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Market Evolution - A Daily Summary of the Financial Markets

December 13, 2019

Japan leads Asian stock market as investors await first phase of trade agreement

The Asian markets rose on Friday, December 13, after the results of the elections in Britain where Boris Johnson has won with a large majority.

It also helped that Washington and Beijing appear to have reached a phase one trade agreement, pending President Trump’s approval. In addition, the White House has offered to eliminate the next round of tariffs that would take effect Sunday.

Mainland China’s shares rose at the end of the session. Hong Kong’s Hang Seng index rose by 2.06% with Tencent and HSBC shares rising by more than 2% each.

South Korean Kospi also experienced strong gains and traded 1.32% higher. Shares of chipmaker SK Hynix shot up more than 5%. Stocks in Australia also advanced, with the S&P/ASX 200 up 0.53%. The major mining company BHP exceeded 2%.

The Japanese Nikkei 225 appreciated by 2.35% as Fast Retailing shares soared above 3.5%. The Bank of Japan released on Friday a tankan survey showing that business confidence among the country’s major manufacturers is falling to its lowest level in more than six years.

The yen was very weak (CurrencyIndex 0%) early Friday morning.

Shares rise to a new record after a Trump tweet saying the U.S. is very close to a trade deal with China

Thursday 12 December was the first time since 27 November that major indices reached all-time highs.

They did so after the U.S. president said that China and the U.S. are very focused on getting their trade agreement before Sunday’s tariff hikes. Trump said 'they want it and so do we’.

Several different sources reliably say that U.S. negotiators have offered to cancel China’s new tariffs and reduce existing ones by up to 50 percent to $360 billion. However, it is also said that the original tariffs would be reimposed if China does not deliver on its side of the bargain.

The US dollar was very weak (CurrencyIndex 12.5%) early on Friday.

European shares close tightly after Trump’s tweet

European equities recovered on Thursday, December 12, after President Donald Trump said the United States is very close to a trade agreement with China.

Stocks registered minimal losses when the European Central Bank announced that it kept its interest rates unchanged, following the first monetary policy meeting of new President Christine Lagarde.

Finally, at the close of the session, the pan-European Stoxx 600 ended up approximately 0.5% higher. Banks, basic resources and automobiles were at the forefront.

In Britain, voters are holding general elections this Thursday. They are the second in the UK since the historic vote to leave the European Union in 2016. The elections promise to be fundamental to the fate of Brexit and the country’s economic policy.

On Thursday, the Ifo Institute confirmed its 1.1% growth forecast for the German economy. It also revised its projection for 2021 upwards to 1.5%. In addition, industrial production in the euro zone fell by 0.5% m-o-m in October and fell by 2.2% over the same period last year.

The euro was mixed (CurrencyIndex 50%) early Friday morning.

Oil prices reached their highest level in three months as the trade agreement is reached and Gold prices fall as risk appetite increases

Oil prices rose in the Asian session on Friday, December 13, reaching three-month highs after the United States and China came close to resolving a trade war that has raised big questions about global demand for crude oil.

While a trade agreement could boost oil demand in the short term, persistent doubts about future demand limit price increases.

Meanwhile, the White House has agreed to suspend some tariffs on Chinese products, and reduce others, in exchange for Beijing’s promise to increase purchases of U.S. agricultural products by 2020. But the White House has made no official statement, raising doubts about whether there is an agreement at all.

Brent futures were up (MarketEvolution) early Friday.

At the Asian session on Friday, December 13, gold fell after Washington and Beijing reached a trade agreement and avoided a new round of tariff measures. This boosted appetite for riskier assets.

In the previous session, gold prices reached their highest level in more than a month, driven by trade uncertainties, ahead of the December 15 deadline when U.S. tariffs on Chinese products were expected to begin to apply immediately.

Gold futures were down (MarketEvolution) early on Friday.

Nothing new at the ECB and markets do not move

At its meeting on Thursday, the Governing Council of the European Central Bank decided that the interest rate on the main refinancing operations, the interest rates on the marginal lending facility and the deposit facility would remain at 0%, 0.25% and -0.50% respectively.

The Governing Council expects the key ECB interest rates to remain at their current levels until the inflation outlook converges to a level sufficiently close to 2%.

On 1 November net purchases resumed as part of the asset purchase programme at a monthly rate of EUR 20 billion. The Governing Council expects them to last as long as necessary to reinforce the accommodative impact of its official interest rates.

It also intends to continue to reinvest in full the main payments on maturing securities in order to maintain favourable liquidity conditions and a large degree of monetary easing.

Weekly U.S. unemployment claims reach highest level in more than two years

The number of Americans who filed for unemployment benefits rose to more than the two-year high last week.

The initial claims increased from 49,000 to 252,000 for the week ending December 7 and is the highest reading since September 2017.

On the other hand, higher food and gasoline prices were offset by lower service costs, pointing to moderate inflation.

These data were released after the consumer price rally was released on Wednesday.

The Federal Reserve, which has an annual inflation target of 2%, tracks the price index of basic personal consumer spending to establish its monetary policy.

Unchanged interest rates indicate that they will no longer be touched until at least 2020

The Federal Reserve kept interest rates stable after its two-day meeting.

The Fed said it is unlikely that action will be taken next year amid persistently low inflation.

Concluding a year in which the central bank cut its benchmark rate three times, the Federal Open Market Committee met expectations and kept the funds interest rate in a range from 1.5% to 1.75%.

The committee indicated that monetary policy is likely to remain where it is for an indeterminate period, although officials will continue to monitor the development of economic conditions.

The decision to keep rates unchanged was unanimous, after several disagreements in recent meetings.

Saudi Aramco reaches record market capitalization on its second trading day

Saudi Aramco’s shares rose on its second day of public trading, pushing the initial public offering to a huge valuation of $2 trillion and reaching the target set by the Company.

The figure, almost a trillion dollars higher than that of the next largest public companies in the world, Microsoft and Apple, was ridiculed for a long time and considered impossible by the majority of the financial community.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

December 16, 2019

Mainland China shares rise amid better-than-expected industrial production and retail sales

Asian equities rose slightly on Monday, December 16, following the easing of uncertainty after the trade agreement.

The United States and China are cooling their trade war by announcing a first-phase agreement that reduces some U.S. tariffs in exchange for a big jump in China’s purchases of agricultural products and other goods. However, investors remain cautious as they wait for more details of an agreement that has not yet been officially signed.

Mainland China’s shares rose at the end of Monday’s session after improved industrial production and retail sales data for the country were released in November. Australia’s S&P/ASX 200 rose 1.63%, led by banks and large mining companies. In South Korea the Kospi was flat.

Japan’s Nikkei 225 fell slightly, after a sharp rise on Friday. The automotive sector was losing ground, reversing last week’s gains on Brexit optimism.

The yen was very weak (CurrencyIndex 0%) early Monday morning.

American stocks changed shortly after the announcement of the trade agreement

U.S. indices changed little on Friday, December 13, even after China and the United States reached a first-phase trade agreement. Investors are picking up profits after the year’s gains.

Wall Street made weekly profits. The S&P 500 and Nasdaq rose 0.7% during the week until Thursday’s close, while the Dow had risen 0.4% until Thursday.

The trade agreement will include a reduction of some of China’s tariffs and the suspension of additional U.S. levies that came into effect on Sunday. China accepted significant purchases of U.S. agricultural products but did not give a specific amount, disappointing some investors who expected a firmer commitment.

The next step is for both sides to take the legal steps and set a deadline for signing the agreement.

The US dollar was very weak (CurrencyIndex 12.5%) early Monday morning.

European equities close up after trade agreement and UK elections

On Friday, December 13, the European stock market closed higher after news that the United States and China reached a first-phase trade agreement and while the UK Conservative Party won an absolute majority in the general election.

The Stoxx 600 pan-European index traded around 1.1% higher at the close of the session. Travel and leisure stocks soared by 3.7% and all sectors and major exchanges traded on positive territory. Retail equities rose 2.9% and both banks and core funds gained just under 1% each.

Boris Johnson’s Conservative Party has obtained an absolute majority in Britain’s general election, giving it the power to carry out its Brexit agreement and remove the UK from the European Union by the January 31 deadline. The result is the party’s biggest electoral victory since 1987.

The pound rose by 1.3% against the dollar on Friday morning, as markets reacted positively to the prospect of greater clarity in the face of coming events.

The euro was mixed (CurrencyIndex 50%) early Monday morning.

Oil prices fall but remain at their highest level in three months and Gold falls after the trade agreement

Oil prices fell in the Asian session on Monday, December 16, but remain at three-month highs after the U.S. and China reached an initial trade agreement. According to analysts, this could revive oil demand and boost trade flows.

The market discounts the trade agreement from phase one, but more concrete news will be needed to surpass the current price level.

Brent futures were up (MarketEvolution) early Monday morning.

In the Asian session on Monday 16 December gold fell, as investors turn to riskier assets after the announcement of a trade agreement.

Investors in India caused price declines last week, due to abundant supplies and scarce demand for gold during the wedding season. Other regions in Asia expect an improvement in purchases before the Chinese Christmas and Chinese New Year.

Gold futures were up (MarketEvolution) early on Monday.

China and the United States reach the first phase of the trade agreement

China and the United States announced Friday that they have reached a phase one trade agreement that includes some tariff relief, an increase in agricultural purchases and a structural change in intellectual property and technology.

While Chinese officials briefed journalists on the details of the deal, President Donald Trump also announced the terms of what he called 'an incredible deal’.

Trump said his administration would cancel its next round of tariffs on Chinese products, which was scheduled to take effect on Sunday. However, the White House will leave 25% tariffs on $250 billion.

China will also consider canceling previously established retaliatory tariffs.

The S&P 500 is the protagonist after the commercial agreement

U.S. negotiators have the terms of the agreement ready for review by President Trump.

The United States has offered to cancel China’s new tariffs and reduce existing tariffs by up to 50%.

Trump said both sides were very close to a great deal and ‘they want it and so do we’.

Exchanges anticipate strong rises and capital inflows into equity ETFs have ranged from $6 billion to $8 billion in recent weeks.

Boris Johnson’s Conservative Party has obtained a majority in the House of Commons.

Boris Johnson has won 353 seats out of a total of 650.

Polls showed 368 seats for conservatives, an increase of 50 seats over the 2017 election.

Johnson stated that 'at this stage the conservative government has been given a new and powerful mandate not only to end Brexit, but to unite the country and carry it forward’.

The leader of the Labour Party, Jeremy Corbyn, announced that he will not lead his party in future elections, after what he called ‘a disappointing night’.

Scottish Prime Minister Nicola Sturgeon said Johnson has no mandate to remove Scotland from the European Union and demanded that they be allowed to hold a new UK independence vote.

The Pound advances after conservative victory

The pound sterling rose 2% after Prime Minister Boris Johnson’s Conservative Party won a majority in the House of Commons.

After the first exit polls, at 22 o’clock in London, which were advanced by a large majority of Johnson, were released, the pound rose to $1.3451. It was more than 2% above its pre-survey value and the highest level against the dollar since June 2018.

The pound also rose against the euro to 1.4%.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

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December 17, 2019

Mainland China’s shares soar leading the main Asian markets

Mainland China’s shares skyrocketed on Tuesday, December 17, despite the lack of details on the trade agreement.

The first-phase trade agreement is absolutely complete, according to a senior White House adviser, who added that U.S. exports to China will double under the agreement. However, Beijing was cautious before the agreement was signed. Washington will reduce some tariffs on Chinese imports in exchange for Chinese purchases of agricultural, manufactured and energy products, increasing by about $200 billion over the next two years.

Hong Kong’s Hang Seng index rose by 1.12%. Shares of Meitu, a popular photo-editing application in China, skyrocketed by more than 8% and led technology share price hikes.

Kospi in South Korea appreciated by more than 1%. Samsung Electronics shares rose more than 3%, while chip maker SK Hynix shot up more than 4%.

Australia’s S&P/ASX 200 remained flat. Minutes were released from the December meeting of the Reserve Bank of Australia, at which the central bank opted to keep the interest rate at 0.75%. The minutes showed that the central bank is prepared to further ease monetary policy if necessary.

In Japan, the Nikkei 225 was up 0.47%.

The yen was very weak (CurrencyIndex 0%) early Tuesday morning.

The Dow rises 200 points and is already on a winning streak of four days

U.S. stocks reached record highs on Monday, December 16, and are on their way to their fourth straight victory. The first-phase trade agreement between China and the U.S. makes it easier for equities to end a great year on the upside.

Technology stocks hit another record when the sector shot up more than 1%. Micron Technology traded 4.2% higher and Western Digital was the best technology value with a 6.8% gain. Goldman Sachs, on the other hand, pushed the Dow strongly up 2.2%.

Investor sentiment was also boosted by the release of solid economic data in China. Chinese industrial production rose by 6.2% in November from last year, beating expectations. Retail sales in China also rose 8% last month.

The US dollar was very weak (CurrencyIndex 12.5%) early Tuesday.

European shares close up and the Stoxx 600 reaches its all-time high

European equities rose sharply on Monday, December 16, after the United States and China agreed to a first-phase trade agreement that offered some optimism about risky assets.

The pan-European Stoxx 600 closed with a rise of almost 1.5%, exceeding 418 points and reaching an all-time high. Core funds led the way, with gains of 2.3%. All sectors and major exchanges traded strongly in positive territory.

British Prime Minister Boris Johnson will welcome new conservative legislators to Parliament on Monday. His majority will allow him to move forward quickly with issues such as Brexit or the funding of the National Health Service.

As for economic data, the PMI composed of the euro zone IHS Markit for December was in line with expectations. The figure reached 50.6 points with a good performance of the service sector, which compensates for the disappointing figures of the manufacturing industry.

The manufacturing PMI reached 45.9 instead of 47.3.

The euro was mixed (CurrencyIndex 50%) early Tuesday.

Crude Oil remains near three-month high and Gold stable as trade agreement uncertainty persists

Oil prices fell slightly on Tuesday, December 17, but remained close to a three-month high. Investors are hopeful that a trade agreement will finally be reached and are preparing for increased demand for oil in the world’s largest economies.

JP Morgan and Goldman Sachs have revised upwards their oil price forecasts for next year. It helps the OPEC-led agreement to reduce production further, in line with improved trade prospects.

