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Week in Review

The Week in Review: US Stocks Bounce Back with All Eyes On France

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Weekly Recap

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Asset Current Value Weekly Change
S&P 500 2345 0.85%
DAX 12105 -0.50%
WTI Crude Oil 49.61 -8.12%
GOLD 1285.50 -1.14%
Bitcoin 1229 4.19%
EUR/USD 1.0728 1.21%

 

Global stock markets had an unusually mixed week as European equities were under pressure before the close French presidential election. The latest polls showed a welcome gain for the favored candidate Macron, who will most likely face Marine Le Pen in the second round. Amid the European tensions, the major US benchmarks ended the period higher, with technology stocks leading the way once again. Japanese stocks were helped by the correction in the Yen, while British equities lost ground following Theresa May’s surprise announcement about a snap UK election in June.

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Monthly progress of the main global indices, Comparison Chart (% gains)

Oil turned lower after two bullish weeks, and WTI Crude plunged back below the $50 per barrel level towards the end of the week, as the jawboning of some of the OPEC nations was overshadowed by the gloomy fundamental picture. Gold also declined during the week, although because of different reasons, as safe-haven assets retreated from their recent highs despite the continued verbal battle between North Korea and the US. As Donald Trump turned surprisingly active on geopolitical issues, he put pressure on China to take up a role in dealing with the “Korean problem”. If the superpowers finally decide to neutralize the communist leadership in one form or another, markets will likely experience another risk-off period.

Cryptocurrencies had a consolidation week as most of the major altcoins were trading in ranges throughout the period. Ethereum, Ripple, Litecoin, and Monero all traded without a clear direction, although Ripple and Litecoin remained way more volatile following their strong moves. Bitcoin enjoyed a bullish move following the Easter weekend, as it broke the $1215 resistance and touched $1250 on Friday for the first time in more than a month. Ethereum Classic and NEM were among the major movers on the upside, while Dash drifted lower after hitting level $75 again.

Economic numbers were also mixed, but the most awaited releases were mostly negative surprises. US data took a nosedive, with the Philly Fed Index, Housing Starts, and Capacity Utilization all missing the consensus estimates. British Retail Sales were also much worse than expected, putting further pressure on the local market. The Eurozone PMIs were a relatively bright spot, and Chinese Industrial Production gave some hope to investors that the slowdown in the country is, at least, contained.

Technical Corner

The NASDAQ has retained its leading role among the global benchmarks, despite the recent geopolitical fears, as it got very close to hitting a new all-time high, “under the radar”. The DAX decoupled from the NASDAQ in recent weeks, as European traders took a cautious stance before the French election. The tech benchmark is in a slightly advancing trend channel that defines the consolidation zone below the April highs.

The US Tech Index, 4-Hour Chart

The 5500 level might be in the focus in the coming week, especially if the week begins with a relief rally after the elections. Primary support is found at 5400, while the low from last week near 5350 cold provide short-term support as well, with a more important level near 5315. The relative strength of the index is a bullish sign for the broader market, as the NASDAQ is usually a good indicator of the risk appetite of traders.

Key Economic Releases of the Week

Day Country Release Actual Expected Previous
Tuesday US Building Permits 1.26 million 1.25 million 1.22 million
Tuesday US Housing Starts 1.22 million 1.25 million 1.30 million
Tuesday US Industrial Production 0.50% 0.50% 0.0%
Wednesday EUROZONE Final CPI 1.50% 1.50% 1.50%
Wednesday US Crude Oil Inventories -1 million -2.2 million
Thursday US Philly Fed Index 22.0 25.6 32.8
Thursday US Unemployment Claims 244,000 241,000 234,000
Thursday US BOE Governor Carney Speech
Friday GERMANY Services PMI 54.7 55.5 55.6
Friday GERMANY Manufacturing PMI 58.2 58.1 58.3
Friday EUROZONE Services PMI 56.2 56 56
Friday EUROZONE Manufacturing PMI 56.8 56.1 56.2
Friday UK Retail Sales -1.80% -0.30% 1.40%
Friday CANADA CPI 0.20% 0.40% 0.20%
Friday US Existing Home Sales 5.71 million 5.61 million 5.48 million
Thursday CANADA Building Permits (monthly) -2.50% 5.40%
Thursday US Initial Jobless Claims (weekly) 234,000 251,000 258,000
Friday CANADA Employment Change 19,400 5,700 15,300
Friday CANADA Unemployment Rate 6.70% 6.70% 6.60%
Friday US Hourly Earnings 0.20% 0.20% 0.20%
Friday US Employment Change 98,000 175,000 235,000
Friday US Unemployment Rate 4.50% 4.70% 4.70%

