NOTABLE MOVES
As of Tues, Dec 18, 08:00 GMT (UTC +08:00)
USDJPY, -0.27%, 112.52
EURUSD, +0.26%, $1.1376
GBPUSD, +0.21%, $1.2654
USDCAD, +0.37%, $1.3455
S&P500, +0.01%, 2,546.16
Nasdaq, +0.45%, 6,783.91
Nikkei Futures, -1.82%, 21,115.45
CURRENCY MARKET WRAP
- The Federal Reserve will conclude a two-day policy meeting on Wednesday, with investors anxiously anticipating the central bank’s interest rate decision and policy statement. Markets are expecting a rate hike, but the certainty for the central bank and Wall Street ends there. Trump’s relentless campaign of pressure on policy makers to halt the rate hikes has further clouded the picture, warning them to avoid “yet another mistake” just hours before the two-day meeting began.
- Oil prices dropped over 1 per cent yesterday, falling for a third straight session, as reports of inventory builds and forecasts of record shale output in the United States, currently the world’s biggest producer, stoked worries about oversupply. Concerns about future oil demand amid weakening global economic growth and doubts over the impact of planned production cuts led by the Organisation of the Petroleum Exporting Countries (OPEC) were also pressuring prices. The dollar fell against most G-10 peers.
- Chinese President Xi Jinping addressed his nation yesterday to commemorate the 40th anniversary of China’s “reform and opening up.” He struck a relatively defiant tone in response to calls for changes to the economy, warning other nations not to impose their will on China or interfere in its development. “No one is in the position to dictate to the Chinese people what should and should not be done,” he said in apparent reference to demands from Washington and other capitals that China should undo some of its protectionist economic policies (even as Chinese negotiators have quietly offered concessions). Mr. Xi also used the speech to defend policies that he had forged over the past six years to make the Communist Party even more powerful, strengthen the state-run sector of the economy while allowing private business to grow, and put China’s stamp on international affairs. He is quoted as saying that “China’s development will never constitute a threat to any other country… No matter what level of development China reaches, it will never seek hegemony.”
- In Brexit, the cabinet has agreed to implement the government’s no-deal Brexit plans “in full” and that ministers would “ramp up” no-deal planning, with departments expected to make it their main priority – including reserving ferry space for supplies and putting 3,500 armed forces personnel on standby to deal with any disruption. Businesses and individuals are also being told by the government to prepare for a no-deal Brexit and a publicity campaign will be launched to provide people with the information they need.
STOCK MARKET WRAP
- Volatility haunted U.S. stock markets again Tuesday as stocks swung dramatically between highs and lows before holding on to a slight gain. Market participants pointed to growing fears of a government shutdown, a slide in oil prices and worries that the Federal Reserve is going too far with its rate-hiking plans as reasons for the weak action. The S&P 500 closed just above its 2018 low Tuesday as stocks struggled to keep a rebound alive throughout the session.
- Stock of energy companies fell across the board as oil prices sank more than 7 percent to a 15-month low on Tuesday as the U.S. and Russia continue to pump at record levels ahead of planned output cuts by OPEC and its allies.
- Shares of Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX) and Google parent Alphabet Inc (GOOGL), collectively known as FAANG, gained between 1.3 percent and 3.1 percent.
- In other corporate news, FedEx (FDX) shares dropped nearly 6 percent during after hours trading Tuesday as the company lowered its full year 2019 earnings guidance but beat expectations this quarter. Adobe Systems Inc. (ADBE) on Thursday reported a 22.8 percent rise in quarterly revenue, helped by higher subscriptions for its flagship Creative Cloud suite of software that includes Photoshop. Micron Technology (MU) shares fell nearly 8 percent in the extended session after the company missed revenue expectations. Boeing Co. (BA) rose 3.8 percent after three days of losses as the aerospace company said it was raising its dividend and increasing share buybacks to US$20 billion from US$18 billion.
BLOCKCHAIN & CRYPTOCURRENCY NEWS
The Japanese Financial Services Agency (FSA) has placed cryptocurrencies into a new legal category called “crypto-assets.” By classifying cryptocurrencies like Bitcoin (BTC) this way, the government reportedly “hopes that traders will no longer purchase them believing that they are legal tender recognized by the government.” On Friday, an FSA advisory panel filed a report requesting the term “virtual currency” be changed since, according to the panel, it could confuse people into believing the asset is legal tender in the country. Japan’s FSA is set to introduce new initial coin offering (ICO) regulations to protect investors from fraud. Business operators conducting ICOs will reportedly be required to register with the FSA.
According to Chief Executive Officer of Tagomi, Jennifer Campbell, the company aims to ease the operational challenges related to trading digital assets. The company caters to clients that “require institutional operational standards.” Tagomi is an electronic brokerage for digital assets. The firm’s offerings include cross market execution, capital management, post-trading reporting, as well as settlement and custodial services. The firm reportedly raised $16 million from such industry players as Peter Thiel’s Founders Fund that invests in technology companies, seed-stage investment fund SV Angel, private equity and venture capital firm Collaborative Fund, and others. Founders Fund initially announced its plans to invest in Tagomi in May 2018, as reported by WSJ. Thiel reportedly said then that Bitcoin (BTC) could become the digital equivalent of gold, as well as a potential hedge on the market.
Allegedly, the People’s Bank of China (PBoC) has registered 78 digital currency patents, of which 44 are blockchain related, since at least 2016, ranking the PBoC as the fifth most prolific patenter in the space. The PBoC has also been actively hiring developers and economic specialists for its Beijing-based Digital Currency Institute, whose stated goal is to issue and distribute a blockchain-based currency. The project was originally conceived by the PBoC’s deputy governor Zhou Xiaochuan, with the intention of “protecting” China from Bitcoin, an asset it couldn’t control. The current Deputy Governor of the Bank, Mr. Fan Yifei, announced earlier this year that once implemented, the Chinese-controlled cryptocurrency would replace the country’s fiat currency and would ultimately help the bank curtail risks associated with money laundering and other crimes.