Brent futures were up (MarketEvolution) early on Tuesday.

The price of gold changed little on Tuesday 17 December, as the different views of Chinese and US officials on the announced trade agreement kept investors apart.

Gold, considered a safe investment in times of political and economic uncertainty, has gained nearly 15% this year driven mainly by the 17-month-old trade war and its impact on the global economy.

The large gold mining companies Endeavour and Centamin have agreed to evaluate the possibility of a merger, following a weekend meeting between the two companies.

Gold futures were up (MarketEvolution) early Tuesday morning.

Ftse 100 continues to celebrate conservative triumph and leads European stock markets

The British Ftse 100 continues to celebrate the triumph of the Conservatives with rises higher than the rest of European places.

The London Stock Exchange already rose 1.10% last Friday thanks to a victory that puts an end to the uncertainty surrounding the UK’s exit from the European Union.

The British Prime Minister has confirmed that the withdrawal agreement with Brussels will be presented to Parliament for ratification before Christmas. It is to be hoped that, after obtaining a majority in the elections, Johnson will easily pass the vote.

Next week there will be a Queen’s speech and the withdrawal agreement will be presented soon. The Secretary of State for the Treasury, Rishi Sunak, has also stated that he will be in Parliament before Christmas.

With regard to the markets, the resolution of the process is a short-term relief, as it substantially reduces the uncertainty that has generated the same in recent years.

During 2020 negotiations will arrive to define the new relationship between the United Kingdom and Europe.

The private economy of the euro zone closes its worst quarter since 2013

The weakness of the euro area business economy extends into December, ending the worst quarter in seven years. The indicator stood at 50.6 points, on the brink of deceleration.

The PMI Composite Index of Total Activity in the Euro Zone stood at 50.6 points, the same as in November, according to the indicator released by IHS Markit.

While the recession in manufacturing has deepened and manufacturing output has plummeted to its worst since October 2012, the services sector shows signs of resilience against the negative economic environment generated by the slowdown in the industrial sector.

In addition, employment growth slowed to a five-year low and price pressures continued to moderate.

On a country-by-country basis, France continued to provide vital support for economic growth, but Germany continued to burden the eurozone economy as a whole with recession in the manufacturing sector.

Growth in the rest of Europe continued at six-year lows.

China denies the espionage of two diplomats in the United States and files a complaint for their expulsion

Beijing denied that two Chinese diplomats attempted to enter a U.S. military base in the state of Virginia. In addition, he filed a formal complaint after Washington expelled them from the country on suspicions that they were carrying out espionage activities.

According to the Chinese, the U.S. accusations are completely false and therefore file a formal complaint and urge the U.S. to correct its position.

Last October, Washington announced that Chinese diplomats should inform the US State Department in advance of any official meeting they plan to hold in the US.

With this measure, the State Department sought to level the playing field between the conditions under which U.S. diplomats work in China and Chinese diplomats in the United States.

In response, China confirmed the imposition of restrictions on U.S. diplomats stationed in the Asian country.

Builders’ confidence jumps to highest level in 20 years

A stronger economy, severe housing shortages, low mortgage rates and a strong labour market make American homebuilders in the best position of the last two decades.

Confidence in the single-family home market rose 5 points in December and is the highest reading since June 1999.

The November reading was also revised up 1 point. The index stands at 56 points.

2009 was the worst time of the housing crisis and builders’ sentiment reached a low of 8 points.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

December 18, 2019

Asian markets calm down as Brexit risks resurface without agreement

Asian equities remained at an 18-month high on Wednesday, December 18, as markets reacted to positive U.S. economic data and despite the possibility of a disorderly exit of Britain from Europe.

Hong Kong’s Hang Seng index was flat. In South Korea, the Kospi also showed little change. Australia’s S&P/ASX 200 suffered the downfall of banks and large mining companies.

Japan’s Nikkei 225 lost 0.54%. Exports fell by 7.9% in November compared to the previous year, falling for the twelfth consecutive month. Imports were also worse than expected, falling by 15.7% compared to an estimated 12.7%.

The yen was mixed (CurrencyIndex 50%) early Wednesday.

The S&P 500 beats another record setting the longest monthly winning streak

The S&P 500 climbed to a new all-time high on Tuesday, December 17 and recorded its longest winning streak since November.

Netflix appreciated by more than 3% after revealing strong growth in the number of registrations in key regions such as Asia-Pacific, Europe, Middle East and Africa. Johnson & Johnson rose 1.3% after Morgan Stanley pointed out that many of the Company’s structural problems have been resolved. Apple shares closed slightly higher and reached a new record.

The Dow closed just above the flat line. The S&P 500 also closed the session in positive for the fifth consecutive time. Both the Dow Jones Industrial Average and the Nasdaq Composite closed the day with record highs. The Nasdaq advanced slightly.

The US dollar was mixed (CurrencyIndex 50%) early Wednesday morning.

European equities close down after previous record highs and Boris Johnson jeopardizes Brexit deal

European equities traded lower on Tuesday 17 December as caution returned after a sharp rise following the US-China trade agreement.

The pan-European Stoxx 600 fell by 0.73% at the close of the session. Most sectors and major exchanges entered negative territory. Oil and utilities stocks rose by 0.61% and 0.53% respectively.

Investors also reacted to renewed threats from UK Prime Minister Boris Johnson of a tough Brexit if the EU does not reach a free trade agreement by the end of 2020. With the UK ready to leave the bloc by January 31, Johnson will use his new majority in Parliament to ban any extension of the transition period beyond the end of 2020.

Meanwhile, Boris Johnson made a phone call to the president of the United States to discuss an ambitious free trade agreement.

The euro was strong (CurrencyIndex 75%) early Wednesday morning.

Crude Oil falls but demand is expected to improve and Gold remains stable on doubts over trade agreement

The Asian session on Wednesday 18 December saw crude oil fall, after rising more than 1% in the previous session, as data showed a surprising increase in crude oil stocks in the United States. But hope for stronger demand next year slowed a steeper fall in prices.

The first phase of the U.S.-China trade agreement, announced last week, has helped avoid pressure from the oil market, which is now being tempered by concerns about the economic impact of a protracted dispute between the world’s two largest oil consumers.

Brent futures were up (MarketEvolution) early Wednesday.

The price of gold changed little during the Asian session on Wednesday, December 18, as conflicting messages about the U.S.-China trade agreement counterbalanced positive U.S. economic data.

U.S. manufacturing production rebounded strongly in November, while the number of homes rose more than expected and future housing permits soared to a peak of 12.5 years.

Gold futures were down (MarketEvolution) early Wednesday.

Boeing to suspend production of 737 Max in January

Boeing plans to suspend production of its 737 Max planes next month. It is a drastic step after the Federal Aviation Administration said its aircraft review would continue next year.

Boeing’s decision, taken after months of global shutdown of its best-selling aircraft, worsens one of the most serious crises in the manufacturer’s history.

The measure is destined to remain one of the largest aircraft manufacturers in the world.

It presents additional problems for airlines, which have lost hundreds of millions of dollars and cancelled thousands of flights without fuel-efficient aircraft in their fleets.

Boeing said it does not plan to lay off or give permission to workers at the Renton, Washington, factory where the 737 Max is produced. Some of the 12,000 workers will be temporarily reassigned.

The private economy of the euro zone closes its worst quarter since 2013

The weakness of the euro area business economy extends into December, ending the worst quarter in seven years. The indicator stood at 50.6 points, on the brink of deceleration.

The PMI Composite Index of Total Activity in the Euro Zone stood at 50.6 points, the same as in November, according to the indicator released by IHS Markit.

While the recession in manufacturing has deepened and manufacturing output has plummeted to its worst since October 2012, the services sector shows signs of resilience against the negative economic environment generated by the slowdown in the industrial sector.

In addition, employment growth slowed to a five-year low and price pressures continued to moderate.

On a country-by-country basis, France continued to provide vital support for economic growth, but Germany continued to burden the eurozone economy as a whole with recession in the manufacturing sector.

Growth in the rest of Europe continued at six-year lows.

The Goldman expert who got the 2019 rally right bets on European stock markets

Goldman Sachs’ global portfolio solutions manager for EMEA and Asia Pacific, Shoqat Bunglawala, recommended acquiring U.S. shares in 2019.

It was a difficult time, with trade warfare at its hottest. Even so, he was right, as evidenced by the historic highs that are now surpassed every day on Wall Street.

This expert already has his prediction for 2020: ‘European stock markets will rise’.

According to Goldman, Europe will avoid a recession and that will help the shares. He acknowledges that the market is valuing a more negative growth outlook, but insists that investors are too pessimistic about growth expectations in the Old Continent.

He advises investing in the eurozone banking sector, as its improvement in the treatment of bad loans and capital levels has not yet been recognized.

December was the turning point. Boris Johnson’s electoral victory in the United Kingdom and, above all, the trade agreement reached between the United States and China are encouraging the markets in recent days. The new scenario brings peace of mind to investors and encourages investment banks to bet on equities for next year.

Goldman is also optimistic about the US stock market. He forecasts a 7% increase for the S&P 500 in 2020.

But there is one factor that generates certain doubts and that can become decisive for this prediction to be fulfilled: the share buyback.

Johnson makes minimal changes in his government pending the end of Brexit

Boris Johnson has touched the least of his government cabinet.

The refurbishment will arrive once the United Kingdom has left the Community block, which is scheduled for 31 January next year, provided there are no further extensions.

The European Union’s withdrawal agreement will be presented shortly. Indeed, the Secretary of State for the Treasury, Rishi Sunak, has stated that the agreement will reach Parliament before Christmas.

One of the changes that has been announced this Monday will concern the Ministry for the Wales affair. This portfolio will now pass into the hands of Simon Hart, who will replace Alun Cairns, who had previously resigned.

Nicky Morgan will continue as Minister of Culture, despite having resigned her seat in Parliament.

The head of the British government’s cabinet, Michael Gove, has declared that next week there will be a speech by the Queen of England.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

December 19, 2019

Japan’s equities decline as central bank keeps monetary policy stable

Mainland China’s shares ended in a downward spiral at the end of Thursday’s session. Hong Kong’s Hang Seng index fell 0.65% while Chinese technology giant Tencent’s shares lost more than 1%.

South Korean Kospi recovered from its previous fall. Shares of chip maker SK Hynix rose by about 2%.

Meanwhile, the S&P/ASX 200 in Australia fell slightly. Australian employment data for November showed an increase of 39,900 jobs, well above expectations for an increase of 14,000. The unemployment rate of 5.2% was also lower than expected at 5.3%.

Japan’s Nikkei 225 declined slightly while the Bank of Japan maintained a stable monetary policy and announced that the Japanese economy is likely to continue with a moderate expansion trend, as the impact of the slowdown in foreign economies is expected to have little effect on the country’s domestic demand.

The yen was weak (CurrencyIndex 25%) early Thursday.

Wall Street extends its bullish rally and renews its historic highs

Wall Street climbs moderately on Wednesday, December 18, but chains six consecutive days of gains and returns to historic highs.

The negative protagonist is FedEx, which has announced it’s second ‘profit warning’ for 2020. On the positive side, Tesla has set new records.

The courier company FedEx plummeted 8% as a result of the announcement that its profits will be burdened by the trade war and its problems with Amazon, after the e-commerce giant has banned its vendors from using its parcel service.

Tesla’s shares have hit all-time highs, up 2%, after exceeding $390 per share due to renewed investor confidence in the electric car market.

On monetary policy, several Federal Reserve members have made it clear that they support the central bank’s current stance, replicating comments from other high officials that interest rates are at an optimal point for 2020.

The US dollar was mixed (CurrencyIndex 50%) early Thursday.

European equities close mixed because of Brexit fears and as confidence in German companies rises

European shares closed unequally on Wednesday 18 December. The pan-European Stoxx 600 finished flat, with the various sectors and exchanges pointing in different directions.

Investors were once again cautious about the UK Prime Minister’s intention to block the extension of trade negotiations with the European Union beyond 2020. Boris Johnson used the power of his newly won parliamentary majority to set a deadline, December 2020, in which to reach a free trade agreement with the European Union. Otherwise they will leave the bloc definitively without any kind of agreement.

Fiat Chrysler and the owner of Peugeot, PSA, on Wednesday confirmed a binding agreement on a merger of approximately $50 billion to form the world’s fourth-largest car manufacturer.

The German business climate survey IFO showed that business confidence rose more than expected in December and reached its peak in six months. This indicates that Germany, Europe’s largest economy, may have regained momentum in the fourth quarter despite the persistent slowdown in manufacturing.

The EUR was weak (CurrencyIndex 25%) early Thursday.

Crude Oil hits three-month high after U.S. crude inventories drop and Gold rises on impeachment

At the Asian session on Thursday, December 19, oil prices remained at an unprecedented level, reaching three-month highs. They do so after it became known that U.S. oil inventories had fallen. In addition, production cuts by major producers keep supply at a low level.

According to weekly data released by the Energy Information Administration, U.S. crude oil inventories fell 1.1 million barrels in the week to December 13. However, reserves of gasoline and distillates increased.

Brent futures rose (MarketEvolution) early Thursday.

The price of gold rose during the Asian session on Thursday, December 19, after the U.S. House of Representatives voted to challenge President Trump, increasing political uncertainty in the world’s largest economy.

Trump became the third president of the United States to be challenged when the Democrat-led House of Representatives formally accused him of abuse of power and obstruction of Congress. It is a historic step that will increase tensions in a deeply divided country.

Cautious sentiment supports gold, often seen as an alternative investment in times of political and financial uncertainty.

Gold futures were down (MarketEvolution) early Thursday.

Pound drops as Boris Johnson threatens Brexit without compromise

The pound fell more than 1% on Tuesday after the media reported that the British government will make it illegal to extend the post-Brexit transition period.

The legislation, if implemented, would only allow 11 months for a trade agreement to be reached with the European Union and many think that is not enough time.

Concern is raised that the new, more powerful UK government may be leading the country towards a tougher Brexit.

During the transition period, EU law continues to apply in the UK as if it were a Member State, but the country would no longer be represented in decision-making bodies.

At present, the transition period has the option of being extended for up to two years if both parts agree.

U.S. Congress debates Trump’s impeachment

The process would make the president the third political trial president in U.S. history.

The House of Representatives began a momentous meeting on Wednesday. The congressmen will debate political prosecution against the president. It is a process that could abruptly end his term.