 

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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Week in Review

Week in Review: Cryptocurrencies Extend Rally as Altcoins Surge

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Rise

Cryptocurrencies staged a convincing rally this week, as the end of U.S. tax season coincided with renewed interest in alternative coins like Ethereum, Ripple XRP and bitcoin cash. The bull case for bitcoin also strengthened as the world’s largest cryptocurrency traded above $8,500.

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Stock markets also rose during the week as strong corporate earnings propelled the major averages on Wall Street and in Europe. However, rate-hike jitters and rising bond yields ate into the gains on Thursday and Friday.

Meanwhile, the commodity upsurge continued, with oil prices hitting more than three-year highs.

Cryptocurrencies Cross $380 Billion

The value of all cryptocurrencies crossed $380 billion on Friday for the first time in over a month, as the end of U.S. tax season stoked further buying interest in the market.

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Crypto assets added more than 20% for the week. Altcoins were the biggest gainers, with Ethereum, Ripple XRP and bitcoin cash recording double-digit gains.

Ether prices are up 20% over the past five days to trade at $598. XRP has gained 40% over the same stretch to hit $0.92. Bitcoin cash was the largest gainer percentage-wise, surging 49% to $1,073.

Bitcoin prices stabilized above $8,500 following back-to-back gains, although its share of the total market fell below 39% for the first time since February. The cryptocurrency managed to overcome huge sell orders from at least two bitcoin whales, who unloaded a combined $100 million in BTC earlier this week.

Interestingly, bitcoin has maintained its poise even as its relative value to Ethereum has declined. In the past, a weaker BTC/ETH exchange rate has been a negative sign for bitcoin.

Stocks Lose Their Luster

Stocks opened the week on a firm upswing, with the Dow Jones Industrial Average reporting back-to-back 200-point gains. By the end of the week, stock markets had given up a significant portion of their gains after President Donald Trump talked down the energy sector.

Losses intensified on Friday as rate-hike jitters and volatile tech shares weighed on the major averages. The Dow Jones Industrial Average fell 201.95 points, or 0.8%, to close at 24,462.94. For the week, the index gained 0.4%.

The CBOE Volatility Index, also known as the VIX, rose in the latter half of the week and on Friday settled at 16.88. The so-called “fear index” trades on a scale of 1-100 with 20 representing the historic average.

Oil Prices “Artificially Very High”

President Trump has criticized the recent spike in oil prices as being a product of OPEC-led intervention, arguing that market manipulation would not be tolerated.

“Looks like OPEC is at it again,” Trump tweeted on Friday. “With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!”

Crude futures spiked to more than three-year highs on Thursday as the possibility of supply disruptions lifted the market. Oil futures have been rising for months thanks to an OPEC-led initiative to drain excess supply from the market.

However, bullish optimism could be contained by rising production from U.S. shale refineries and growing criticism from the Trump administration over oil’s inflated value.

The Week Ahead

The cryptocurrency market’s upward correction will be closely monitored next week as traders look to avoid the dreaded bull trap. The recent strong performance in altcoins is a good indicator that the market is pivoting higher after a volatile first quarter.

Strong quarterly results are also expected next week, which could help tame volatility on Wall Street.

