Bits and pieces from last week global markets

Important updates from global markets at the second week of 2018.
By Markets Chimp

1/13/18 7:55 AM


US equities

US equities made it again to a new record high this past week. Dow 30 peaked again at 25,800, with eyes now on the very near 26,000 level! The overall sentiment is extremely bullish. The index was flushed by its financial sector stocks after the earning release of JP Morgan (NYSE: JPM) topped expectations. Besides, we saw a rebound by General Electric (NYSE: GE) which rose for the third week on a row after losing nearly 40% in 2017. The week also witnessed a sell-off on Facebook (NSDQ: FB) as the stock has lost 4% due to a change in Facebook newsfeed policies (Read it here).

Yields

The past week was featured by a big movement on the yields of government bond all over the world, which was accordingly spilt over the entire bond market.

It was first brought over by the Bank of Japan’s decision to trim its monthly bonds purchases. Such a decision caused the yields on government bond, not only in Japan but all over the markets, to rise significantly. Also, the Japanese yen gained notably last week (1.89%) as investors expected a tighter monetary policy by Bank of Japan.

Later during the week, the yield on US Treasuries went up in response to talks over China’s future plans to reduce purchases of US Treasuries. Despite the fact that it was later denied, markets have already captured the sentiment of a bearish bond market, with fears over excess supply.

US dollar

The US dollar index (DXY) shed 1.14% this past week, with losses sending the greenback towards its lowest levels since December 2014. The dollar was hit multiple times against other currency pairs, as it could not phase out the false news over China, besides the arrival of the US retail sales data that came in very disappointing. 

It’s worth noting that after nearly a month since the signing of the tax reform bill into law, DXY is at a 3-year low. Among the notable moves last week versus the US dollar were the British pound, which rose nearly 1.14% based on talks over “Soft Brexit” (Read it here).

Energy

Oil prices scored the fourth weekly gain in a row, with Brent oil prices touching USD70 for the first time since 1 December 2014, before retreating a bit to close the week at USD69.89 to gain 3.22%.

Likewise, WTI oil prices weekly gains were nearly 4.82% at USD64.30 per barrel, which marks the highest price for Crude oil since 8 December 2014.

The story for this week’s gains is different. Not only is the production cut by OPEC held responsible behind the rally, but also the sudden drop in US production helped back oil prices. The drop in US production was associated by the “Bomb Cyclone” winter storm which disrupted US output heavily. The storm resulted also in declining natural gas output, causing gas futures to rally nearly 14% this past week.

Gold

Gold prices continued to soar as it snitched a 4-week winning streak. The case with gold is fairly justified in light of US dollar tumbling. Despite the Fed hikes in 2017 and the expected three hikes in 2018, the US dollar barely received any reinforcement. This, accordingly, helped gold which is starting to restore its “safe haven” role in the marketplace once more.

Cryptocurrencies

The bigger member of the family Bitcoin was experiencing quite a rough week and endured nearly 17% weekly losses based on potential attempts by South Korea to restrict its use. However, Ethereum was a different story, as it soared 35% this past week, outperforming Ripple which had achieved a 22.26% weekly loss! This helped Ethereum again restore its position as the second largest cryptocurrency in terms of market cap.

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