It takes 216 House votes for the impeachment to run its course, and Democrats are likely to get the support they need, even though there are still undecided among their ranks.

The Upper House requires two-thirds of the votes for the impeachment to pass, which would mean Trump’s immediate departure from the White House. This scenario is very remote, as Republicans hold a Senate majority.

Formally, Democrats have charged the president with abuse of power and obstruction of justice. Both points will be voted on separately and are related to Trump’s pressure on the Ukrainian president to investigate the family of Joe Biden, vice president of the government during Barack Obama’s term and a favourite in the Democratic primary race.

The first impeachment was made against Andrew Johnson in 1868 and the second against Bill Clinton in 1998. Both were slowed down in the Senate, but it was a profound wear and tear for both presidents.

The impeachment also began against Richard Nixon, who resigned in the Watergate case, before the process officially took shape.

Facebook fails to convince lawmakers of the need to track customer locations

Legislators say Facebook should give users more control over their data and should respect their decisions to maintain their privacy.

In a letter dated December 12, Facebook explained how it is able to estimate the locations of users used to direct ads, even when they have chosen to decline location tracking through their smartphone’s operating system.

Facebook said that even when location tracking is disabled, it can deduct users’ general locations from contextual clues such as locations they tag on photos, as well as the IP addresses of their devices.

Facebook recognized that it also targets ads based on the limited location information it receives when users deactivate or limit tracking.

Rick Gates was finally convicted

Trump election campaign vice president sentenced to 45 intermittent days in jail and 3 years probation.

He eventually gained leniency for his extraordinary cooperation with federal prosecutors in the investigation against other Trump associates.

Gates was pressured by Manafort not to testify against Trump and was offered a defense if he agreed not to testify.

Gates not only pleaded guilty, but also testified against Manafort at the 2018 trial.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

December 20, 2019

Asia’s shares are mixed after North American trade agreement passes vote in House of Representatives

Asian stocks were mixed on Friday, December 20, after a new Wall Street record and positive news on the trading front boosted investor sentiment.

Mainland China stocks were little changed at the end of the session. China left its new lending benchmark unchanged, as expected. Chinese President Xi Jinping, at a ceremony on Friday to mark the 20th anniversary of Macao’s handover, encouraged the diversification of its economy, which is currently dependent on casinos. China is waiting for measures including a new stock exchange denominated in Yuan. Macao’s gambling shares, which are listed in Hong Kong, were in the spotlight on Friday.

Hong Kong’s Hang Seng index rose slightly. In South Korea, the Kospi entered positive territory. Australia’s S&P/ASX 200 fell 0.25% at the end of the session.

Japan’s Nikkei 225 fell as the North American trade agreement affects the entire Japanese automotive sector. The country’s core inflation rose by 0.5% in November from a year earlier. It is still far from the 2% target.

The yen was mixed (CurrencyIndex 50%) earlier on Friday.

Dow climbs 100 points to another record and investors are slow to assimilate the impeachment

On Thursday, December 19th, the U.S. stock market rose. It seems that investors did not take into account the impeachment process of President Trump and the mixed economic data that was released from the U.S.

Cisco Systems and Walgreens were the best performing components of the Dow, rising more than 2% each. Real estate and materials, gaining 0.4% each, led the S&P 500 up.

Meanwhile, rising chip consumption is strongly supporting the markets, and Micron Technology stocks also contributed to Thursday’s rise.

The US dollar was weak (CurrencyIndex 25%) earlier on Friday.

European stocks remain flat as investors assimilate interest rate decisions

On Thursday, December 19, European stocks showed a mixed tone, with investors digesting economic data and central bank interest rate decisions. On the other hand, markets showed minimal reaction to the US President’s impeachment.

Sweden’s Riksbank ended five years of negative interest rates by raising its repo benchmark rate by a quarter of point to 0.0%.

The Bank of England kept its main interest rate at 0.75% with its committee voting seven to two in favour of maintaining the current level. The bank reduced its Q4 GDP growth forecast from +0.2% to +0.1%.

In terms of corporate data, Airbus will end 2019 ahead of its archrival Boeing in both orders and deliveries.

Meanwhile, German carmakers Daimler and BMW said they plan to exit the US carpool market, due to the volatile state of the global mobility landscape.

The euro was very weak (CurrencyIndex 12.5%) earlier on Friday.

Crude Oil nears three month high and Gold falls on increased risk appetite

In the Asian session on Friday, December 20, the price of oil remained stable, near a three-month high. It has now risen three times in a row due to the easing of trade tensions between China and the United States. Expectations are growing for higher demand and better global economic growth.

China announced on Thursday a list of tariff exemptions for the import of six oil and chemical products from the United States.

JP Morgan and Goldman Sachs raised their outlook for oil prices in 2020 amid OPEC-led production cuts.

Brent futures were up (MarketEvolution) early Friday morning.

Gold fell in the Asian session on Friday December 20th due to increased risk appetite.

The China-U.S. trade agreement is expected to be signed soon, although concrete news on the conditions of the agreement have not yet leaked out.

Investors are awaiting the release of the U.S. Gross Domestic Product (GDP) data, which reflects the progress of an economy that drags others along.

Gold futures were up (MarketEvolution) earlier on Friday.

President Trump challenged in historic vote

The House of Representatives voted Wednesday to remove President Donald Trump, making him the third president to be charged with felonies and misdemeanors and face a Senate trial that could remove him from office.

The majority partisan vote, after eight hours of highly charged debate, represented the culmination of an extensive investigation that was conducted by multiple committees in the Democrat-controlled House of Representatives.

The White House and Republicans in Congress have openly opposed impeachment.

After Wednesday’s votes, White House press secretary Stephanie Grisham called the impeachment an unconstitutional parody, and Trump said she is confident the Senate will restore regular order and justice.

Eurozone inflation rate rises in November

The inflation rate in the euro area stood at 1% in November. It is three tenths above the October reading and represents the first price acceleration since last June.

In the European Union as a whole prices rose in November by 1.3% a year, two tenths above the rise recorded in October.

The rise in inflation in the euro zone is due to the 1.9% rise in services, compared to 1.5% the previous month. It is also due to the rise in fresh food which rose by 1.8% in comparison with a rise of 0.7% in October.

On the other hand, energy prices fell by 3.2%.

Among the countries for which data were available the lowest inflation rates were recorded in Italy and Portugal after Belgium.

The biggest price increases were in Romania, Hungary, Slovakia and the Czech Republic.

Macron and unions fight for retirement at 64

The French government and trade unions on Thursday reaffirmed their commitment to raising the retirement age to 64.

This dispute is leading to strikes in France which have lasted 15 days so far.

Laurent Berger, the leader of the country’s leading trade union federation, insisted on his demand that the so-called ‘equilibrium age’ be withdrawn, which in practice will mean raising the general retirement age to 64.

The reformist unions defend the core element of the reform, which is the unification of the 42 existing pension systems into one point system. They warn that if the Executive maintains the ‘balancing age’ the mobilisation will continue in January.

The French government has been open to negotiations but, for the moment, timidly.

The new Secretary of State for Pensions, Laurent Pietraszewski, said that financial equilibrium must be achieved for the transition to the universal points system.

U.S. Court of Appeals leaves Obamacare intact

A federal appeals court ruled Wednesday that the individual mandate provision of the Affordable Health Care Act is unconstitutional, but questions whether it should be dismissed.

The Court is ordering a trial judge to consider whether the ACA, more commonly known as ‘Obamacare’, should remain intact.

The individual mandate is unconstitutional because it can no longer be read as a tax, and there is no other constitutional provision justifying this act of Congress.

Health policy analysts hope the matter will reach the Supreme Court, which upheld Obamacare in a highly divided ruling in 2012.

Democrats think this lawsuit is the latest Republican assault on Americans’ health care.

Ending Obamacare has been a long-term goal for President Trump, who failed to bring together enough Republicans to repeal and replace the health care law in 2017.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

December 23, 2019

Asian markets fall as China cuts tariffs on more than 850 products

Major markets in Asia-Pacific fell on Monday, December 23, amid increased optimism about U.S.-China trade relations.

Mainland Chinese stocks fell. Trade optimism improved investor sentiment. The US President said on Friday that he had had a very good talk with Xi Jinping about the first phase of the trade agreement. This indicates that more progress has been made after the initial agreement. On Monday, China said it would reduce import tariffs on more than 850 products from January 1, including frozen pork. It will also reduce tariffs on some information technology products from July 1.

Hong Kong’s Hang Seng index was flat and South Korea’s Kospi was slightly down.

Australia’s S&P/ASX 200 lost 0.34%. Australia’s top mining outputs fell from the start of the session. Rio Tinto was down 1.62%.

Japan’s Nikkei 225 remained stable.

The yen was mixed (CurrencyIndex 50%) early Monday.

The S&P 500 jumps to another record as the rally extends four weeks

U.S. stocks rose to new highs on Friday, December 20, ending a week of solid gains as geopolitical risks were reduced.

Wall Street also received a boost after Trump said he had a very good conversation with Xi Jinping about the trade deal. In addition, he noted that China has already begun large-scale purchases of agricultural products.

Meanwhile, consumer spending growth for the third quarter was revised up to 3.2% from 2.9%. Consumer sentiment also remained strong in December.

The S&P 500 was up more than 1.5% for the week and recorded its fourth consecutive weekly gain. The Dow and the Nasdaq rose by 1.2% and 2.1%, respectively, during the week.

The US dollar was mixed (CurrencyIndex 50%) early Monday morning.

European stocks close higher as trade dispute relief continues

The European stock market rose on Friday, December 20, as the principle of an agreement between China and the United States seems to be confirmed. Investors around the world appear to be happy with the widespread gains in stock markets, following positive news about the trade war.

The pan-European Stoxx 600 was up 0.72% at the close, with chemicals, food and beverages leading the gains. All sectors, except banking and automotive, performed well.

In the UK, the Executive Director of the Financial Conduct Authority (FCA), Andrew Bailey, was appointed as the new Governor of the Bank of England, replacing Mark Carney.

Gross domestic product in the third quarter grew 0.4% quarter-on-quarter and 1.1% compared to the same period last year.

The German Economic Institute DIW announced that Europe’s largest economy contracted slightly in the fourth quarter.

The euro was very weak (CurrencyIndex 12.5%) early Monday morning.

Crude Oil falls more than 1% but has its third consecutive week of rising and Palladium falls more than 5%

Crude oil fell on Friday, December 20, but still managed to record its third consecutive week of gains amid easing trade tensions between the United States and China. This has boosted business confidence and prospects for global economic growth.

Progress in the trade dispute between the world’s two largest oil consumers has raised expectations of increased energy demand in the coming year.

Futures on the Brent were down (MarketEvolution) early Monday morning.

On Friday, December 20, palladium fell more than 5%, erasing more than $100 per ounce during the session. Investors took profits after last week’s strong rally.

Palladium approached the $2,000 an ounce level and now the decline shows that technical analysis has taken control. When markets are overextended, both overbought and oversold, corrections tend to be quite strong.

Autocatalyst metal has been affected by the supply shortfall and reached an all-time high of $1,998 an ounce early last week, up about 46% so far this year.

Meanwhile, the price of gold was falling as investors stayed out of the way before the Christmas season. Nevertheless, it had a modest weekly rise. Investors are buying gold on fears that the stock market rises could be reversed.

Economic data showed that U.S. economic growth in the third quarter showed signs that the economy maintained a moderate pace of expansion.

Gold futures were up (MarketEvolution) early Monday.

Andrew Bailey is selected to replace Mark Carney as governor of the Bank of England

Andrew Bailey, the current head of the UK’s financial watchdog (CFA), has been appointed the next governor of the Bank of England.

The news was confirmed by UK Finance Minister Sajid Javid on Friday morning.

Javid said that ‘when we started the selection process we said we were looking for a leader of international standing with experience in monetary, economic and regulatory affairs and Andrew Bailey meets these requirements’.

Bailey, 60, is the executive director of the FCA, which regulates the country’s financial services industry. Prior to joining the FCA in 2016, Bailey was the chief executive of the Prudential Regulatory Authority which is another part of the UK’s central bank.

UK lawmakers back Boris Johnson’s withdrawal bill

UK Prime Minister Boris Johnson successfully tested his new parliamentary majority on Friday, when lawmakers passed his Brexit bill. The bill puts the country on track to leave the European Union on January 31st.

The legislation will be further debated by both houses of Parliament early next year. But it seems likely that its approval will be completed with the support of 358 MPs.

The changes in the October bill are seen as controversial by many. The new bill would ban any extension of the UK’s transition period until 31 December 2020. This would narrow the gap for Britain to agree a trade agreement with the European Union.

U.S. Senate passes new spending bills to prevent Government shutdown

The Senate on Thursday passed two spending bills to prevent a government shutdown.

The first measure covers eight credit bills and was approved by a margin of 71-23. The second includes four other bills.

The president has to sign the bills before Friday to keep the federal departments running.

The $1.4 billion package increases spending, both for the military and on national programs. It also eliminates key taxes to fund the Affordable Care Act and raises the age of tobacco purchase in the United States to 21.

Congress appears poised to avoid another shutdown, after lawmakers overcame a major dispute with the president over funding for barriers on the U.S.-Mexico border.

Some Republicans voted against the funding legislation, criticizing increased spending and the rushed approval process.

The House of Representatives approves the USMCA trade agreement

The House approved the Mexico-United States-Canada Agreement, one of Trump’s economic and political priorities.

After an overwhelming majority of 385 votes in favour and 41 against, the trade pact now heads to the Senate, which is expected to ratify it next year.

Most Republicans and Democrats have praised the latest version of an agreement that replaces the previous North American Free Trade Agreement.

In the new version of the agreement, some concessions have been made to the Democrats on intellectual property standards.

This is the first trade coalition of workers, farmers, Republicans, Democrats, business and farm groups, organized labour and many more, according to U.S. Trade Representative Robert Lighthizer.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

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December 24, 2019

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January 7, 2020

Asian markets rise despite US-Iranian tensions

Asian markets rose on Tuesday, January 7, as oil prices fell and gold moderated amid growing geopolitical concerns in the Middle East.

Chinese stocks were in positive territory and Hong Kong’s Hang Seng index rose by 0.50%.

