Financial Market Review for January 29 2018 In the first trading session of this week, Asian shares extended their bull run on Monday amid upbeat corporate earnings and strong global economic growth. MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.26 percent, aiming for a 12th straight session of gains. It is up 8 percent for the year so far. Japan’s Nikkei rose 0.1 percent as the yen eased a little, while South Korea notched a record. Hong Kong’s Hang Seng has been the best performer for the year so far with a rise of almost 11 percent, while Shanghai blue chips ran into profit-taking on Monday. Wall Street has likewise been on a tear. Just last week, the Dow rose 2.08 percent, the S&P 500 2.22 percent and the NASDAQ 2.31 percent. The stock market is heading into its most exciting, and potentially most volatile, week of the New Year as earnings season picks up the pace and the Federal Reserve convenes its first meeting of 2018. The combination of corporate results and the Fed could make for some lively action in a market that has largely remained tranquil even as it continues to set fresh records and hit new milestones. There are 125 S&P 500 companies, including 10 Dow components, reporting next week, and they include technology behemoths that tend to generate the most buzz and interest among investors: Facebook Inc. FB, +1.34% Microsoft Corp. MSFT, +1.87% Google parent Alphabet Inc. GOOGL, +0.46% Amazon.com Inc. AMZN, +1.75% and Apple Inc. AAPL, +0.23% The five together have a market capitalization of $3.6 trillion—on par with Germany’s gross domestic product—and are so dominant and powerful that they not only impact regional economies but influence how we function day to day. In the currency markets, The U.S. Dollar took a beating last week in reaction to negative comments from a high-ranking U.S. government official. This news fueled volatile rallies across the board in the major currencies. The dollar closed lower against a basket of currencies for the seventh straight week and is now down 3.20% for the year. March U.S. Dollar Index futures settled at 88.891, down 0.336 or -0.38%. The aggressive selling was fueled by Treasury Secretary Steven Mnuchin who said a weaker greenback would help U.S. trade balances in the short-term. President Trump tried to put a lid on volatility and keep dollar bears in check when he told CNBC that he wanted a “strong dollar,” however, this wasn’t enough to stop the price slide. There were only two major economic reports last week. U.S. fourth-quarter gross domestic product increased at a 2.6 percent annual rate, held back by a modest pace of inventory accumulation. Economists had forecast a 3 percent increase.
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Financial Market Review for January 29 2018 The Commerce Department said on Friday that orders for long-lasting manufactured goods rose 2.9 percent in December, the fastest pace since June and another sign of strength for American industry. Economists had forecast a gain of 0.9%. The previous forecast was revised higher to 1.7%. Core Durable Goods Orders rose 0.6%, beating the estimate of 0.5%. The previous month was revised upward to 0.3%. Last week, the Bank of Japan held its monetary policy steady, voting to maintain the short-term interest rate at minus 0.1 percent and the target for the 10-year government bond yield at zero percent. In an outlook report accompanying the latest monetary policy statement, the BOJ said it is maintaining its forecast for inflation to hit 2 percent in the fiscal year 2019/2020. But it now expects core consumer prices to grow 0.8 percent in the fiscal year 2017/2018, lower than the previous projection of 1.1 percent. Consumer prices are expected to be up by 1.8 percent in fiscal year 2018/2019, unchanged from the previous forecast, the BOJ added. On Friday, the dollar slipped to its low for the week against the Japanese Yen after Bank of Japan Governor Haruhiko Kuroda said the central bank expects the economy to continue growing at a moderate pace and inflationary expectations are picking up slightly. The New Zealand Dollar finished the week sharply higher despite some strong mid-week volatility, triggered by weaker-than-expected quarterly inflation data. Last week, the New Zealand government reported that growth in New Zealand’s consumer prices unexpectedly slowed in the final quarter of 2017 as a sharp drop in the price of retail goods outweighed the effect of more expensive gasoline and air fares. The consumer price index increased 0.1% from the previous quarter and 1.6% from a year earlier, Statistics New Zealand said Thursday, following a 0.5% rebound in the third quarter that brought the annual gain to 1.9% on year. Economists were looking for a 0.4% increase from the previous quarter, and remain steady at 1.9% compared with the previous year. The euro did run into a little profit-taking in Asia on Monday which nudged it to back to $1.2412 and away from a three-year peak of $1.2538 last week. Finally in the commodity markets, Gold prices continued to trade and consolidate in the range between the 1345 and 1360 regions over the last few days. We had mentioned this in our forecasts over the last few days where we had said that this sort of consolidation and ranging was likely to happen for the short term as the dollar bulls and bears battle it out for control of the dollar. Over the past couple of days, we have seen some strength in the dollar all across the board and that has forced the gold prices to move back into the lows of the range in the 1345 region. The prices are expected to find some good support in this region over the next few days as the market and the traders wait for the end of the month.
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Financial Market Review for January 29 2018 Oil prices have dipped towards the $66 region on profit taking and some strength from the dollar which is seen all across the markets. We are seeing some signs of fatigue from the bulls and this is likely to affect the prices and bring in a correction towards the $65 region. The prices seem set to move towards the $70 region but the price action suggests that it might take longer than expected. Silver prices have also been trading in a solid manner over the last few days and the steady trading continues today as well. The prices seem to be caught in a range between the $17 and $17.5 regions for now. View our full economic calendar for a daily roundup of major economic events.
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