On the economic calendar, manufacturing PMI and durable goods orders will make headlines. The Bank of Japan (BOJ) will also deliver a high-profile policy verdict next week as officials continue to steer the economy toward growth and inflation. No change in interest rates is expected.

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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4.5 stars on average, based on 343 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Week in Review

Week in Review: Cryptocurrencies Rebound 30% as Demand Returns

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Higher

The cryptocurrency market surged this week, with bitcoin and the major altcoins posting double-digit gains on improved investor sentiment and signs of growing institutional interest. Bold predictions of bitcoin’s future value also emboldened investors to re-enter the market after prices threatened a bearish reversal last week.

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Equity markets also advanced over the previous five days, although trading was choppy after President Trump threatened greater military intervention in Syria. This environment lifted risk-off assets such as gold, which rose to two-and-a-half month highs.

Cryptocurrencies Rebound

Crypto assets put up huge gains this week, raising optimism that the worst of the downturn had passed. Gains were spread out evenly across most major assets, with the likes of bitcoin and Ethereum showing signs of a bullish breakout.

Bitcoin jumped above $8,200 on Friday, its highest in over three weeks. Ether prices climbed to a high of $529 for a five-day return of nearly 40%.

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XRP spiked more than 43% this week after Santander bank announced the launch of a blockchain-powered foreign exchange service that uses Ripple’s technology.

EOS surged more than 55% ahead of a planned airdrop scheduled for Apr. 15.

The cryptocurrency market reached a high of $329.6 billion on Friday, its highest since Mar. 26. The digital asset class was last valued at $315 billion.

Trading volumes have more than doubled in recent days, with total transactions surpassing $23 billion on Friday. Meanwhile, bitcoin’s share of the total market fell to around 42%, another healthy indicator for the broader crypto asset class.

Positive Outlook

The crypto market’s recent breakout likely had an institutional component behind it, based on a simple analysis of price trends across major exchanges.  For example, bitcoin’s initial break above $7,000 was first registered on Bitfinex, which indicates the presence of a large institutional order.

A cryptocurrency hedge fund boldly predicted Friday that bitcoin’s bottom is behind us and that buying pressure will accumulate in the near future. Pantera Capital, which controls roughly $800 million in assets, has told clients in a note that bitcoin’s darkest days may have passed.

The hedge fund has only made three such predictions since 2014, which means there is some conviction and merit behind its outlook.

Billionaire Tim Draper has also predicted huge upside for bitcoin, setting a price target of $250,000 per coin by 2022. In 2015, Draper correctly predicted that bitcoin would reach $10,000 by 2017.

Sabre-Rattling Syria

Fears of a U.S.-Russia conflict in Syria escalated this week after President Trump threatened to rain down missiles on the Assad regime over its alleged use of chemical weapons. Though conclusive evidence of a regime-led chemical attack remains elusive, the U.S. and its allies are said to be coordinating a military strike on the country.

The threat of an imminent strike receded Thursday after President Trump implied via Twitter that an attack may or may not be imminent. This allowed equity markets to recover from a sharp selloff earlier in the week.  The S&P 500 Index, Dow Jones Industrial Average and Nasdaq Composite Index all rose during the week.

Against this backdrop, the case for owning commodities like gold have increased substantially, according to Goldman Sachs. The U.S. multinational investment firm has doubled down on its “overweight” recommendation for commodities, which includes aluminum, crude and other raw materials.

Gold briefly crossed $1,360 this week to settle at its highest level in two-and-a-half months. Crude oil also surged to more than three-year highs on Mideast tension.

The Week Ahead

With $75 billion flowing back into the crypto market, the question of sustainability is on everybody’s mind heading into the weekend. Crypto assets have failed to generate sustained rallies over the past two months, with the total market cracking $500 billion only once since the epic February crash.

On Wall Street, corporate earnings will also be in the headlines, as will the escalating tensions between Russia and the United States concerning Syria.

