Daily Analysis: Markets Mixed as Commodities Remain Under Pressure

01:23 07/12/2017

Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2634 0.19%
DAX 12998 -0.35%
WTI Crude Oil 56.02 -1.72%
GOLD 1266.00 -0.11%
Bitcoin 13,897 16.45%
EUR/USD 1.1796 -0.23%

Donald Trump made headlines with yet another controversial decision today as the POTUS recognized Jerusalem as the capital of Israel, sparking strong reactions across the globe. The move will likely raise tensions in the Middle East, and furthermore, Mr. Trump urged Saudi Arabia to cease the blockade of civil war-torn Jemen, where a humanitarian crisis is quickly deteriorating. Despite the newsflow, crude oil and gold both had a negative session, as commodities remained under pressure, with strong selling in Asia setting the tone for the day.

Stocks remained in a slightly chaotic trading range, as the global tech sell-off that also had its roots in Asia, eased and the US indices finished close to unchanged after a choppy session. Despite the recent correction, the major US benchmarks are still very close to their all-time highs, while their European and Asian peers are well below the record levels. Small caps lagged the broader market amid another round of tax-bill related speculation, with rumors of a 22% corporate tax rate instead of the widely expected 20% surfacing.

Russell 2000 (Small Cap Index), 4-Hour Chart Analysis

The trends in bonds have been in the center of attention even, as some cracks are appearing on the wall of confidence that central banks built up by the QE programs. The US yield-curve flattening returned in earnest this week, as long-dated treasuries got bought while the short-dated bonds experienced selling.

A Week of Buying in TLT (Long Dated Bond ETF), 4-Hour Chart Analysis

Cryptocurrencies

The relentless rally of Bitcoin entered its next phase today, although this time around altcoins were mostly left out of the buying. The most valuable coin leaped across $13,000 and $14,000 as the unprecedented advance pushed the total market cap over the $240 billion mark, with the segment overtaking J.P. Morgan in the process (looking at you Mr. Dimon).

BTC/USD, Daily Chart Analysis

While the current rate of the advance is clearly unsustainable, and another sharp correction is very likely in the coming period, the public recognition of cryptocurrencies is at previously unimaginable levels. IOTA and Monero were the only major coins that could follow BTC in the early stages of the break-out, while Stellar Lumens also made headlines, but the altcoin sell-off in late trading caused a sharp correction in the leaders as well, with only Bitcoin continuing higher.

IOTA/USD, 4-Hour Chart Analysis

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
2:30 AUSTRALIA GDP 0.6% 0.7% 0.9%
15:15 US ADP Employment Change 190,000 189,000 235,000
15:30 CANADA BOC Rate Decision 1.00% 1.00% 1.00%
15:30 CANADA BOC Statement
17:30 US Crude Oil Inventories -5.6 mill -3.2 mill -3.4 bill

Key Economic Releases on Thursday

Time, CET Country Release Expected Previous
2:30 AUSTRALIA Manufactruing PMI 1.37.bill 1.60 bill
10:30 UK Halifax HPI 0.2% 0.3%
15:30 US Unemployment Claims 239,000 238,000
17:00 CANADA Ivey PMI 6.2% 6.3%
18:00 EUROZONE ECB President Draghi Speaks

Featured image from Shutterstock