It was a tale of the 3 Central banks, further tariffs impositions, a strained G-7 meeting & Geo political events last week for the financial markets. Quick recap: U.S. Equities still undecided on the direction after reaching new highs last week, USD Majors tanked after a dovish ECB decision & Crypto meltdown continues. Now let’s move on the nitty-gritty of things.
The Crazy Cryptoverse
Every major event in the markets is always associated with some kind of external event happening and the recent meltdown of the digital coins that started last Sunday was no different either. A hack at the smallish South Korean exchange (Coinrail) apparently precipitated the move, but if you ask me the Crypto coins just started off another bear run after completing the recent consolidation. I will show how with the Bitcoin chart that follows but first another startling news story that actually has been doing the rounds for some time now is of the “Price Manipulation” one where Bitfinex & Tether are deemed to be the main culprits. You can read more about it here.
Coming out of the rumors and media frenzies let’s take a look at the daily chart of the Crypto kingpin Bitcoin. Pretty evident from the chart that there is a clear bearish momentum to it. A secondary bearish trend looks to be ensuing here after the first completing the rebound from the first bearish trend. The price seems well capped under the ST Resistance @ $7800 level a break of which will ease the selling pressure but only a convincing break of the Psychological level of $10,000 is needed to flip the bias back to the bullish side. Having said that, move this week doesn’t seem to be painting a rosy picture for the digital coins in the short-term. Looking at the CCI30 Crypto index the value sits @ 6252.51 from 7684.65 last week with falls of 58.61% and 15.51% for YTD and MTD respectively at the time for writing. Also the MarketCap for Cryptos dropped significantly to $281.7 billion from $342.1 billion this week.
Some of the Major headlines from the Cryptoverse last week:
- CFTC Subpoenas Leading Exchanges for Trading Data
- Crypto Exchange Binance to Offer Fiat-Crypto Trading via Malta-Based Platform
- Coinbase Index Fund Now Open & also Announces Ethereum Classic Support
- New Trade Organization to Promote Blockchain Established in Switzerland
- U.S. SEC decides not to label Bitcoin & Ethereum as securities
Here’s an interesting graphic from the digital world:
FOMC rate hike was surprisingly a non event last week but what followed the ECB dovish hold broke the back of USD Majors with the Dollar index spiking and undoing the correction from the recent highs within 24 hours. This unwarranted strength by the Greenback is causing major headaches for the emerging market currencies. We saw rate hikes in India, Turkey & Pakistan while Thai Baht & Argentina Peso continue to be under pressure against the USD as the emerging markets and developing countries try to halt the slide of their currencies against the might Dollar. Major currency crisis brewing in Venezuela where Prices have risen almost 24,600% in the 12 months ended May 31, according to the country’s opposition-led National Assembly.
Moving on to the Dollar Index it was a vertical ascend in the form a sharp spike to end the week and to top it all it just happened in the matter of one day. As anticipated last week in my blog the Dollar held the upper boundary of the support & bounced off 93.20 level to finish the week close to the previous resistance high of 95.00. Seeing this mammoth move it doesn’t look like Greenback is any kind of mood to give up the current trend any time soon barring any major Risk on sentiment returning.
Looking at the individual moves in the USD majors it was nothing less than free falls. EURUSD: 300+ pips, USDCAD: 250+ pips, GBPUSD: 230+ pips, AUDUSD: 150+ pips – As you can see it was just a Dollar strength story. Euro continues to be the weakest with the mounting concerns of a Euro region slowdown with weak data. USDCAD is in news with the recent spats between the U.S. & Canadian Administrations over the G-7 fallout & NAFTA worries – seems like it is going to be an eventful summer for this pair. A look here the debt levels of different markets – although it looks Emerging markets are faring better than the Advanced economies, wonder what the currency crisis is going to do to these numbers.
Some news the Equity markets had to digest last week with the week starting early after an extremely uncomfortable discussion between the G-7 countries where the waves of Protectionism seems to be flaring up. And the week ended no better as well with U.S. slapping another $50 billion worth of tariffs on Chinese goods and preparing another list to impose $100 billion more to twist its arm further. Of course China retaliated with $34 billion of duties on U.S. goods almost instantly. I wonder who is going to cave in first in this Cat & Mouse game. Before I move on to the technical Analysis here’s an interesting statistic that I cam across:
World Cup fever may spell a dull streak for the markets. An analysis of 15 global stock exchanges by the ECB and Dutch central bank found that trading volumes drop by roughly 33% from normal levels during the games. The research also found median trading volume was 55% lower than normal when the national team from an individual exchange’s country was playing.
It was an indecisive week for the U.S markets but they shrugged off most of the bad news to still be on bullish side of things. Friday was a bit of a ride with the Tariff news but stocks rebounded towards the end; to close with a nice hammer as shown – looking constructive also with the massive accumulation in volume. There is a major resistance in the 2800 region which would clear the path of all time highs as evident in the S&P 500 chart above. Tech sector continues to outshine & outpace the general market. Wrapping up last week all three indices were showing divergent numbers — DJIA (-0.89%), S&P500 (0.02%), NASDAQ (1.32%).
Some News makers last week:
- Demand for Dutch fintech firm Adyen (ADYEN) saw shares surge over 100% at the market open in Amsterdam, in what was one of Europe’s biggest technology IPOs in recent times. The stock hit a high of €503.9, giving the company a valuation of €14.8B. Adyen is a payments processing firm that works with customers including Netflix (NASDAQ:NFLX), Facebook (NASDAQ:FB) and Spotify (NYSE:SPOT), but also sells point of sale systems for physical stores.
- It’s the largest-ever investment by a carmaker in the global ride-hailing sector. Toyota (NYSE:TM) is pouring $1B into Southeast Asia’s Grab (GRAB) as CEO Akio Toyoda attempts to ward off risks from self-driving and shared vehicles.
- G20 energy ministers are gathering in southern Argentina to form a communique on energy and climate-related goals, which will be submitted to G20 heads of state before their next meeting in November.
Here’s an info graphic for the for highest paid CEOs you may find interesting:
List of IPOs expected to price this week: Eidos Therapeutics (EIDX) on June 19; Essential Properties Realty Trust (EPRT), Aptinyx (APTX), Avrobio (AVRO), I3 Verticals (IIIV), Xeris Pharmaceuticals (XERS), ElectoCore (ECOR), Magenta Therapeutics (MGTA), Kezar Life Sciences (KZR) on June 20; Autolus Therapeutics (AUTL) and DERMAdoctor (DDOC) on June 21.
And to end it all a fun fact from history last week (#Investopedia):
June 13, 2016: @Microsoft announced a $26.2 billion deal to buy LinkedIn at $196 per share. It marked Microsoft’s biggest acquisition in its 43-year history. With the recent acquisition of GitHub, Microsoft now owns two of the most powerful networking platforms.
And don’t forget to smile: