stole the spotlight this week, as bitcoin staged a massive rally en route to record highs. The BTC/USD exchange rate spiked more than 28% during the week, and briefly traded above $5,800, according to Bitstamp.

Bitcoin’s gains followed speculation that China would soon ease trading restrictions on cryptocurrency. An announcement by Coinbase that it was introducing an ‘instant buy’ program for U.S. traders also seemed to support bitcoin’s cause on Friday. The U.S.-based digital currency exchange has more than 11 million members.

Russia’s stance on cryptocurrency appears to have softened after a top central banker signaled for the closure of online bitcoin exchanges. High level talks between Kremlin officials and the business community have convinced President Vladimir Putin and central bank chief Elvira Nabiullina to pursue a regulatory framework instead of an all-out ban.

After initial apprehension, the broader cryptocurrency market followed suite. Ethereum jumped to six-week highs, while Litecoin also finished firmly higher.

The Week Ahead

Crypto enthusiasts will continue to monitor the news wire next week for regulatory developments from around the globe. On Wall Street, market participants can expect a deluge of third-quarter earnings results from the S&P 500 Index.  A steady stream of economic data will also make headlines throughout the week.

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Market Overview

Asian Market Update – Wednesday: Asian shares trading higher as Communist Party Congress convenes in China

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Communist Party members

The Big Question: How will markets react to news out of the congress?

Major Asian equity markets were trading higher during Wednesday morning’s trading session, as markets in China and across the Asia Pacific watched the once-in-five-years meeting of the Communist Party of China in Beijing.

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Wednesday morning, President Xi Jinping is delivering a hours-long speech, which can be compared to the US President’s State of the Union speech to Congress, addressing issues ranging from social and economic to military, and so on.

In China, the Shanghai Composite Index was up 0.27 percent to about 3,381 before midday on Wednesday. The CSI 300 Index, which tracks the 300 largest companies listed in Shanghai and Shenzhen, was up 0.48 percent to 3,931 before midday.

In Hong Kong, the Hang Seng Index edged up 0.01 percent to around 28,700 before midday.

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In Japan, the Nikkei 225 was up 0.09 percent to around 21,354. The Nikkei remained in an uptrend on Wednesday, following recent record highs.

In South Korea, the Kospi was down a slight 0.15 percent to around 2,480 shortly before midday. Korean Peninsula tensions are rising again after a North Korean ambassador to the UN warned that a nuclear war “could break out any moment.”

Down Under, the ASX 200 also added 0.08 percent to around 5,894.

The economic data front remain relatively quite on Wednesday, with the biggest market driver today likely to be the Communist Party Congress in China.

President Xi, in his speech, repeated largely familiar themes in terms of economic policy, which included calls for continued implementation of opening and reforms of the Chinese economy.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 21,354 0.09%
China-Shanghai Composite Index 3,381 0.27%
China-CSI 300 3,931 0.48%
South Korea-KOSPI 2,480 -0.15%
Hong Kong –Hang Seng 28,700 0.01%
Australia-ASX 200 5,894 0.08%

Cryptocurrencies

Prices of cryptocurrencies pointed lower overnight during the Asian trading session on Wednesday.

As of midday in Asia, bitcoin was down 1.67 percent to $5,503, that’s about $60 lower than the same time on Tuesday. However, the overall pattern is still showing a healthy consolidation in bitcoin above the support level at $5,500.

Ethereum lost 2.74 percent to about $307 before midday. Ethereum is now near the $300 level after recent surges to as high as $340.

Litecoin was down 3.28 percent to about $57 at midday. Litecoin has now dropped below $60 after several days above that level.

Currencies

The Japanese yen lost 0.07 percent the US dollar at midday Thursday to 112.25 per dollar.

The Chinese yuan gained 0.2 percent against the US dollar, trading at 6.609 per dollar.

The Australian dollar gained 0.03 percent on the dollar, changing hands at 1.2742 per dollar at midday.

Commodities

WTI Oil was flat for the day, trading at $51.90 per barrel.

Brent Crude gained a slight 0.28 percent to $58.21 per barrel.

Gold was up 0.11 percent to $1,286 an ounce.

Business News across Asia

In China, of course, the focus of not only Chinese state media but foreign media outlets is on the speech by President Xi Jinping. As mentioned above, the speech covers a wide range of topics. But if you only take one thing out of it, here it is:

Take away: President Xi reaffirmed earlier calls for opening and reform plans, trying to reassure foreign companies about market conditions and access. Though that’s just talk now, but a talk like that in a such a big meeting, carries a lot of weight.

Featured image from Wikimedia Commons.

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Market Overview

Dow Jones Hits New Record After Brief Stint at 23,000

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The Dow Jones Industrial Average rose to New records Tuesday, powered by stronger than expected earnings for major health blue chips.

