Stocks surge higher into the weekend

Summary:

• Stocks rally on US-China trade hopes

• What to expect on the gold market in the next quarters?

• Thailand’s stock exchange eyes crypto

• Surprise jump in inflation boosts CAD; NZDCAD at key level

• Where next for the pound as Brexit saga wrangles on?

Some positive news on the trade front has caused a strong move higher on Wall Street with US stock markets moving up to their highest level in 5 weeks. The catalyst for this latest rally comes after Chinese officials were reportedly said to be open to eliminating the trade imbalance with the US, something which has been the root cause of the tensions between the world’s 2 largest economies. It’s not just the US that has got a lift from this with stocks in London also on the rise, and the FTSE has managed to chalk up a 4th consecutive week of gains after getting caught up in this Friday rip higher to end back not far from the 7000 level. The German Dax has also rallied strongly and is up more than 2% on the day and back above the 112000 level.

Investors from the gold market cannot say that 2018 was a good year. Price of the precious metal traded even 13% lower at one point but solid end of the year helped recoup part of the losses and in turn gold finished year 8% lower. Gold trades 8% above the local low from August but the beginning of 2019 was marked with relative underperformance. Gold price is virtually unchanged in comparison to two weeks ago. Having said that, the question remains whether gold will be able to push higher in 2019 or are we set to experience continuation of sideways trend started in 2014? Shares of Barrick Gold have performed better compared to other indices tracking major gold producers. The most recent falls could be tied to uncertainties with regard to some takeovers the company made. However, at the current levels this company looks attractively. Source: Bloomberg.

Friday’s trading has not brought any more spectacular movements looking at top cryptocurrencies. The largest three virtual currencies - Bitcoin, Ripple, and Ethereum - have been trading quite faintly thus far. According to CoinMarketCap, the capitalization of the whole cryptocurrency market stands around the $122 billion mark, and the largest virtual currency Bitcoin accounts for roughly 52.5% of this value. The Stock Exchange of Thailand (SET) wants to get a digital asset operating licence from the country’s Ministry of Finance, and to launch a new exchange becoming a digital asset exchange, as the Bangkok Post reported yesterday. Pattera Dilokrungthirapop, the Vice-Chairwoman of the SET’s Board of Governors, said that the stock exchange wanted to catch bigger and bigger investment trend of digital assets, as the Thailand’s newspaper wrote. Moreover, Mrs. Dilokrungthirapop also added the Stock Exchange of Thailand wanted to speak with its members to successfully launch the mentioned digital asset exchange.

The main event on the economic calendar this afternoon has come from Canada with the latest look at price pressures in the country showing an unexpected rise. The consumer price index (CPI) Y/Y rose to +2.0% from 1.7% previously, and this amounts to a positive surprise for the Canadian dollar. Looking at the monthly figure it appears that the gain came largely due to a surprise jump in services inflation which rose by 0.5% M/M, while the Goods equivalent came in at -0.7% M/M. Perhaps surprisingly, energy declined by 3.7% M/M, despite the bounce we saw in the oil price towards the end of December, so the beat in the headline can’t really be explained away as being heavily influenced by the oil markets. NZDCAD is a little higher on the day but not far from potentially key support around 0.8915. A clear break below there could be seen as taking out the neckline in a head and shoulders formation which would open up the chance for a much larger decline.

The past week has been arguably the most tumultuous for UK politics since the EU referendum in 2016, with the Brexit saga continuing to wrangle on with seemingly little progress being made. As was widely expected PM May’s deal was met with a resounding rejection in the house of commons, with the margin of the parliamentary defeat the largest ever suffered by a government. Despite all the background noise, it’s been a pretty good week for the pound, with the currency rising against all its major peers. The markets are seemingly pricing in a shift towards a softer version of Brexit and downplaying the chances of a no-deal. You can read more here.