The first quarter culminated on a positive note for the Financial Markets. Although somewhat of an anomaly, specially the inverse relationship between Equities & Cryptos in recent times, both segments gained handsomely in tandem. Not just that, the reserve currency of the world (U.S Dollar) also recovered from the post dovish FOMC blues. The Greenback recovered all the losses incurred after the Feds held rates in the last meeting. Moving on to some of the specifics and major news-makers, here is the weekly synopsis of the Global markets.
The agonizing wait for the Bitcoin ETF prolongs as the U.S SEC continues to push the deadlines further and further. However under the stipulated rules, the regulatory body has to reach a decision on the Bitcoin ETF applications from VanEck and Bitwise by May 16, 2019. That could be a significant day in heralding a Crypto summer or killing the current rebound. In a related regulatory move, the Helsinki-based LocalBitcoins – one of the most well-known international P2P crypto exchange will soon come under the supervision of the Financial Supervisory Authority of Finland. The supervisory body will be closely watching the KYC/AML compliance procedures among other oversights. The step is being attributed to a significant move towards legitimizing the financial network. Finally, in trading news, Huobi Derivatives market (Huobi DM) launched the XRP (Ripple) Futures contract. The trading platform which was initially launched in November 2018 gained a lot of popularity with its BTC & ETH futures contracts & crossed $20 billion worth of trading volume back in January.
Coming to the Crypto trading, it was a solid week of gains for the digital assets as most of them gained on the back of Bitcoin taking out the previous high to reach the $4200 milestone. Looking at the BTC hourly chart (above), the crypto kingpin is trading just above the immediate support in the $4140 region. The short-term bullish bias stays intact as long as the $4075 holds. A break of this level would signal a bearish reversal – however, a penetration of the $4500 level could account for meaningful gains towards the psychological level of $5K & beyond. The total market cap stands at $144 billion with BTC dominance of 50.1% at the time of writing.
The World economic stage was dominated by news of the unresolved Brexit issue in Europe and the ongoing trade talks between U.S-China which seem to be headed towards conclusion within the next couple of the months or so. The Chinese delegation is expected in Washington this week to take the talks further. The noise from these two headliners eclipsed another important event coming out of Europe – Italy became the first EU country to be a part of China’s controversial Belt & Road initiative. The Italian authorities tried to calm the extreme reservations of the U.S & its European allies by saying that nothing of strategic importance like the 5G networks is part of this partnership. Wonder if this economic partnership is going to help the peninsula nation with its economic problems.
It was a record-breaking quarter for the U.S stocks. The 13.1% quarterly gain of the benchmark S&P 500 was the best in almost a decade and its best start to a year going all the way back to 1998. This bumper gain wiped out the 14% losses from the last quarter of 2018 and reinforced the resilience of the U.S stocks. Looking at the daily chart of the index (above), it has turned around nicely after a minor correction from the new top it created last week. The support around the 2725 region will act as a bullish reversal line if a correction happens from here – for now it looks good to continue with the gains. In major news, tech giant Apple expanded its bid into the services sector with the launch of video platform called TV+ but the shares slipped as Apple (AAPL) looked to new areas of revenue growth. The ride-hailing giant Uber (UBER) concluding the battle with its biggest competitor in the Middle East region Careem, acquiring the latter for $1.4 billion in cash & $1.7 billion in notes. Another ride hailing giant, Lyft (LYFT) made its debut on the Nasdaq and soared 21% giving it a valuation of $24 billion @ $72/share. Transportation sector is on the move.
The mighty Dollar made a fourth come back this year after making a lower low following a dovish FOMC caused an impulsive fall in the index after its last meeting. The benchmark Forex index has risen for 6 of the past 7 sessions. The MT bullish trend line has continued to provide support. Immediate support lies in the 96.75 region above which the strong bullish trend continues. In individual moves, GBPUSD & EURUSD continued to be pinned down on EU economic slowdown worries & the unresolved Brexit issue. Both pairs have returned to the larger MT bearish trends with any technical rebounds providing an opportunity to sell – beware of volatility with geopolitical issues playing out. NZDUSD caved into a dovish RBNZ rate decision as well and remained under pressure for the most part of the week – 0.6870 will act as a strong resistance for any rebound. And finally, USDCAD turned bearish in the ST with better than expected GDP numbers out of Canada. The larger trend is still bullish, however, immediate resistance @ 1.3380 will keep the gains capped for now.
Looking ahead, it is a busy calendar week for economic data. Some of the important data releases are as follows:
U.S – USD Retail Sales Advance, ISM Manufacturing, ISM Employment, Durable Goods Orders, ISM Non-Manufacturing/Services Composite, Initial Jobless Claims, Change in Non-farm Payrolls
EU – Euro-Zone Retail Sales, ECB Publishes Account of March Meeting, German Factory Orders
UK – GBP Markit/CIPS UK Composite PMI
Canada – RBC Canadian Manufacturing PMI, Net Change in Employment
Australia – RBA Cash Rate Target, AiG Performance of Service Index
China – Caixin China PMI Composite
Japan – Nikkei Japan PMI Composite, Real Cash Earnings
Time to wrap things up here with a comic depiction of how an inverted U.S treasury yield curve has been haunting the investors with a warning about the onset of a possible recession. Happy Trading everyone!