South Korea’s Kospi was up 0.94%, led by the technology and cosmetics sectors. Australia’s S&P/ASX 200 was up by about 1.39%.

Japan’s Nikkei 225 was up 1.39%, after falling nearly 2% on Monday. Most sectors won. Technology stocks were on the rise with Nintendo up 0.87%. Softbank was up 1.58% and Sony was up 3.57%. Auto stocks in Japan also strengthened by more than 1% overall.

The yen was mixed (CurrencyIndex 50%) early Tuesday.

Dow recovers from 200-point drop to finish higher

U.S. stocks rose on Monday, January 6, recovering early session losses as oil fell despite growing geopolitical concerns following the assassination of Iran’s top general last week.

Technology stocks led the gains. Facebook and Amazon rose more than 1%, while Netflix and Google advanced 3.1% and 2.7% respectively.

Monday’s earnings contrasted with Friday’s sharp drop. The Dow and S&P 500 had their worst day in a month on Friday, after the U.S. air strike in Baghdad that killed Iranian general Qasem Soleimani.

The U.S. dollar was weak (CurrencyIndex 25%) early Tuesday.

US-Iranian tensions shake markets again

Fears of an escalation of the conflict have extended the rise of oil and triggered sales in equities.

The week has started with a new dose of tension in the financial markets. As was the case last Friday, geopolitical conflicts are clouding the investment climate. The drone attack, ordered by Trump, that killed Iranian General Qasem Soleimani, threatens to reignite instability in the Middle East.

On Monday, January 6, the European stock markets let themselves to be carried away by the additional uncertainty generated by geopolitical tensions. Aside from the conflict between the United States and Iran, the day’s agenda included better than expected figures from the Eurozone’s PMI which moderated the cuts. The composite PMI reached 50.9 points, above the 50.6 expected.

The German Dax saved 13,000 points, which it lost during the session, and the French Cac saved 6,000 points.

The euro was mixed (CurrencyIndex 50%) early on Tuesday.

Oil falls as markets await Iran’s response and Gold falls from seven year high

Oil prices fell on Tuesday, January 7, after reaching record highs in recent months. Meanwhile, the market calms down and the world prepares for Iran’s response to the assassination of its top military commander by the United States.

Prices rose in the previous two sessions due to fears of the escalation of the conflict and the disruption of supply in the Middle East.

Some analysts have moderated expectations of a widespread conflict.

The futures on the Brent were down (MarketEvolution) early Tuesday morning.

The price of gold fell on Tuesday, January 7, one day after reaching its highest level in almost seven years, due to the escalation of tensions between the United States and Iran.

Defense Secretary Mark Esper said Monday that the United States has no plans to withdraw its troops from Iraq, which supports gold, following a U.S. military letter informing Iraqi officials of the repositioning of troops.

The world’s largest gold-backed stock fund, SPDR Gold Trust, said its holdings rose 0.10% to 896.18 tons on Monday from 895.30 tons on Friday.

In addition, the hedge funds increased their bullish positions on gold and silver COMEX contracts during the week to December 31.

Gold futures were down (MarketEvolution) early Tuesday.

The weekend has brought further increases in geopolitical tension

The tension between Iran and the United States continues to be the main factor in the decline.

In addition, missile attacks against the U.S. in Iraq, the Iraqi parliament asking the U.S. to withdraw its troops, very serious threats from Iran, and news that Iran has decided to skip the nuclear agreement signed in 2015.

It seems that instability will continue for some time.

With all this, oil continues to rise and it will be difficult for it to stop, while gold is hitting 2013 highs and acting as a refuge value.

In Asia, the Nikkei, which had been closed all week since Tuesday, ended this Monday with a 1.90% decline.

This week another important factor comes into play

In mid-week the season of results publication begins, but there are more factors to take into account…

Brent crude oil futures have reached their highest level since mid-September following the American attack.

Yields on 10-year German government bonds reached a seven-month high on the first day of the new year. 15-year yields briefly exceeded 0%, for the first time since July. The US yield curve, a classic indicator of recession risk, is close to its highest levels since October.

This week’s Friday will see the first U.S. employment release of the decade. The employment outlook suggests that Trump’s trade war with China has not had much impact on the overall economy.

Regarding the Brexit, lawmakers will meet again this January 7 and discuss the divorce settlement that Prime Minister Boris Johnson has agreed to with Brussels.

With respect to the China-United States trade agreement, investors are still unsure what the text of the agreement will say.

The Nikkei starts the year with downhills

The Japanese index ended its first session of the year with a fall of 2%, in a day of decline for the Asian stock markets

On Monday, the MSCI Asia-Pacific stock index, excluding Japan, declined by 1%.

Investors have decided to sell, because of rising tension in the Middle East and after the United States announced the death of a powerful Iranian general, Qassen Soleimani, in a drone attack at Baghdad airport.

The market discounts that Iran will retaliate, because Soleimani was considered one of the strongest men of the Persian regime. He was in charge of the country’s military activities throughout the Middle East region.

In addition, over the weekend, Iraq’s parliament passed a resolution calling on the government to expel foreign troops from the country.

For its part, Iran declared that it will not respect the 2015 nuclear agreement.

Brent oil has rebounded 2%, to $70 per barrel.

Gold rises to seven-year high due to geopolitical uncertainty

The gold ounce is up 1.5% to $1,575 per barrel, and is nearing a seven-year high due to increased geopolitical uncertainty in the Middle East.

Investors have decided to buy gold, considered the safe-haven asset par excellence, after the United States killed a powerful Iranian general, Qassen Soleimani.

In addition, over the weekend, Iraq’s parliament passed a resolution calling on the government to expel foreign troops from the country.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

January 8, 2020

Dow futures drop nearly 200 points after Iranian retaliation raises fears of further conflict

Dow Jones Industrial Average futures fell 170 points on Wednesday, January 8, indicating a loss of 192.68 points at the opening of the markets. U.S. military officials said the Al Asad airbase, located in western Iraq, has been attacked with multiple shells. The news also led to a rise in the price of oil and gold.

Asian markets fell on Wednesday, January 8, as violence broke out in Iraq. Asia-Pacific markets recorded losses. Stocks fell when it was reported that rockets were fired at an Iraqi airbase housing U.S. troops.

China’s mainland markets were down. Hong Kong’s Hang Seng index fell by 0.87%. In Singapore, the Straits Times index fell by 0.75% with Singapore Airlines shares down 1.11% as the airline said it is diverting all its flights in and out of Europe to avoid Iranian airspace.

South Korea’s Kospi index fell 0.77% at the end of the session. Australia’s S&P/ASX 200 fell slightly.

In Japan, the Nikkei 225 ended down 1.56% and Japanese Prime Minister Shinzo Abe is said to have cancelled a trip scheduled for this weekend to the Middle East.

The yen was very strong (CurrencyIndex 87.5%) early on Wednesday.

Wall Street takes a reath while assessing geopolitical risks

Wall Street recorded a mixed sign on Tuesday, January 7th, as investors look cautiously at the Middle East. Geopolitical tensions between Iran and the U.S. are affecting the direction of the markets in the early days of 2020. More turbulence is expected in the region in the coming months. However, the New York Stock Exchange was able to close in positive on Monday, after a bearish opening.

The technology sector helped the markets to overcome and on Tuesday also led the gains. Analysts discount that this sector still has the best growth prospects for the coming years.

In this sense, the leading companies are presenting their latest developments at the CES (Consumer Electronic Show) in Las Vegas, which is held earlier this year.

On the other hand, the oil company Apache shoots up 25% at the S&P 500, after announcing a major oil and gas discovery in Suriname with the French group Total.

The evolution of the service sector is very relevant after the ISM manufacturing in December marked minimums of the last decade, last week, by the trade war between China and the United States. The market expects that the strength of consumption will continue to drive services, the lungs of American GDP, as confirmed by the latest data published.

The US dollar was strong (CurrencyIndex 62.5%) earlier on Wednesday.

European stock exchanges have been keeping a close eye on the conflict between the United States and Iran

Less tension between the two countries led to a drop in oil prices and a timid return of investors to equities at the Tuesday January 7 session.

If two of the biggest sources of tension for investors - the trade war and Brexit - relaxed at the end of 2019, 2020 has begun with a new concern: the conflict between the US and Iran following the drone attack that killed the Iranian general Qasem Soleimani last Friday.

On Monday, January 6, the European stock markets closed their second session of falls, and although uncertainty remains, geopolitical tensions have relaxed and the price of the barrel of Brent has been cut to 68 dollars, after reaching over 70 dollars on Monday.

In the European markets, the German Dax led the way with a 0.76% rebound. This puts it above 13,200 points, after it lost 13,000 points at times during the session. The French Cac and London’s FTSE 100 closed virtually flat.

The euro was weak (CurrencyIndex 25%) early on Wednesday.

Oil prices rise by 4% after attacks on American forces at bases in Iraq and Gold soars to $1,600

The price of oil rose more than 4% in the Asian session on Wednesday, January 8, after Pentagon officials said Iran launched more than a dozen ballistic missiles against multiple bases in Iraq that housed U.S. troops.

Operators anticipated a retaliation, but not against American troops, raising fears that the next step by the United States could be an attack inside Iran. The direction the markets will take in the next 48 hours will depend on the response of the United States.

The futures on the Brent were down (MarketEvolution) early Wednesday morning.

Gold rose more than 2% on Wednesday, January 8, breaking the $1,600 mark, as investors sought refuge in the safe metal after Iran fired rockets at Iraqi airbases housing U.S. forces.

The jump in price, from what is seen by investors as a safer asset in times of political and economic uncertainty, came after Iran’s missile attack on U.S.-led forces in Iraq. The attack came hours after the funeral of an Iranian commander, whose death in a U.S. drone strike has raised fears of a wider conflict in the Middle East.

Gold futures were down (MarketEvolution) early Wednesday morning.

The most important strategic oil point in the world could be a determining factor

A critical door for the world’s oil industry has once again come into focus, following a dramatic escalation in geopolitical tensions since the assassination of a senior Iranian general.

The death of Iranian military commander Qasem Soleimani late last week has triggered already high tensions between Washington and Tehran. Many investors are increasingly anxious that a growing conflict could disrupt global oil supplies.

Analysts at Eurasia Group predicted that the most likely result of Soleimani’s death would be an escalating cycle of tit-for-tat responses in the Middle East.

As tensions continue to rise analysts expect to see Iran harassing commercial shipping in the Gulf. As a result, shipping in the Strait of Hormuz will be temporarily disrupted.

Located between Iran and Oman, the Strait of Hormuz is a narrow but strategically important waterway that links Middle Eastern oil producers with major markets around the world.

It was the focal point of growing tensions between the United States and Iran in May and June last year, when six oil tankers and a US drone were attacked on or near the waterway.

Brussels in the battle for the promised EU minimum wage

Only 6 of the 28 Member States of the European Union do not have a statutory minimum wage. Only Denmark, Finland, Sweden, Austria, Italy and Cyprus do not have a statutory minimum wage. In the remaining countries it varies from less than 500 euros in Bulgaria and Romania to more than 2,000 euros in Luxembourg.

Plans to adopt an EU minimum wage are beginning to be a problem for Brussels. The Nordic countries have already warned that the measure could undermine their old systems of collective bargaining between companies and employees.

The new president of the European Commission, Ursula von der Leyen, promised in July to introduce a framework for minimum wages in the EU, while respecting the differences between individual labour markets, as part of her strategy to win the support of the European Parliament.

But countries where wage agreements between trade unions and companies are commonplace are against the introduction of EU regulations that could damage their own systems.

The Nordic countries and a few other states with high wage levels depend on collective bargaining systems under which the state plays a minimal role.

The EU wants to see wages converge at a higher level throughout the area, given the wide wage disparity, especially between Western countries and the newer members in the East.

The number of employees in the EU is at record levels. But many workers are having trouble making ends meet and are even close to poverty.

Eurozone activity in December stagnates despite rebound in the services sector

Euro area activity remained close to stagnation at the end of last year, as the improvement in the services sector only partially offset the continued decline in manufacturing.

IHS Markit’s euro area final composite index of purchasing managers (PMI) rose to 50.9 points in December from 50.6 in November. Thus, the index was unchanged from the previous month and remained close to the 50-point mark that separates growth from contraction.

Services PMI rose to 52.8 points from 51.9 in November, above a preliminary reading of 52.4.

But the Manufacturing PMI released last week showed that industry activity contracted for the eleventh consecutive month in December.

A Chinese delegation will travel to the United States on January 13

A Chinese delegation, led by Vice Premier Liu He, will travel to Washington on January 13 to sign the first phase of the trade agreement.

This phase will serve as a basis for trying to end the disputes between the two powers.

The Chinese delegation had planned to make this trip at the beginning of the month, but it was finally postponed after the US president announced that the agreement would be signed on the 15th.

The Chinese team will finally travel on the 13th and stay in the US capital until the 16th.

At first, it had been noted that the act of ratification of the agreement would be attended by Xi.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

January 9, 2020

Asian markets recover after US-Iranian tensions seem to ease

Asia-Pacific markets rebounded on Thursday, January 9, after President Trump’s comments on the Iran conflict eased investors’ concerns about further escalation of geopolitical risks in the Middle East.

China’s continental markets traded higher, with the Shanghai Composite up 0.69% at the start of the session. As sentiment improves, market participants are selling safe haven assets such as gold and bonds.

In South Korea, the Kospi was up by 1.17%. Hong Kong’s Hang Seng index rose by 1.2%. Australia’s ASX 200 rose by 0.9%, supported by the financial sector.

Japan’s Nikkei 225 rose by 1.9%, erasing its losses from the previous session.

The yen was very weak (CurrencyIndex 0%) early Thursday.

S&P 500 reaches historic record after Trump’s soft comments on Iran’s attack

American shares rose on Wednesday, January 8, after President Trump spoke about Iran’s attack on an Iraqi airbase housing U.S. troops.

Trump said Iran appeared to be retreating, after attacking the Ain al-Asad airbase with no injured people. However, he added that the United States will immediately impose additional economic sanctions on the Iranian regime.

Investors around the world have been preparing for a larger-scale conflict between Iran and the United States, following the assassination last week of General Qasem Soleimani, but so far no military measures have been announced that could further increase tension in the area.

The US dollar was very strong (CurrencyIndex 100%) earlier on Thursday.