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Dow Touches 23,000 In Intraday Trade

The blue-chip index briefly traded above 23,000 before paring gains to settle a mere three points shy of the milestone. The index rose 0.2% to 22,997.44 for a new all-time record.

Sixteen of the Dow’s 30 index members contributed to the rally. UnitedHealth Group (UNH) and Johnson & Johnson were the best performers after each reported earnings that beat forecasts.

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On the opposite side of the ledger, Goldman Sachs (GS) shed 2.6% despite posting better than expected Q3 results.

With the gain, the Dow has now finished in positive territory in 12 of the past 15 sessions. Over that period, it has added 3.2%.

The broader S&P 500 Index also climbed to new highs Tuesday, adding 0.1% to finish at 2,559.36. Health stocks led the gains, climbing 1.3% as a sector.

Meanwhile, the tech-driven Nasdaq Composite Index pared losses to settle flat at 6,623.66.

However, the gains on Tuesday were accompanied by a mild increase in volatility, with the CBOE VIX settling in the double digits for the first time in a week.

Economic Data Largely Positive

The latest batches of industrial production and housing data painted a favorable picture of the U.S. economy. Industrial production – the broadest measure of factory output – rose 0.3% in September, the Federal Reserve reported Tuesday. Analysts had forecast an increase of 0.2%.

A closely watched measure of housing market conditions also strengthened more than expected this month. The National Association of Home Builders’ housing market index climbed four points to 68 for October. That was the highest level in five months.

Upbeat data helped the U.S. dollar notched its fourth consecutive gain on Tuesday. The U.S. dollar index (DXY) climbed 0.2% to 93.51.

The dollar strengthened against the pound and euro, while paring gains versus the yen and loonie.

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Analysis

Daily Analysis: Dollar Rally Continues amid Fed Chair Confusion

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Tuesday Market Recap

Asset Current Value Daily Change
S&P 500 2554 -0.09%
DAX 12995 -0.07%
WTI Crude Oil 51.53 -0.66%
GOLD 1287.00 -1.22%
Bitcoin 5652 -0.86%
EUR/USD 1.1751 -0.38%

Yesterday’s trends are mostly continued in financial markets, such as the low-volatility levitation in stocks and the slightly more active trading in currencies with the apparent Dollar strength. The Great British Pound continued to be under pressure amid the amplified Brexit-related worries, but most of the other majors also lost ground to the Greenback.

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The Dollar rally has been fueled by the rise in the odds of some of the hawkish Fed Chair candidates, while overall, the “race” for the positions looks more chaotic than ever. Interestingly, the long-end of the yield curve is refusing to follow the short-term moves, and without the effects of the Fed’s QE program, the yield curve would probably be inverted by now, signaling strong recession risks.

Dollar Index (DXY), 4-Hour Chart Analysis

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The major stock indices are virtually unchanged yet again and even the previously surging Nikkei entered a consolidation, adding to the unusual October lull. Commodities have been quite active thanks to the Dollar’s vigor, with crude oil and gold both turning lower. Oil gave back most of yesterday’s gains as the Iraqi-Kurdish conflict turned out to be less violent than previously feared, and the brief rally fizzled.

WTI Crude Oil, 4-Hour Chart Analysis

Cryptocurrencies

The major coins are having a mixed session at best, as yesterday’s rebound wasn’t durable, and most of the coins turned back lower again. That said, despite the recent choppy price action, the total market cap of the segment is close to its all-time high, even as only Bitcoin is trading near its own record price level.

The optimism regarding Ethereum major Byzantium upgrade wasn’t enough to lift the second most valuable coin today, and the price of the ETH token retreated below the key $330 level after touching $350 yesterday after the upgrade’s lock-in. Ripple and NEO have been among the most active majors today, but with opposing performances, as Ripple fell significantly after yesterday’s break-out attempt, while NEO defied gravity and jumped above the $30 level after a corrective period.

BTC/USD, 4-Hour Chart Analysis

Technical Picture

The S&P 500 is grinding higher despite the overbought short-term momentum readings, and the benchmark is trading very close to its all-time high. The 2550 level is still in focus, but until volatility remains near record lows, the minuscule moves are unlikely to change the technical setup. While a sudden drop in prices could quickly negate the recent break-out, the consolidation could very well lead to further upside, as bulls remain firmly in control, despite the lofty valuation levels.

S&P 500 Futures, 4-Hour Chart Analysis

Key Economic Releases on Tuesday

Time, CET Country Release Actual Expected Previous
02:30 AUSTRALIA RBA Meeting Minutes
10:30 UK CPI 3.00% 3.00% 2.90%
11:00 GERMANY ZEW Sentiment 17.6 20.3 17
12:00 EUROZONE Final CPI 1.50% 1.50% 1.50%
15:15 US Industrial Production 0.30% 0.40% 0.20%
15:15 US Capacity Utilization Rate 76.00% 76.20% 76.10%

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