Market In-Review: Markets Set New Highs as Risk-on Resumes

■ U.S. markets advance on Trump’s tax cut wording

■ Dow Jones pulls ahead of 20K point mark, adding 1% weekly

■ Bitcoin drops over USD 100 as China exchanges halt withdrawals

■ Oil recovers initial losses as OPEC deal proves resilient

■ EUR/USD recedes to 1.0643, on Le Pen victory woes

Optimism, often a rare commodity in the markets, proved fairly abundant in last week’s session, led by president Trump stating that the administration is planning a corporate tax announcement over the next few weeks. U.S. equity investors have been particularly fortunate this week, in what appears as a fairly strong earnings season. The S&P 500 climbed to yet another record of 2,316.10 points, as it gains 0.8% weekly. The Dow, similarly added a percentage point for the week, to 20,269.37 points.

Positive sentiment was also boosted globally, after president Trump was said to back the “One China” policy, in a phone call with Chinese president Xi Jinping. Also on the Chinese front, January Trade Balance data, released on Friday, pointed to a 16.7% annual gain of imports to the country, far exceeding December’s +3.1%. The Hang Seng Index opened Friday’s session adding an excess of 0.8%, but later moderated to more modest gains. Weekly increase for the index summed to 1.9%, which was somewhat toned down by a 0.9% depreciation of the Yuan vs. the Dollar.

Gold prices did suffer a significant selloff between Thursday and Friday, amid the global search for yield. A recovery towards the weekend, however, has aided the metal of kings to a 1.1% weekly increase. The same, however, cannot be said for Bitcoin, with the crypto-currency suffering a major selloff on Thursday, leading it to drop some USD 100, on news that Chinese exchanges have disabled withdrawals after meeting with the People’s Bank of China, a move hinting that the central bank is pushing to limit bitcoin activity. Here too, however, a small recovery was made towards the end of the week, seeing prices recover to USD 1,004.03.

The same yo-yo movement was recorded at oil market. Aside from the increase of China’s imports hinting of more upcoming demand for commodities, Friday also saw the International Energy Agency report OPEC and non-OPEC producers have curbed supply in January by approx. 1.5 million barrels per day. Having lost nearly 5% between Monday and Tuesday, later gains aided oil to end the week close to flat.

EUR’s rally comes to an end

After strengthening by approx. 4% vs. the Dollar since January’s lows, the Euro’s rally came to an abrupt end this week. Concerns that French conservative candidate Marine Le Pen may prove victorious at the upcoming presidential elections in April, were coupled with Le Pen presenting a plan to leave the Eurozone. Weekly declines for the EUR/USD pair summed to 1.3%, ending at 1.0643.

On the positive end, the weaker Euro aided some local equity markets, with the DAX adding about 1% between Wednesday and Friday. Having opened the week with close to a 2% dive, the CAC 40 also saw gains towards the weekend, ending the session close to flat.