European stock markets close with moderate gains as investors are wary of a possible widespread conflict in the Middle East

On Wednesday 8 January, European markets managed to assuage the initial misgivings caused by Iran’s attack on US military bases. Analysts put the warnings of a larger scale war in the Middle East into perspective and oil fell by 3%.

Some investment firms point out that Iran’s retaliation has not been as aggressive as might be feared. Analysts point out that, in an election year, part of Trump’s electoral appeal comes from its refusal to deploy troops to fight in foreign wars.

Geopolitical tensions are conditioning the start of the year in the financial markets, overshadowing the imminent signing of the first phase of the US-China trade agreement.

The euro was weak (CurrencyIndex 25%) early Thursday morning.

Oil goes down again and gold does the same

The price of oil plunged almost 5%, to less than $60, on Thursday, January 9, after Trump said Iran was pulling out of the fight in the Middle East and that gold had fallen from its peak of the last 7 years.

However, Washington will impose sanctions on Tehran, instead of a military attack, as some investors feared.

Despite the promised sanctions, investors see the situation as somewhat softer and as a move towards conflict resolution.

MarketEvolution futures were down early Thursday.

Gold falls on Thursday, January 9, after exceeding the $1,600 level, for the first time in almost seven years, as fears of a greater conflict in the Middle East are reduced by softer rhetoric between Iran and the United States. Expectations are that there will be no open war.

The rest of the catalysts influencing gold remain unchanged.

Tweets from Iranian officials saying that Tehran did not want a war, and the comment by the US president that all is well, helped ease concerns about conflict in the region.

Gold futures were down (MarketEvolution) early Thursday.

Eurozone inflation rises in December

The annual inflation rate in the euro area increased in December to 1.3%. It is three tenths above the level set in November.

By components food, alcohol and tobacco prices recorded the main increase which was 2% in comparison with 1.9% in November.

Services registered a rate of 1.8%, one tenth less than in November.

The inflation rate for non-energy industrial goods remained stable at 0.4%. Energy prices increased by 0.2% in December, compared with a decline of 3.2% the previous month.

Core inflation, which excludes energy and fresh food prices as the most volatile, remained stable at 1.4%.

This is the key indicator the European Central Bank looks at to assess price developments in the single currency area and ultimately decide whether its stimulus policy needs to be maintained. The target remains at 2%.

Crude oil drops below $60

Oil prices plunged Wednesday after President Trump said Iran appears to be retreating in the Middle East and that Washington will impose sanctions on Tehran instead of another military attack, as some investors feared.

Trump’s comments came after Iran’s rocket attack on U.S. forces in Iraq did not destroy the main energy infrastructure that could have disrupted the world’s oil supply.

Trump also confirmed in his White House speech that no Americans were injured during the bombing.

Tehran launched more than a dozen ballistic missiles against multiple military bases housing American troops early Wednesday morning, according to Pentagon officials.

Private payroll growth soars in December

American employment ended in 2019 with businesses adding 202,000 jobs in December. It is another sign of a healthy labour market, according to a Wednesday ADP report.

The total was well above the economists’ consensus estimate of 150,000 jobs.

Despite all this, the labour market continues to moderate.

Manufacturers, energy producers and small businesses have been losing jobs. Unemployment is low, but will start to rise if employment growth slows down further.

A Boeing 737 aircraft bound for Kiev crashes in Iran

A Boeing 737 aircraft from Ukraine International Airlines bound for Kiev crashed minutes after taking off from Tehran on Wednesday, killing all 176 people on board.

The Boeing 737-800, carrying 167 passengers and nine crew members, was an older model of the Boeing 737 Max that has been on the ground worldwide since mid-March.

The cause of the accident was not immediately known. Such determinations take months, but Iran’s Fars news agency reported that the plane crashed due to technical problems, without providing further details.

Ukraine International Airlines said the plane carried citizens from Canada, Iran, Sweden and Ukraine.

The timing of the crash led to speculation that a stray Iranian missile may have brought the plane down.

Ukraine International Airlines almost ruled out pilot error and said the three-year-old plane had been inspected on Monday.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

January 10, 2020

Asian markets rise on Apple’s supplier upgrades

The major Asian markets were mostly in positive territory on Friday, January 10, following the easing of US-Iranian tensions and the rise of Wall Street.

Mainland Chinese markets were slightly down and Hong Kong’s Hang Seng index was flat. In South Korea, the Kospi index rose by 0.57%.

Apple’s suppliers in Asia were strong, after the technology giant’s shares jumped 2.1% to an all-time high. This followed news that iPhone sales in China rose by more than 18% in December.

The retail giant Fast Retailing cut its outlook for the year, after a worse-than-expected quarterly performance due to protests in Hong Kong and the South Korean consumer boycott that affected sales at Uniqlo stores. Its shares fell by 2.73% in the afternoon.

In Japan, the Nikkei 225 rose slightly.

The yen was very weak (CurrencyIndex 0%) in early Friday morning.

Dow rises again to record level as geopolitical tensions ease

On Thursday, January 9th, the U.S. stock market reached a record high as tension between Iran and the U.S. eased for the time being.

Technology stocks performed well. The S&P 500 Technology sector rose more than 1%, led by a 3.5% gain in AMD shares. The chip manufacturer rose in anticipation of a potentially stronger server market in 2020.

Goldman Sachs rose by 1.8% and boosted the Dow, after Bank of America improved its valuation.

Apple shares rose by 2% to an all-time high, after it became known that iPhone sales in China rose by 18% in December.

The US dollar was very strong (CurrencyIndex 100%) early on Friday.

Donald Trump’s response to Iran’s attack has halted the escalation of the war and brought the conflict into the sanctions arena

Crude oil continues to fall and the European stock markets closed on Thursday 9 January with a rise of 1.3% in the case of the German Dax. The Ibex, on the other hand, was marked by slight cuts of 0.10% with the banks as the main drag.

The German Dax stood out from the crowd, rising 1.3%. The macro data of the day provides unequal references from Germany, with worse than expected export figures, but a more forceful increase than expected in industrial production.

The improvement in the second half of Wednesday’s European markets was consolidated in Thursday’s session. The resurgence of buying has as its trigger the greater calm with which investors are facing the crisis between the United States and Iran. Some analysts have already noted that Iran’s retaliation, in the form of a ballistic missile attack on US bases in Iraq, had been more limited than might have been expected.

Fears of an escalation of the conflict were later curbed by Donald Trump’s message. His response to Iran’s attack ruled out further warfare and channelled the conflict into the realm of sanctions.

The euro was mixed (CurrencyIndex 50%) early on Friday.

Oil prices fall as the threat of war in the Middle East eases and Gold depreciates as risk appetite increases

On Friday, January 10, the price of oil fell, as the threat of war in the Middle East, one of the main oil-producing regions, diminished. Investors are changing their outlook for economic growth and demand for oil.

Both the U.S. and Iran appear to be trying to ease tensions, reducing the risk of a major supply disruption in oil markets.

In addition, the U.S. House of Representatives on Thursday passed a resolution to prevent Trump from taking military action against Iran, days after the president ordered a drone strike that killed a senior Iranian commander and sparked fears of war.

Investors are now watching the first phase of the trade agreement to be signed between Washington and Beijing next week.

The futures on the Brent were down (MarketEvolution) early Friday morning.

Gold fell in the Asian session on Friday, January 10th, after having lost 1% in the previous session. The easing of tensions between the US and Iran eased the market and boosted investors’ appetite for riskier assets.

Markets received a respite after the US president responded to Iran’s missile attacks with economic sanctions, rather than military action.

Gold futures were down (MarketEvolution) early Friday morning.

Chinese Vice Premier Liu will sign the trade agreement in Washington next week

Chinese Vice Premier Liu He, head of the country’s negotiating team in the U.S.-China trade talks, will sign phase one of the trade agreement in Washington next week.

Liu will visit Washington January 13-15, said Gao Feng, a trade ministry spokesman.

Negotiating teams on both sides remain in close communication to finalize the final details.

The agreement reached last month is expected to reduce tariffs and boost Chinese purchases of U.S. agricultural, energy and manufactured goods, while addressing some disputes over intellectual property.

Lagarde urges Eurozone governments to coordinate a fiscal stimulus plan

The President of the European Central Bank has argued that the implementation of a concerted fiscal stimulus plan in the Eurozone would allow an acceleration in the region’s GDP growth.

The ECB is forecasting a GDP of 1.1% in 2020 and 1.4% in 2021.

A concerted stimulus plan at euro area level would help to accelerate growth. Using all available tools would also bring inflation closer to the target, slightly below 2%.

Lagarde argues that the implementation of a significant fiscal stimulus plan has been one of the reasons why growth in the United States has been higher than in the euro area. Also the lower fiscal restrictions, the faster consolidation of its banks and the advantage of a dollar that is an international reserve currency.

Unemployment remains stable in the EU and eurozone in November

The unemployment rate lay at 6.3% in the EU and 7.5% in the euro area in November 2019. In both cases it remained stable in comparison with October.

Unemployment thus remains at its lowest level since January 2000 in the Twenty-Eight and July 2008 in the single currency area.

In the year-on-year comparison the unemployment rate fell by three tenths in the EU from 6.6% in November 2018 and by four tenths in the euro area from 7.9%.

In comparison with the same month in 2018 the number of unemployed fell by 768,000 and 624,000 respectively.

Nancy Pelosi announces that the House of Representatives will vote to limit Trump’s military power

The House of Representatives will vote on a resolution to curb the power of President Donald Trump. It’s about preventing military action against Iran.

Trump announced that it appears that Iran is withdrawing from the military scene and that the United States will increase economic sanctions, instead of taking military action.

Pelosi added that some members of Congress have serious concerns about the president’s strategy.

The government must work with Congress to promote an immediate and effective strategy to ease tensions to prevent further violence. The United States and the world cannot afford a war.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

January 13, 2020

Asian stocks rise as investors await the signing of the first phase of the trade agreement

On Monday, January 13, the Asian stock market rallied as investors await the signing of the U.S.-China trade agreement.

Mainland Chinese markets rose mostly. Hong Kong’s Hang Seng Index also rebounded 0.82% as technology stocks were the best performers. In South Korea, the Kospi index rose by 0.72%.

Australia’s S&P/ASX 200 bucked the trend, falling 0.47%, while major mining and oil companies’ stocks were losing. Among the oil companies Origin Energy fell by 1.83%, Woodside Petroleum fell by 1.28% and Santos by 0.68%. However, Australian gold stocks rose on Monday erasing last week’s losses, after falling as trade tensions eased. Evolution Mining was up 2.51% and Kingsgate Consolidated was up 2.27%.

Japanese markets were closed on Monday for a holiday.

The yen was very weak (CurrencyIndex 0%) early Monday.

Dow passes 29,000 points for first time as investors shake off weak December employment report

On Friday, January 10, U.S. stocks reached a record high, despite weaker than expected employment data.

Pfizer shares rose by 1.7% to lead the Dow’s earnings. Healthcare and technology were the best performing sectors in the S&P 500, rising 0.5% each.

The U.S. economy added 145,000 jobs in December, while 160,000 new jobs were expected.

Wages also disappointed, growing by only 2.9% year-on-year. Economists had predicted a 3.1% gain. December was the first month since July 2018 that wages grew by less than 3% over the previous year.

The US dollar was strong (CurrencyIndex 75%) early Monday morning.

American employment figures are not expected to cause major shocks in the markets

Wall Street and a good part of the European stock markets remained in a zone of historical records on Friday, January 10. The truce reigns in the financial markets, in the midst of less warlike tension, and leaves the way open for the conquest of new historical records.

In Europe, the Stoxx600 index is setting new records. The German Dax, at over 13,500 points, is on the verge of reaching new heights in its history.

The European stock markets prolonged the truce experienced during Thursday’s session, with bullish references from Wall Street and Asia. The publication of the official US employment report does not cause any major shocks in the markets, despite not reaching expectations.

The euro was weak (CurrencyIndex 25%) early Monday morning.

Crude Oil falls on easing of trade tensions and Gold loses ground to strong dollar

During the Asian session on Monday, January 13, the price of oil fell, due to the easing of trade tensions between the United States and Iran.

However, the drop was slowed down because the signing of the trade agreement could boost the demand for oil.

The Brent futures were down (MarketEvolution) early Monday morning.

In the Asia session on Monday, January 13, the price of gold fell as expectations of a U.S.-China trade agreement boosted the dollar and diminished the appeal of gold as a safe haven currency. The first phase of the agreement between Washington and Beijing is expected to be signed at the White House on Wednesday.

Gold prices had gained 18% last year in the context of a prolonged trade struggle between the world’s two largest economies and a negative impact on global growth. Now those conditions have changed.

Gold futures were up (MarketEvolution) early Monday morning.

American job market ends 2019 with disappointing growth

The U.S. labour market ended 2019 on a bitter note, as December payroll and wage growth did not meet expectations.

Non-farm payrolls increased by only 145,000 while the forecast was for 160,000 new jobs.

The unemployment rate remained stable at 3.5% and met expectations of a 50-year low.

In addition to slow payroll growth, average hourly earnings increased by only 2.9%, below the projected 3.1%.

December marked the first time that wage earnings were below 3% on a year-on-year basis since July 2018.

House of Representatives passes resolution to limit Trump’s military powers

The House of Representatives passed a resolution to curb the military powers of President Donald Trump in his confrontation with Iran.

The House of Democrats passed the measure by 224 votes to 194. Three Republicans and one independent voted in favour, while eight Democrats opposed it.

The Democrats, concerned about the conflict following the assassination of Iran’s top general, Qasem Soleimani, passed the measure to give Congress greater oversight over the White House’s military action against Tehran.

The measure calls for Trump to halt military force against Iran within 30 days if it does not have congressional approval.

Facebook and Apple are still unstoppable

Both companies have started the year on an upward trend that has allowed them to surpass their historical highs.

The company led by Mark Zuckerbeg reached $219.78 per share, beating its previous high.

The case of Apple is different. The apple company has been on a free ride since it hit new highs after surpassing 237 dollars in early October 2019. Since then, it has advanced more than 31% and has set its new record at 312.67 dollars.

2019 was a dream year for Apple, becoming its best year in the last decade, after adding 86%.

