Market Commentary February 12

The Trading Daily Market Commentary features a summary of selected market segments as well as economic matters. Its content of interest is made available to all traders and investors at large

A new week for the market, however same obscurity surrounds America-China trade discussions, a possible second US Government gridlock, and mixed first-quarter forecasts are looming around.

Current week, which we have spoken about as a possibly critical turning point for the stock market, carries with it a deadline for Federal Government to come to a brand-new budget deal - a date required by Trump when he temporarily reopened the Government a just over two weeks ago.

Thus far, no harm has been made to the short-term uptrend coming from the last year's Christmas Eve low levels. However, there were some apparent divergences with technology, utility, industrials, and staples rallying while materials, energy, and financial sector all fell.

The DJI index had another up and down session but closed negative 53 points at 25053 or minus 0.21%. The other main American indices fared better on Monday the S&P500 grew just under 2 points closing,  plus 0.07%, the Nasdaq100 finished the day down 4 points higher or 0.06%, and the small-cap Russell 2000 index closed positive with almost 13 points or plus 0.84%.

Other Market(s)

The market in Japan was closed. Foundation Day is a special day created to signify the remembrance of the founding of a nation. In the position of Japan, this is for the mythological framework of Japan and the induction of the nation's first Emperor Jimmu. 

Therefore, we would like to reach out to our Japanese readers with good wishes. The Yen currency did manage to migrate over 110 handle, suggesting a weaker currency.

The robust US Dollar came about with resumed optimism concerning the America-China trade deal. This copulated with U.K. Brexit has been the fore running headline news so far this year. Upcoming March 1st is the sanctioned deadline day - this is the day where the tariffs will rise from 10% to 25% on all exchanged goods.

It shows that the market(s) have trust that a deal will be reached before the deadline. The core Shanghai composite index was a great example of this rising 1.4% following the long week celebrating the New Year.

The H.K. Hang Seng index also profited 0.7%. The South Korean KOSPI and Aussie ASX200 indices moved somewhat higher, however, in the opposite ways with the latter fading.   

The Eurozone markets were no different. The French CAC40 index increased by 1.09%, while the German DAX30 index which took quite a whipping on Friday managed to rise by 1.07%.

The U.K. proclaimed its growth numbers for the last year, which suggested that the national economy rose only 1.4% down from 1.8% in the previous year (2017). Fingers typically were pointed at messy Brexit fiasco for the skepticism it brings to the negotiations table.  

The FTSE100 index dismissed the headline news and managed to push higher. The Sterling, on the other hand, slid by 0.63% versus the US Dollar following the story about the steepest contraction of Gross Domestic Product since March 2016 was announced - they were much worse than expectations. 

In addition to the construction, the Gross Domestic Product figures, as well as production figures print this was the biggest fall ever since September of 2012. The Euro Dollar decreased by 0.41%, as it seems the America-China trade deal pushed capital flows back into the Greenback.      

Utmost markets have been a bit jittery over the past week or so, and depending on one’s view; there is a principal culprit – the US Dollar.

Example of the best acting assets recently has been the Greenback, and while Inter-market connections are always in flux, a soaring US Dollar has been a serious matter for investors beyond various asset classes.

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