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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4.5 stars on average, based on 343 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Week in Review

Week in Review: U.S.-China Trade Quarrel Triggers Global Panic Sale

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A trade spat between the United States and China escalated this week, triggering a mass exodus from global equities. For Wall Street, this amounted to the worst start to the second quarter since the Great Depression.

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On the crypto front, markets failed to sustain a mid-week rally as correlation between equities and digital assets intensified. In the process, bitcoin asserted greater dominance over the market, as demonstrated by its growing share of the total pie.

Epic Meltdown on Wall Street

After a disastrous start to the week – and month – U.S. stocks turned things around between Tuesday and Thursday. However, volatility returned in a big way on Friday as the major indexes plunged more than 2%.

The Dow Jones Industrial Average plunged 572.46 points, or 2.3%, to close at 23,932.76. All 30 index members recorded losses, with the lowest being -0.5%.

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The broader S&P 500 Index closed down 2.2% at 2,605.47, with six of 11 sectors falling 2% or more.

Meanwhile, the technology-driven Nasdaq Composite Index fell 2.3% to 6,915.11.

Implied volatility, as expressed through the CBOE VIX, surged more than 13% on Friday to close at 21.49, which is above the historic mean.

Trade War

Friday’s selloff was triggered once again by escalating trade tensions between China and the United States. On Friday, the White House not only defended President Trump’s new tariff policy, but underscored the administration’s intent to pursue harsher measures unless China adopts fairer trade practices.

“Year after year, China continues to distort global markets and harm U.S. businesses and consumers with unfair trade practices,” the White House press office said in a statement.

China has already proposed to match President Trump’s $50 billion tariff proposal with its own hit list of American-made goods. However, it has also signaled readiness to buy more American-made semiconductors.

While most analysts have been fixated on what the U.S. has to lose in a trade war, China is also at risk because it cannot match the U.S. in duties. The reason is simple: China only imports about $131 billion in U.S. goods, which is a fraction of what the U.S. consumes from China each year.

In retaliation to China’s retaliation, Trump threatened an additional $100 billion in duties – that’s on top of the $50 billion already pledged. That total already exceeds China’s total U.S. imports for the year.

Trump explained his reasoning in the following tweet:

There’s strong reason to believe that the tit-for-tat will continue despite China willingness to negotiate trade terms. It remains to be seen how Beijing will react to harsher border taxes in the future.

Jobs Miss Adds to Negativity

A disappointing jobs report on Friday also added to the market’s woes after the Labor Department reported lower-than-expected nonfarm payrolls numbers.

U.S. employers added a mere 103,000 workers to payrolls last month, nearly half the rate analysts were expecting. Labor economists revised up the tally for February to reflect growth of 326,000.

The jobless rate held steady at 4.1% as workforce participation slipped. Analysts had forecast a slight dip in unemployment and a large pick-up in participation.

Average hourly earnings picked up faster than expected, a sign of stronger inflation.

Earnings rose 0.3% in March, up from 0.1% in February and slightly ahead of forecasts calling for 0.2%. This translated into year-over-year growth of 2.7%.

A Mediocre Week for Cryptocurrencies

It was another down week for cryptocurrencies, with the total market cap shedding $13 billion over the seven-day stretch. The market peaked at $283.3 billion on Tuesday but has since declined to around $250 billion.

Bitcoin was down for most of the week, with prices falling below $6,600 on multiple occasions. The downturn threatened a bear-market reversal as prices approached the recent low of $6,425.

Bitcoin’s dramatic decline since the start of the year may have a silver lining: it means speculators, who are largely responsible for price swings, have abandoned the market. Their return could depend on how regulations evolve as well as how successful exchanges are in bringing institutional traders on board.

The Week Ahead

U.S. corporate earnings, inflation data and Mark Zuckerberg’s congressional testimony will dominate the headlines next week. Many traders are looking to corporate results to smooth out the volatility on Wall Street given the lofty expectations on the Q1 earnings quarter. However, surprise misses could shake an already tumultuous market and give traders more reason to exit the asset class.

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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4.5 stars on average, based on 343 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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