Boeing’s internal messages reveal efforts to manipulate regulators

The messages show that Boeing employees apparently boasted about pushing the regulators to approve the 737 Max without the pilots undergoing simulator training. They also expressed concern about the flight simulators for this model.

This was revealed in internal Boeing documents released Thursday.

The Federal Aviation Administration had asked Boeing for more than 100 pages of internal messages. After reviewing them, lawmakers raised several alarms about the certification of the planes and about Boeing’s dismissive attitude toward the regulators.

Boeing has condemned the messages and says they do not reflect the company’s will.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

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January 14, 2020

Asia-Pacific stocks rise and China’s exports and imports rebound

On Tuesday, January 14, stocks in Asia gained ground as market sentiment improved ahead of the signing of the first phase of the China-U.S. trade agreement. Optimism rose further after Washington stated that Beijing is no longer a currency manipulator.

The Chinese market was largely unchanged in the first part of the session. China’s imports from the United States rebounded in November and December. In particular, soybean and pork imports from the United States recovered significantly in December. In addition, it was the first time that exports rose since March last year.

Hong Kong’s Hang Seng index fell slightly and South Korea’s Kospi index rose by 0.38%.

Australia’s S&P/ASX 200 rose by 0.64%, with large mining companies rising in value. Fortescue Metals was up 1.48%, the BHP group was up 0.95% and Rio Tinto was up 1.35%.

The Nikkei 225 was positive at 0.51% after the Japanese markets returned from their Monday holiday. Softbank shares rose by 3.22%.

The yen was very weak (CurrencyIndex 0%) early on Tuesday.

American stocks rise at the start of the week

On Monday, January 13, the U.S. stock market rose, resuming the rally that began last week with the easing of geopolitical tensions and as investors became more optimistic about U.S.-China trade relations. A Chinese delegation will travel to Washington on Monday for the signing of the trade agreement.

American Express advanced 1.1% leading the Dow. The S&P 500 was boosted by the technology, real estate, and materials sectors, which advanced about 0.6% each.

Major stocks hit record highs last week, as concerns about escalating trade tensions faded. In addition, the fall in oil prices eased fears of rising energy costs in the short term.

The US dollar was mixed (CurrencyIndex 50%) early Tuesday morning.

European shares close down pending commercial and geopolitical developments

European stocks were negative on Monday 13 January, while the United States and China are preparing to sign the first phase of their trade agreement on Wednesday.

British Prime Minister Boris Johnson will travel to Northern Ireland on Monday to meet the leaders of the country’s newly formed executive and his Irish counterpart, Leo Varadkar. The British pound fell to a two-week low after Bank of England Monetary Policy Committee member Gertjan Vlieghe said he might vote for an interest rate cut if the next data shows no rebound in the British economy.

The EUR was strong (CurrencyIndex 75%) earlier on Tuesday.

Oil prices rise and Gold falls before the signing of the trade agreement and the improvement in risk appetite

Crude Oil rose sharply in the Asian session on Tuesday, January 14, as investors focused on the signing of phase one of the U.S.-China trade agreement.

A weekly reduction in U.S. oil inventories is also expected.

However, the increases are limited by the tensions in the Middle East, even though both Tehran and Washington refrained from further military escalation after this month’s fighting.

Investors are awaiting the upcoming events on the trade front and the start of the earnings season.

The futures on the Brent were down (MarketEvolution) early Tuesday morning.

Gold fell during the Asian session on Tuesday, January 14, as investors opted for riskier assets after the U.S. withdrew its designation of China as a currency manipulator pending the signing of the agreement between the two parties to ease their trade dispute.

The decision to remove China from the blacklist coincides with the arrival in Washington of a high-level Chinese delegation for the signing of the trade agreement.

Gold futures were down (MarketEvolution) early Tuesday morning.

The proximity of the signing of the trade agreement remains a favourable factor

At the moment nobody knows anything publicly about the 86 pages of the document.

It cannot be ruled out that on Wednesday, when the details are known, there may be some disappointment or other.

The issue of Iran is already completely forgotten by the market, unless new incidents arise again that would have to be serious for the markets to pay much attention.

Technically there is a large overbought in many indices, at levels not seen in a long time. In addition, it is necessary to remember that it is a period of blackout of buybacks.

The banks are in the spotlight of the investors. JPMorgan Chase & Co, Morgan Stanley, Goldman Sachs Group Inc and Wells Fargo & Co will be the first to release results this week.

Tesla Inc. and Nio are up sharply after it was announced that the Chinese are maintaining subsidies for these types of cars this year.

On the other hand, the semiconductor sector is strong in the pre-opening and is known to be very influential in technology.

Tesla continues to be unstoppable and exceeds $500 per share for the first time

It looks like 2020 is going to be Tesla’s year.

The car company has been trading at a high for several days now. After Monday’s opening, it surpassed $500 per share for the first time in its history.

The rises it is experiencing day after day have led it to soar nearly 20% at the start of the year.

It is already the third most valuable car company in the market, with a market capitalization of approximately 86,180 million dollars. Only Toyota and Volkswagen are more valuable.

The bullish rally, which began following the publication of its accounts, is what has allowed it to reach its historical highs.

Bond market

US Treasury yields are improving.

Traders have turned their attention from the situation in the Middle East to the expected signing of the US-China trade agreement.

The 10-year benchmark yield rose 1.7 basis points to 1.84%. This reflects increased risk appetite.

Euro zone bond yields also rose on Monday, January 13, before the signing of the trade agreement on Wednesday. It puts an end to a dispute that threatened global growth.

Wall Street reached record highs last week, despite a disappointing December employment report.

This week will see fourth-quarter earnings from major U.S. banks, including JPMorgan Chase & Co., Morgan Stanley, Goldman Sachs Group Inc. and Wells Fargo & Co.

Lower earnings growth on Wall Street will put pressure on the stock market

On January 14, 2020, the fourth and last quarter of 2019 results season opens.

Expectations are not good. Analysts expect earnings growth of 1%, compared to a 24% increase in 2018.

Poor corporate results in the fourth quarter of 2019 may put the cap on a year of lacklustre growth for companies last year.

Looking ahead to 2020, everything is expected to get better. Experts anticipate a profit rebound of up to 10%. According to forecasts, 90% of companies will present better revenues and more profits.

In 2020, companies have a better basis for earning more as risks such as the trade war, Brexit and the Federal Reserve rates seem to be mitigated.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

January 15, 2020

Asia falls as investors await the signing of the first phase of the trade agreement

On Wednesday, January 15, market sentiment was weak in Asia, before the US and China signed their principle of agreement.

Mainland Chinese stocks were down at the start of the session. Hong Kong’s Hang Seng index lost 0.57%. In South Korea, the Kospi index fell slightly.

Australia’s ASX 200 index resisted the bearish trend and rose slightly, while most sectors rose.

The session followed a quiet end to the session on Wall Street, where major investment banks posted good quarterly results.

U.S. and Chinese officials are expected to sign the trade agreement on Wednesday, after the two countries agreed on the terms of phase one last month. Washington said it would cancel or reduce some tariffs in exchange for China buying more U.S. products and fixing problems in areas of technology and financial services. The United States is also threatening to impose higher tariffs if China does not comply with the agreement.

Japan’s Nikkei 225 fell 0.46%.

The Yen was very weak (CurrencyIndex 0%) earlier on Wednesday.

The Dow closes flat while banking sector shares rise led by JP Morgan

On Tuesday, January 14, the Dow Jones Industrial Average closed with little change. JP Morgan Chase led the banking sector with good quarterly results.

JP Morgan Chase recorded quarterly earnings and revenues that exceeded analysts’ expectations, causing its shares to rise more than 1.2%. The bank’s annual earnings reached record levels. It also had an increase in bond trading revenues in the fourth quarter.

Citigroup’s earnings were also boosted by strong fixed income trading, with fixed income revenues up 49%. The banking giant’s shares were up 1.6%.

Delta Air Lines reported better-than-expected earnings, driven by lower fuel costs and strong travel demand. The results caused Delta’s shares to rise 3.3%.

Despite strong results from JP Morgan, Citi and Delta, expectations for the corporate earnings season remain low.

The US dollar was strong (CurrencyIndex 62,5%) early Wednesday.

European shares are mixed after a hectic session

European stocks fluctuated on Tuesday, January 14, as Chinese negotiators arrived in Washington to sign the first phase of the long-awaited trade agreement with the United States.

The pan-European Stoxx 600 remained above the flat line at the end of the session, having been between red and black all day. Domestic goods stocks rose by 0.7% on average, leading the gains. Oil and gas stocks fell by 0.5%.

London’s FTSE 100 also remained just above the flat line, on its fourth day of gains in five sessions. The pound sterling remained down after data released on Monday showed that UK economic growth slowed to its lowest point since 2012. This boosted expectations of an interest rate cut by the Bank of England.

The EUR was strong (CurrencyIndex 62,5%) early Wednesday.

Oil breaks its streak and Gold rises after it is known that tariffs against China will be in place until phase two of the trade agreement

Oil prices rose on Tuesday, January 14, after five days of decline, as the United States and China prepare to sign a preliminary trade agreement and ease tensions in the Middle East.

The outlook for oil demand is supported by the expected signing of the trade agreement which represents a major step towards ending a dispute that has cut global growth and reduced demand for oil.

The futures on the Brent rose (MarketEvolution) early Wednesday.

Gold rose on Wednesday, January 15, after a senior U.S. official said that tariffs on China would be maintained until the second phase of the trade agreement is completed.

Palladium reached a new record.

Gold futures were up (MarketEvolution) early Wednesday.

U.S. Consumer Price Index rises moderately in December

Prices in the United States increased slightly in December and underlying monthly inflationary pressures declined. This could allow the Federal Reserve to keep interest rates unchanged at least for this year.

The Labor Department reported that the consumer price index rose by 0.2% last month, after rising by 0.3% in November. It remains at 2.3%.

The monthly increase in the CPI has been slowing down since October’s rise.

Core inflation in December was curbed by the decline in the cost of used cars and trucks, airfare, furniture and household operations.

These declines offset increases in the prices of medical care, clothing, new vehicles, recreation and vehicle insurance.

Here’s what’s in the first phase of the trade agreement

U.S. and Chinese trade representatives end years of intense bilateral negotiations with the first phase of an agreement that promises billions of dollars in agricultural purchases and the start of technology transfer reforms.

Still, many analysts are not sure exactly what the two nations are agreeing to.

On paper, the agreement includes a major expansion of U.S. food, agricultural and seafood exports to China. These purchases also include manufactured goods, energy products and services.

Also included is a Chinese commitment to end its practice of pressuring foreign companies to transfer their technology to Chinese firms.

The agreement reiterates U.S. opposition to currency manipulation and China’s commitment to buy at least $200 billion in U.S. exports over two years.

Cessation of the nuclear agreement with Iran

Paris, Berlin and London open the door to get out of the nuclear deal with Iran.

France, Germany and the United Kingdom opened the door to abandoning the nuclear agreement with Iran, after resorting to the dispute settlement mechanism for what they consider to be Iranian non-compliance with its commitments.

In a joint statement, the three European countries say that Tehran is not respecting its commitments and therefore they are using the joint commission to resolve disagreements which it must resolve in less than 35 days.

Boeing records drop in orders in 2019

For the first time in decades, Boeing’s commercial aircraft business lost orders over the course of an entire year. It’s an example of how much the 737 Max crisis has hurt the company.

Boeing lost orders for 87 commercial aircraft in the entire past year, which means it had more cancellations than new purchases. The final count included the cancellation of three orders in December.

The negative figure is especially painful when compared to European rival Airbus, which placed orders for 768 new aircraft by 2019.

Even with 2019 being a slightly worse year for Airbus, its order book still stands at 7,482 commercial aircraft. This is the equivalent of almost ten years of production.

Boeing ended 2019 with an order book of 5,406 commercial aircraft.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

January 16, 2020

Asian markets calm down after signing phase one of the trade agreement

Asian markets rose moderately on Thursday, January 16, after the United States and China ended some uncertainties for the world economy by signing their partial trade agreement.

Hong Kong’s Hang Seng index rose by 0.37%, but China’s mainland markets struggled to rise. This week the data showed that Chinese imports of goods from the US recovered in November and December.

In South Korea, the Kospi index rose by 0.23%. Shares of technology giant Samsung Electronics rose by 1.53% and Hyundai Motor jumped by 3.48%.

The Australian benchmark ASX 200 index rose by 0.6% with most sectors trading higher. The financial sub-index rose by 0.9% as the country’s major banking stocks advanced.

Japan’s Nikkei 225 rose very slightly.

The yen was very weak (CurrencyIndex 0%) early Thursday.

The U.S. market reached a record high before dropping most of its gains at the end of the session

On Wednesday, January 15, the U.S. stock market rose, but lost most of its gains after the U.S. and China signed the first phase of the long-awaited trade agreement.

Most of the details were already known and investors anticipated some obstacles on the way to signing phase two. The U.S.-China trade agreement includes provisions to curb intellectual property theft, along with forced technology transfers. It also increases Chinese purchases of U.S. products. The signing was eagerly awaited, as the conflict between the world’s two largest economies has dragged on for nearly two years.

The agreement does not eliminate current U.S. tariffs on Chinese imports and leaves doubts about how the agreement will be enforced. It is seen as fragile by some analysts who believe additional tariffs could still be implemented.

About 30 S&P 500 companies have published their quarterly results. Of those companies, 82% have posted better-than-expected profits.

The US dollar was weak (CurrencyIndex 25%) earlier on Thursday.

Doubts persist in Europe on the eve of the first wave of business results of the season

The stock markets in Europe closed with mild cuts on Wednesday, January 15.

Europe was bearish, awaiting the first waves of results of the season.

The day included an outstanding battery of macro data: the Germany’s GDP in 2019 has been adjusted to expectations of +0.6%, its lowest growth since 2013. Eurozone industrial production has fallen more than expected. It is down by -1.5% compared to an estimated -1.1%. The UK’s year-on-year CPI has cooled to 1.3% which is two tenths below expectations, a level that leaves the door open to a possible rate cut by the Bank of England.

The German Dax fell slightly and delayed the assault on the new historical records.

The euro was strong (CurrencyIndex 75%) earlier on Thursday.

Oil falls for the sixth time in seven sessions on rising inventories and production

Crude oil fell on Wednesday, January 15, after a report was released in the U.S. showing a large increase in gasoline and distillate inventories. In addition, crude oil production reached a new record high.

