NOTABLE MOVES
As of Sat, Jan 19, 08:00 Singapore Time zone UTC+8
USDJPY, +0.49%, $109.78
EURUSD, -0.31%, $1.1363
GBPUSD, -0.80%, $1.2882
USDCAD, -0.17%, $1.3254
AUDUSD, -0.36%, $0.7168
NZDUSD, -0.31%, $0.6743
S&P500, +1.32%, 2,670.71.
Nasdaq, +0.98%, 6,784.61.
Nikkei Futures, +1.38%, 20,630.0
CURRENCY MARKET WRAP
- Industrial production increased 0.3% in December (consensus 0.2%) on top of a downwardly revised 0.4% increase (from 0.6%) in November. The capacity utilization rate rose to 78.7% (consensus 78.6%). The key takeaway from the report is that there was notable strength in manufacturing output (hard data), which saw its largest gain since February 2018 and helped alleviate some of the concerns surrounding the softening ISM Manufacturing Index (and soft survey data) for December.
- The yield on the 2-yr Treasury note rose five basis points to 2.61%, and the yield on the 10-yr Treasury note rose four basis points to 2.78%. The U.S. Dollar Index increased 0.3% to 96.37.
- Sterling fell on Friday ahead of the government’s release of Plan B. Based on the options for plan B, May has little choice but to ask the EU for more time, which is why by today, Article 50 should be extended. It then goes to vote by EU member states who are widely expected to approve the request. However it won’t be an open ended extension. The European Parliament’s Brexit coordinator Verhofstadt suggested that he’s open to an extension to May and not beyond that because he doesn’t want Brexit opinions to spill over to European parliamentary elections.
STOCK MARKET WRAP
- The S&P 500 gained 1.32% on Friday, boosted by trade talk optimism and waning concerns about the U.S. economic outlook. Friday’s gains extended the benchmark index’s weekly gain to 2.9%.
- Friday’s presumed catalyst was a Bloomberg News report highlighting China’s willingness to eliminate the U.S. trade imbalance. According to the report, China made an offer during trade negotiations earlier this month to boost the amount of U.S. imports, such that the trade balance with the U.S. would be $0 by 2024. It’s not the news itself that sparked an extended rally, but the tenor of recent trade headlines that have fed hope for a meaningful trade deal. It is evident that the market is beginning to price in the positive effects of a trade deal, which, if struck, should bode well for global growth and corporate earnings prospects.
- In other corporate news, Tesla (TSLA 302.26, -45.05) dropped -13.0% following plans to reduce its full-time staff by approximately 7%. The company hopes that a reduction can help produce its Model 3 at a more affordable price point for the masses.
BLOCKCHAIN & CRYPTOCURRENCY WRAP
Former Governor of French Central Bank Joins Board of Directors of Blockchain Firm Setl
Founded in 2015, Setl is a financial company with a focus on blockchain technology. Setl has built a blockchain-based infrastructure for institutional payments and settlements, with a reported capacity of over 1 billion transactions per day. Setl has hired former governor of the French central bank Christian Noyer as a member of its board of directors. According to the most recent announcement, Noyer has joined the board of directors of Setl, bringing a “wealth of experience in the financial, regulatory, economic management and central banking world.” Noyer’s professional experience includes serving as Vice President of the European Central Bank, Governor of the Banque de France between November 2003 and October 2015, as well as service at the Treasury in the French Ministry of the Economy and Finance.
ICOs Raised $160 Million in First Half of January
Initial coin offerings (ICOs) completed in the first half of January have raised around $160 million. ICOs completed by Jan. 15 have managed to raise about 33 percent of the combined amount raised in the previous month of December. Half of that sum was secured by just one project. According to ICObench, the number of fundraisers that are set to take place in January is more than 150, a figure similar to the past seven months, excluding December. In January, the combined hard cap, the maximum amount of money that a project can secure from investors during an ICO — amounts to more than $4 billion. As per the report, three fundraisers out of the five largest this month have reached or almost reached their hard caps. ICObench also reported that the number of ICO listings has continued to decline in January, suggesting that the phenomenon is losing its popularity. In terms of amount of funds raised, Canada has been leading during the first half of the month, with a combined figure of $80 million. However, when it comes to the actual number of projects, the Netherlands ranked first.
Ethereum Team Lead: Constantinople Hard Fork to Activate in Late February
Core developers of Ethereum (ETH) have postponed the activation of the Constantinople hard fork until late February. The upgrade is now set to be implemented at ETH block 7,280,000, as announced by a team lead at Ethereum. Szilagyi explains that the activation will take place at block number 7,280.000, which is expected to be mined on Feb. 27, 2019. The upgrade will reportedly be implemented as “a single fork on mainnet and a post-Constantinople-fixup fork on the testnets to get them back in line feature wise with the main network.” The vulnerability allows a potential attacker to steal cryptocurrency from a smart contract on the network by repeatedly requesting funds from it while feeding it false data about the malicious actor’s actual ETH balance. In order to patch the loophole, the launch of the upgrade had been postponed until further notice. The upcoming Constantinople hard fork is an upgrade to the ETH network, which encloses separate Ethereum Improvement Proposals (EIPs) in order to soften the transition from the current proof-of-work (PoW) to the more energy efficient proof-of-stake (PoS) consensus algorithm.