European equities join the risk-on rally
11 Nov 2019European equities also rose last week bolstered by US equity markets and an improvement in third quarter earnings. The Stoxx 600 Index rose for the fifth week in a row. Among 80% of the constituents that have reported on the Stoxx 600 Index, 50% have surpassed consensus estimates both on top line revenue growth and bottom line earnings growth. This is the highest percentage in the last 6 quarters.
Haven commodities lose steam
11 Nov 2019Gold hit a three-month low last week at $1464/oz on the back of a broader risk-on sentiment in the markets. Flows out of gold funds primarily drove the price down even though speculative positioning in the precious metal remains elevated. Silver, on account of its strong correlation with gold, had a similar trajectory and traded around $17/oz- just slightly above its three-month low.
US stocks rally further
11 Nov 2019US equity market indices including the Dow Jones, the S&P 500 Index and the Nasdaq all posted record highs last week. Optimism surrounding the completion of the first phase of the US-China trade deal, the pickup in long term US Treasury yields and better than expected earnings release for the third quarter provided a tailwind to US equity markets.
Cautious trade optimism lifts cyclical commodities
04 Nov 2019Industrial metals and agricultural commodities, which have meaningfully been hit since the advent of US-China trade tensions, have found support in the last two weeks from optimism returning in market sentiment regarding an upcoming deal between the two countries. A statement from the office of US trade representative Robert Lighthizer noted that he and Treasury Secretary Steven Mnuchin “had a constructive call” with China’s Vice Premier Liu He on phase one of the US-China trade agreement.
Saudi Aramco Initial Public Offering (IPO) launched
04 Nov 2019Saudi Arabia launched the IPO of Saudi Aramco on the local Tadawul exchange in a bid to raise as much as $60bn with a sale of up to 3% of the company. The process has been delayed in recent months by questions over the valuation of Saudi Aramco, with bankers and analysts estimating $1.2tn to $1.5tn to be more realistic than the Saudi government’s desired valuation of $2tn. The kingdom may therefore be keen to increase oil prices to achieve a higher valuation.
US stocks rose for a fourth week in a row
04 Nov 2019The large cap S&P 500 index and the technology heavy Nasdaq composite Index attained new intraday and closing highs on the back of a strong monthly jobs report, healthy momentum from third quarter earnings and US Federal Reserve’s third interest rate cut for the year. The CBOE Volatility Index (VIX) touched a four-month low in response to the improvement in sentiment.
Gold surges past $1500/oz again
01 Nov 2019Gold ended last week higher and went past $1500/oz again as economic data from both US and China came out soft fuelling demand for the haven asset. Uncertainty surrounding Brexit and geopolitical risks in the Middle East continue to keep gold relevant and in favour from investors. This week, markets are expecting the US Fed to cut rates again. This monetary policy accommodation is further supportive of gold prices.
EU agrees to a flexible UK extension until end of January
28 Oct 2019The EU has agreed to extend the Brexit deadline to the end of January 2020 giving the UK the possibility to leave earlier if Boris Johnson’s deal with the EU is ratified by the parliament. The UK parliament had earlier voted to support the general principles of the deal but to slow down the timetable beyond the previously stipulated October 31st deadline. The UK parliament is now expected to agree on calling a general election in December.
Healthy earnings drive US equities
28 Oct 2019US markets ended last week higher helped by the Q3 earnings season. About 40% of S&P 500 companies have reported to date with 82% beating earnings expectations by an average of 4.4% and 64% beating on sales. The technology sector led by the Nasdaq Index outperformed the broader market, while small cap market led by the Russell 2000 Index outpaced the S&P 500 Index (which is dominated by large cap stocks).
Boris Johnson’s Brexit deal turned down by UK parliament
21 Oct 2019Sterling jumped to its highest level in 5 months after leaders of the 27 EU countries endorsed a new Brexit deal with Prime Minister Boris Johnson. On Saturday the UK Parliament met in a special session to vote on the agreement and parliament voted against the deal as expected. The government has now asked the EU for an extension for talks beyond October 31 Brexit Deadline which is likely to result in either a new election or a second referendum. PM Johnson however intends to make a second attempt to push the deal through parliament this week.