The price of oil was affected by the OPEC report, which states that the group of producers expects lower demand for their oil in 2020, even as global demand increases.

U.S. gasoline stocks last week rose to their highest level since February, while distillate inventories rose to their highest level since September 2017, according to the U.S. Energy Information Administration (EIA).

The U.S. appears poised for another production record. The EIA report also showed that oil production, for the week ending January 10, rose to 13 million barrels per day.

Brent futures were up (MarketEvolution) early Thursday morning.

The signing of the U.S.-China trade agreement failed to dispel the uncertainty.

Gold rose on Wednesday, January 15, as details of the first-phase trade agreement between the United States and China failed to calm investors’ concerns about the differences between the two countries. In addition, Washington is maintaining tariffs on some Chinese products. There are expectations that trade concerns will continue to persist.

Persistent risks will support the gold price in the short term.

Among other precious metals, palladium rose to a record high and platinum reached its highest level in almost two years.

Gold futures were down (MarketEvolution) early Thursday.

Trump may continue to impose tariffs on China after signing phase one of the trade agreement

China may have difficulty in fulfilling its commitment.

This is especially true when the agreement would mean that Beijing would increase its imports of US goods and services by at least $200 billion over two years.

To meet that additional $200 billion, China would have to buy an absurd amount of agricultural goods and machinery, especially airplanes and energy products.

The phase one trade agreement allows the American president to further increase tariffs on Chinese products.

If the Chinese fail to meet these targets, the United States could impose new tariffs or remove existing promises in the agreement.

Brussels takes first steps towards an EU-wide minimum wage

The European Commission has taken the first step towards all EU countries establishing a fair minimum wage in the future. It will do so through public consultation with trade unions and employers’ organisations in the EU.

The idea is not to set a common minimum wage in all countries, in fact the EU does not have competence for wages, but to ensure that those existing in each state allow for a decent income.

Last year, Frans Timmermans, now Vice-President of the institution, proposed that the minimum wage should be at least 60% of the average salary in the country, which is now not achieved in most countries.

The consultation is the first step in a process that will take months to produce a proposal that takes into account the sensitivities of the 28, among whom the situation is very different.

Johnson opens the door to an extension of the trade agreement with Brussels

British Prime Minister Boris Johnson has indicated that his plan to reach a trade agreement with the European Union by 31 December this year may be more complicated than has been anticipated so far.

Johnson said it is possible that the UK will end up signing the agreement that regulates the trade relationship with the rest of the EU countries.

The UK will officially leave the EU on 31 January and has been given eleven months to negotiate over 600 trade agreements covering all sectors of activity.

The new president of the European Commission, Belgian Ursula van der Leyen said that it was impossible to reach a complete trade agreement.

European countries consider that in order to reach an agreement, the United Kingdom must align itself with environmental and workers’ rights legislation, changes in which Johnson wants to have a more lax regulation.

Trump’s impeachment trial could start next Tuesday

Nancy Pelosi is sending the articles from the Trump’s impeachment to the Senate this Wednesday.

If that happens, the House can move forward with the process this week by having Chief Justice John Roberts take the oath of office.

Pelosi decided to turn over the two articles against Trump, abuse of power and obstruction of Congress, to the Senate after holding them up for weeks in a ploy to get assurances about how the Republican-led chamber will conduct the trial.

The White House had pressed for non-cooperation with the impeachment investigation, claiming that the proceedings were unconstitutional and unfounded efforts to overturn the democratic process.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

January 17, 2020

Asia-Pacific stocks rise and data shows China’s economy growing as expected

Asian markets rose on Friday, January 17, as the release of China’s gross domestic product figures showed that growth is in line with analysts’ expectations. The Chinese yuan, which has been appreciating amidst the trade optimism, strengthened further.

Chinese markets rose following the release of those figures. Now China will hold on to the commitments of phase one of the trade agreement, at least until the elections in the United States. Beijing is involved in the agreement in the sense of stabilizing the economy and boosting market confidence, but expects tariff reductions. Hong Kong’s Hang Seng index rose by 0.54%.

South Korea’s Kospi remained flat, having risen at the start of the session. The Bank of Korea kept its reference rate at 1.25% as expected. The move follows two rate cuts last year.

Australia’s S&P/ASX 200 rose by 0.55%, as major mining companies are strong. Rio Tinto was up around 1.75%, Fortescue Metals was up 2.73% and the BHP group was up around 1.12%.

Japan’s Nikkei 225 was up 0.38% with most sectors up.

The yen was very weak (CurrencyIndex 0%) early Friday.

The Dow rises 150 points after good economic data and while Morgan Stanley rises strongly

The U.S. equity market hit a new high on Thursday, January 16, after Morgan Stanley released a quarterly report that exceeded analysts’ expectations. In addition, investors were confident about the good U.S. economic data.

The S&P 500 tops 3,300 for the first time, as stocks soar on good business results and economic data.

Morgan Stanley’s three main businesses, investment management, wealth management and trading, produced more revenue than expected in the previous quarter and the company’s shares rose by 7%.

So far, the earnings season has started solidly. About 7% of the S&P 500 companies have reported earnings. Of these companies, 76.5% have recorded better-than-expected earnings.

Strong economic data has also raised investor sentiment on Wall Street. Weekly unemployment claims fell unexpectedly to 204,000 while 216,000 new claims were expected.

Meanwhile, retail sales rose by 0.3% in December, meeting expectations.

The U.S. dollar was weak (CurrencyIndex 25%) earlier on Friday.

European shares close up after the signing of the partial agreement between the United States and China

The European stock market closed higher on Thursday, January 16, as investors reacted positively to the signing of the partial trade agreement between the United States and China.

The pan-European Stoxx 600 index closed slightly higher. Utilities stocks were the best at 0.9% while automobile stocks fell by 0.9%.

Trade tensions between China and the Netherlands are increasing, after the Beijing ambassador was quoted as warning that China should not prevent Dutch semiconductor equipment supplier ASML from shipping its products to China.

The euro was weak (CurrencyIndex 37.5%) early on Friday.

Oil remains stable as slow growth in China offsets optimism over trade deal and Gold continues to decline as demand for risky assets increases

During the Asian session on Friday, January 17, oil remained stable as reports of slow economic growth in China, which is the world’s largest crude oil importer, raised concerns about future demand for fuel and offset optimism over the signing of the trade agreement between China and the United States.

In the fourth quarter of 2019, the world’s second largest economy improved by 6% over the previous year, while the expansion for the entire year was 6.1%, the slowest in 29 years.

Brent futures were up (MarketEvolution) early Friday morning.

Gold fell in the Asian session on Friday, January 17, recording its worst week in the last two months.

Positive economic data in the U.S. and optimism about the U.S.-China trade agreement boosted appetite for riskier assets and decreased the attractiveness of gold bars.

Gold futures were up (MarketEvolution) earlier on Friday.

According to the minutes of its last meeting, the ECB points to a weak but stable growth dynamic

The minutes of the European Central Bank’s meeting of 12 December last, published on Thursday, show that the bank remains cautious about the economy in general. They also say that the data points to weak but stable growth dynamics.

They add that there are slight indications that core inflation is rising.

The central bank, chaired by Christine Lagarde, notes that sentiment has improved thanks to the easing of global trade tensions. However, geopolitical tensions are not conducive to reducing uncertainty.

The ECB left policy unchanged, in the first meeting with Lagarde at the helm, and noted that political risk may be decreasing, inflationary pressures appear to be increasing and the manufacturing sector is showing signs of bottoming out.

All this suggests that the worst of the recent downturn may be over.

Trump signs phase one of trade agreement with China in a bid to stop the conflict

President Trump signed a partial trade agreement with China on Wednesday, as the world’s two largest economies try to contain their economic struggle.

Through the agreement, the Trump Administration intends to address some U.S. concerns about China’s trade abuses. However, the agreement appears to leave doubts about how Washington and Beijing will honour their commitments and avoid further tensions.

The agreement takes steps to eradicate various practices, including intellectual property theft and forced technology transfers in exchange for access to the Chinese market.

It also details a $200 billion increase in Chinese purchases of U.S. products over two years.

The American president said that… 'The United States and China are righting the wrongs of the past and providing a future of economic justice and security for workers, farmers and families’.

Putin consolidates his power after the resignation of the Russian government

Russia’s government resigned on Wednesday to make way for further major constitutional changes.

President Vladimir Putin thanked the Medvedev government for its work. The move is reportedly to allow Putin to carry out the sweeping constitutional changes he spoke of in his annual speech.

Putin said that… ‘for my part, I want to thank you for everything that has been done at this stage of joint work and I want to express my satisfaction with the results that have been achieved’.

The news of the government’s resignation came after Putin’s annual speech to parliamentarians. The Russian leader proposed a vote on constitutional changes that would focus power on the prime minister and the parliament, away from the presidency. It is believed that this could limit the power of Putin’s successor if he resigns in 2024.

Until now, Moscow’s political system was considered an autocracy, with Putin holding much of the power.

U.S. Senate approves new North America trade agreement

The Senate approved the new North America trade agreement, sending it to Trump for ratification.

The House of Representatives approved the U.S.-Mexico/Canada Agreement in a bipartisan vote. After Trump signs the Mexico-United States-Canada pact, only Canada’s approval will be needed for it to enter into force.

The Senate rushed to approve the trade agreement before the president’s expected impeachment next week.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

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January 20, 2020

Asian stocks rise as China keeps its lending rate unchanged

Stocks in Asia rose on Monday, January 20.

Friday’s US session was conditioned by the fact that Monday January 20th is a US holiday and all markets will be closed. It is the Martin Luther King holiday. In any case, it is positive that despite Wall Street being closed for the next three days, no profit taking by investors has been seen.

Mainland Chinese stocks rose at the end of the session, while the People’s Bank of China kept its prime lending rate unchanged. Shares of Chinese drug manufacturers and face mask companies also rose, amid concerns over a coronavirus outbreak in the country. The moves came after the People’s Bank of China kept the prime interest rates on one-year and five-year loans unchanged.

However, Hong Kong’s Hang Seng index fell by 0.39% as AIA life insurer shares dropped by more than 1%.

South Korea’s Kospi index rose by 0.79% as Samsung Electronics shares rose by about 2% after the company announced some changes in its management. Meanwhile, Australian stocks also experienced gains, with the S&P/ASX 200 rising slightly while most sectors advanced.

In Japan, the Nikkei 225 rose slightly despite Fast Retailing shares falling more than 1%.

The Yen was mixed (CurrencyIndex 50%) in early Monday’s trading.

US markets rise slightly in another record week

On Friday, January 17, U.S. stocks rose slightly, reaching new all-time highs, with Wall Street having a solid weekly performance amidst strong economic data and a good start to the earnings season.

The weak performance on Friday contrasted with the market movements during the week. The Dow and the S&P 500 both rose by about 1.8% on a weekly basis. The Nasdaq gained more than 2% during the week.

In the US, housing starts jumped by almost 17% in December to a 13-year high. This follows the release of better-than-expected weekly unemployment claims and strong business activity figures.

Corporate earnings were better than expected at the start of the earnings release period. Over 8% of the S&P 500 companies have reported quarterly results. Of those companies, 72% delivered better than expected results.

The US dollar was very strong (CurrencyIndex 87,5%) early Monday morning.

European stock markets end the week with solid gains

Hopes of a revival of the Chinese economy have given wings to European markets on Friday 17 January.

The European stock markets followed the rise of Wall Street and the Stoxx600 set a new all-time high, while the German Dax, at over 13,500 points, came close to its record.

The most anticipated data of the day in the European markets, the Eurozone CPI, confirmed the expected 1.3% rise.

It was already three very weak days but, as happened last month, the expiry of derivatives on the third Friday of the month has once again encouraged the markets. However, the Dax made a visit to the great resistance 13560, where it rebounded. At the moment it is still unable to hold on to it and that limits the upward expectations in the rest of Europe.

The automotive sector, which has been a great burden all week, has finally risen a poor 0.29% and still has problems.

On the other hand, social protests in France have taken their toll on the stock market on the companies most closely linked to consumption.

The euro was very weak (CurrencyIndex 0%) early Monday morning.

Crude Oil reached its highest weekly level following Libya’s troubles and Gold remains unchanged as risk aversion decreases

At the Asian session on Monday, January 20, the price of oil reached its highest level in over a week, after two large oil production bases in Libya began to close due to the military blockade, this will probably lead to a reduction in the flow of oil from this OPEC member.

Two rival factions in Libya have claimed the right to rule the country for more than five years and the National Petroleum Corporation said Sunday that two major oil fields in the southwest had begun to close, after forces loyal to the Libyan National Army blocked a pipeline. If this kind of disruption continues, the market will continue to react with an upward trend.

The futures on the Brent were rising (MarketEvolution) early Monday morning.

In the Asian session on Monday, January 20th, Gold moved within a narrow range as U.S. economic data boosted risk appetite among investors and diminished the metal’s appeal as a safe-haven asset.

Speculators reduced their bullish positions on COMEX gold contracts during the week leading up to January 14. The holdings of the SPDR Gold Trust, the world’s largest gold-backed fund, rose by 2.20% to 898.82 tons on Friday.

Physical gold purchases accelerated ahead of Lunar New Year celebrations in China and Singapore, while demand in India declined last week.

Gold futures were up (MarketEvolution) early Monday morning.

Alphabet reaches $1 trillion market capitalization for the first time

Google’s parent company, Alphabet, has reached $1 trillion in market capitalization, making it the fourth U.S. company to reach this level

Apple was the first to reach it in 2018. Then Microsoft and Amazon followed. Apple and Microsoft are still valued at over a billion dollars, while Amazon has fallen below the mark since then.

Analysts are optimistic about the company’s newly appointed CEO, Sundar Pichai, who replaced Alphabet founder Larry Page and co-founder and chairman Sergey Brin.

The optimism also comes from the Company’s growth in its cloud computing business. This division still lags far behind Amazon and Microsoft, but it doubled its revenue rate from $1 billion to $2 billion per quarter between February 2018 and July 2019.

However, the business faces challenges related to trust and data security.

According to Merkel the European Union may be caught between the United States and China

The German Chancellor has said that the European Union may be caught up in the middle of the trade war, and she believes that relations with the United States and China must be strengthened.

Merkel says she would not advise considering China a threat just because of its economic success, since, as with Germany, China’s rise is based mainly on effort, creativity and know-how.

As for relations with the United States, Merkel stresses that the tensions are more due to structural causes.

Europe is no longer at the centre of world events. American interest in Europe is currently declining and will continue to do so no matter who the president is. She therefore believes that Europe must take on more responsibility.

With regard to Brexit, the German Chancellor points out that it is a wake-up call and that Europe must respond by becoming attractive, innovative, creative and a good place for research and education.

Eurozone inflation rebounds in December with its highest rise since June

The year-on-year inflation rate in the euro area stood at 1.3% in December. It is three tenths above the November reading and is its highest level since last June.

In the European Union as a whole prices rose by 1.6% year-on-year in December, compared with a rise of 1.3% in November.

The rise in inflation in the euro area is due to the positive contribution of energy prices, which rose by 0.2% after falling by 3.2% year-on-year the previous month. It is also due to the 2.1% rise in the price of fresh food.

In turn, the price of services recorded an interannual increase of 1.8% in December, one tenth lower than that observed in November.

Excluding the impact of energy prices, inflation in the euro area stood at 1.4%. Excluding also food, alcohol and tobacco prices, core inflation in the euro area remained at 1.3%.

The lowest price increases were in Portugal, Italy and Cyprus. The strongest increases were observed in Hungary, Romania, the Czech Republic and Slovakia.

China says its economy will grow in 2019 in line with expectations

China said Friday that its economy grew by 6.1% in 2019, meeting expectations even in the midst of its trade dispute with the United States.

The Chinese economy was expected to grow by 6.1% in 2019, compared to 6.6% in 2018. Still, China’s GDP growth last year was the slowest since 1990.

Although official Beijing’s GDP figures are still an indicator of the health of the world’s second largest economy, many outside experts have long expressed scepticism about the veracity of China’s reports.

Beijing’s official growth target for 2019 was 6% to 6.5%, but Chinese Vice Premier Liu He said that GDP growth in 2019 was estimated to be more than 6%.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

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January 21, 2020

In Asia-Pacific markets took a negative tone amid concerns about the spread of a virus in China

The infection is being compared to the SARS outbreak that killed 800 people in 2002/2003.

Asian stocks plummeted as the new coronavirus has spread to more Chinese cities. The concern is growing and could spread further, with many trips over the Lunar New Year holiday. The Chinese New Year holiday will make the situation worse, as people are forced to travel all over the country. The World Health Organization has called an emergency meeting to assess the situation.

Stocks in Hong Kong led the losses among major Asian markets on Tuesday, January 21, after the rating agency Moody’s downgraded the financial centre. In South Korea, Kospi finished down 0.74%.

Making matters worse, three Katyusha rockets fell inside Baghdad’s Green Zone, which houses government buildings and foreign missions. In addition, the International Monetary Fund on Monday cut its global growth projections for 2020 and 2021.

The Yen also benefited from concerns about the outbreak of infection in China. The Bank of Japan kept monetary policy stable and raised its economic growth forecast. It appears that the government’s spending package, and diminishing pessimism about the global outlook, eased pressure on the central bank to add to the stimulus. Japan’s Nikkei 225 fell by 0.87%.

The yen was very strong (CurrencyIndex 87.5%) early Tuesday.

Monday January 20 was a holiday in the United States with Wall Street closed

On Tuesday 21 January the market will probably focus on the opening of the WEF’s annual event in Davos, where politicians and business leaders will meet.

Climate change and sustainable business will be a key issue for delegates at this year’s WEF summit, but other political risks such as international trade and geopolitical instability are also likely to be on the agenda.

This year’s attendees include U.S. President Donald Trump, German Chancellor Angela Merkel and climate activist Greta Thunberg.

Both Trump and Thunberg, whose positions on climate change are polar opposites, are expected to take the stage at the WEF on Tuesday.

The US dollar was strong (CurrencyIndex 75%) earlier on Tuesday.

Smooth profit collection on the European Stock Exchanges

Session on Monday, January 20 marked by the holiday on Wall Street, where Martin Luther King Day was celebrated.

The holiday in the United States not only leaves European investors without any significant references, but its closure usually reduces activity in the financial markets. The stock markets, without much encouragement to prolong their latest rises, are opting for caution. Investors minimize their portfolio adjustments while they wait for greater novelties. The truce calls into question, once again, the assault of the German Dax on its historical records.

Among the references highlighted in the coming days are the first waves of business results in Europe and Thursday’s meeting of the ECB.

The ECB week begins without any significant news. With hardly any relevant macro data in sight, the euro is trading on the edge of the $1.11 level. The pound, on the other hand, is nearing the $1.30 threshold, with just over a week and a half to go before the Bank of England decides to cut interest rates.

The euro was weak (CurrencyIndex 25%) early Tuesday morning.

Oil prices drop as supply risk concerns fade and Gold reaches two week high on demand for safe-haven assets

The price of oil fell during the Asian session on Tuesday, January 21. Investors seem to be ignoring the supply problems following Libya’s declaration that two major oil fields are in the middle of a military blockade.

Two major oil fields in southwest Libya began closing on Sunday after a pipeline was blocked, potentially reducing the country’s production.

Futures on the Brent were down (MarketEvolution) early Tuesday.

Gold reached a two-week high during the Asia session on Tuesday, January 21, as a new strain of pneumonia in China stoked fears of a major epidemic that could hamper economic growth by causing an outbreak of risk aversion and selling of Asian stocks.

Gold futures were up (MarketEvolution) early Tuesday.

The international community joined forces to build a shared future

After World War II, the international community joined forces to build a shared future. Today it must do this again, as Klaus Schwab, founder and president of the Davos Forum, has pointed out.

He added that… ‘ Instead of closing economies through protectionism and nationalist politics, a new social pact must be forged between citizens and their leaders. Both to make everyone feel safe within their own country and to remain open to the world’.

World leaders head to Davos 2020 in search of stability

Where are we going?

Thousands of politicians and business leaders will address this question when they attend this year’s World Economic Forum in Davos, Switzerland.

Next week’s meeting comes at a time of major trade disruptions, foreign policy changes and a climate emergency.

In the words of former Finnish Prime Minister Alexander Stubb, there is a ‘new world disorder’.

This is a time when the United States has left a power vacuum in trade, climate, security and overall global leadership.

The European Union has tried to be a mediator between the United States and the Middle East, has tried to lead on climate goals and, despite the more protectionist tone of the White House, has continued to support multilateral trade.

However, internal divergences within the EU have prevented it from advancing the global agenda.

IMF says world economic outlook remains sluggish and reduces growth prospects

The International Monetary Fund has become less optimistic about global growth, warning that the outlook remains slow and there are no clear signs of a turning point.

The Washington-based institution predicted in October a global growth rate of 3% by 2019 and 3.4% by 2020. The IMF has now revised these forecasts downwards to 2.9% and 3.3% respectively. By 2021, the Fund has projected a growth rate of 3.4 per cent.

The projected recovery in global growth remains uncertain. It continues to be based on the recovery of emerging market economies, which are under stress and underperforming.

Epic Systems warns customers to stop working with Google Cloud

Account representatives from Epic Systems, one of the largest providers of medical records systems, have begun calling their customers with a clear message: 'We are not going to pursue further integration with the Google Cloud.

The company decided to stop development with the Google Cloud because it did not see enough interest among its healthcare customers to warrant the investment. Epic will now focus on Amazon Web Services and Microsoft Azure.

Epic is a privately held company and is also one of the largest electronic medical records companies in the United States. It sells its products, which include a digital equivalent of a physician’s traditional paper medical record, as well as billing tools, in the largest hospital systems in the United States.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

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January 22, 2020

Asian stocks rise as investors welcome China’s response to pandemic

This time, China’s response and openness, in contrast to the initial cover-up of the SARS outbreak, have helped to reassure investors concerned about the potential global repercussions.

China’s National Health Commission said Wednesday that there were 440 cases of the new virus, with nine deaths so far. Measures have been taken to minimize public gatherings in the most affected regions.

The outbreak, which originated in Wuhan, has reached the United States, Thailand, South Korea, Japan and Taiwan. Cases have been confirmed in 13 Chinese provinces. The World Health Organization is meeting Wednesday to consider whether the outbreak constitutes an international emergency.

Stock markets recovered on Wednesday, January 22, after China’s good response to the virus outbreak, which allayed some fears of a global pandemic. However, Shanghai’s shares initially fell amid concerns about a blow to domestic demand and tourism.

Nevertheless, concerns about contagion continue, particularly as millions of people travel for the Lunar New Year festivities. The outbreak has revived memories of the Severe Acute Respiratory Syndrome (SARS) epidemic in 2002-03, a coronavirus outbreak that killed nearly 800 people and disrupted travel worldwide.

Elsewhere in Asia-Pacific, markets advanced, while safe assets such as gold, bonds and the Japanese yen returned some of Tuesday’s gains. Australia’s S&P/ASX 200 set a new record. Japan’s Nikkei, South Korea’s Kospi index and Hong Kong’s Hang Seng rose by more than half a percentage point.

The Yen was strong (CurrencyIndex 75%) early Wednesday.

The Dow falls for the first time in six days and retreats from all-time highs

On Tuesday, January 21st, the U.S. stock market declined as concerns about U.S.-China trade relations and the outbreak of a virus in China stopped the market from rebounding.

Walgreens Boots Alliance and Chevron were among the worst performing stocks on the Dow, falling more than 1% each. The S&P 500 was led down by the materials and energy sectors.

The Dow had its first drop in six sessions, while the S&P 500 and Nasdaq were poised to break a three-day rally. The U.S. markets were closed on Monday for the Martin Luther King holiday.

According to a statement by Tudor Jones in Davos, ‘we are in the midst of the craziest monetary and fiscal policies in history. It is a situation so explosive that it defies imagination’.

On the other hand, the US Treasury Secretary’s statements had a negative influence on the markets. Steven Mnuchin said that a second phase of the trade agreement between China and the United States cannot eliminate all existing tariffs.

The US dollar was strong (CurrencyIndex 75%) earlier on Wednesday.

New session of moderate falls on European stock markets

Sales have been imposed on the European stock markets on Tuesday 21 January. Fears of a coronavirus pandemic plaguing China have crept into investor concerns.

The agenda for the day included the favourable surprise of a much better than expected ZEW economic confidence index for Germany. Forecasts pointed to an improvement of up to 15 points, but the final figure shot up to 26.7 points. The German Dax was once again the best of the major indices in the Old Continent and was on its way to record highs.

The French Cac has been hit by the setback suffered by luxury giants such as LVMH, Kering and Hermès due to fears of a drop in sales in China and in airport shops. Virus alerts are flying over the quotations of airport managers and airlines.

At least the 4.6% increase in EasyJet after the publication of its accounts has been encouraging. However, the incipient drip in business results in Europe has cast further doubt on the evolution of corporate results.

The euro was weak (CurrencyIndex 25%) early on Wednesday.

Oil falls as surplus offsets Libyan concerns and Gold falls as markets assess coronavirus risks

During the Asian session on Wednesday 22 January, the price of oil fell, as the International Energy Agency (IEA) forecast a surplus in the market during the first half of the year. This helps alleviate concerns about the complicated situation in Libya.

The IEA expects the market to have a surplus of one million barrels per day in the first half of this year.

There is an abundance of energy supply in terms of oil and gas. This is why the recent geopolitical incidents have not pushed the oil price too far upwards.

The Brent futures were down (MarketEvolution) early Wednesday morning.

In the Asian session on Wednesday, January 22nd, the price of gold fell as the dollar strengthened and investors assessed the risk of a global epidemic due to a coronavirus outbreak in China.

The number of victims of the Wuhan coronavirus rose to six deaths on Tuesday and a first case was reported in the United States. Many tourists have cancelled their travel plans and airports are stepping up screening tests.

Investors are worried about the threat of contagion as hundreds of millions of people travel for the Chinese Lunar New Year holiday, which peaks next weekend.

Gold consumption in China fell in 2019, for the first time in three years. The high price of the precious metal and the economic slowdown hit gold buying in the world’s largest gold market.

Gold futures were down (MarketEvolution) early Wednesday.

Trump urges countries to put their own citizens first as he preaches U.S. economic success

President Donald Trump took the opportunity to address world leaders in Davos to announce his ‘America First’ program.

He also encouraged other nations to adopt a similar approach.

According to Trum, 'The United States has achieved an impressive turnaround by adopting an entirely new approach focused on the welfare of the American worker.

Every decision made in tax, trade, regulation, energy, immigration, education and other areas focuses on improving the lives of ordinary Americans.

The annual Davos forum is an event where the world’s most powerful political leaders and corporate executives share ideas in the Swiss Alps.

Greta Thunberg accuses world leaders of having given up on global warming

Young activist Greta Thunberg has lashed out at political and economic leaders for giving up the fight against global warming and for putting immediate economic interests ahead of the necessary ecological transition.

‘I wonder what you will say to your children in the face of this chaos,’ Thunberg told the audience listening to her speech at the World Economic Forum in Davos.

Thunberg, who was already participating with other young people on a panel in the morning in which he pointed out that nothing has been done in the fight against climate change in recent times, insisted on the need not to wait any longer and to put an end to the use of fossil fuels.

The Swedish activist made her speech after US President Trump, who joined the initiative to plant one billion trees promoted by this forum.

According to Thunberg, 'planting trees is good but not even close to what needs to be done’.

She also reminded that everyone is worried about the United States abandoning the Paris Agreement, but she reproaches no one for worrying that all the signatories are already failing to comply.

The digital tax again

French President Emmanuel Macron said he had a big discussion with Trump in Davos about the digital tax.

Regarding the tax raised by Paris against large technology companies, he said the two countries will work together to avoid a retaliatory tariff increase.

Macron and Trump agreed to postpone a possible tariff war until the end of 2020 and to continue with further negotiations.

Boeing to seek new loans to address 737 Max crisis

Boeing is in talks with several banks to secure loans worth $10 billion.

The company is facing increased costs, arising from the two fatal accidents of its 737 Max aircraft.

The Company has so far raised at least $6 billion and is talking to other lenders for further contributions. The total amount could increase if there is any additional demand.

Liquidity is not an immediate concern, but the new debt shows that Boeing is shoring up its finances to cope with this crisis.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

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