Weekly market update : Markets rise despite signs of a slowdown in the global economy

Monday February 25

Weekly market update

With good corporate earnings and further progress on the international trade front, financial centers have gained momentum this week, despite signs of a slowdown in the global economy.

Indexes Over the past week, most indices have recorded positive weekly performances. In Europe, the CAC40 gained 1.1%, the Dax 1.4% while the Footsie lost 0.7%. Within the peripheral countries of the euro zone, Portugal stabilised (+0.07%), Spain increased by 0.9% and Italy by 0.3%. In Asia, the Nikkei recorded a weekly performance of 2.5%. The Shanghai Composite won 4.5% and Hang Seng 3.3%. In the United States, the Dow Jones rose by 0.35%, the S&P500 by 0.3% and the NASDAQ100 by only 0.1%. In a very symbolic way and characterizing the current climate, the semiconductor indicator (Sox) returned to its graphic peaks, thanks to a clear recovery over the last two months. semiconductor index

Commodities Oil ended up significantly higher this week, supported by OPEC's efforts to limit extraction. The market particularly welcomes the drop in production of the world's largest exporter, Saudi Arabia. The WTI price rose by 3.3% on a weekly basis to around USD 57.6 per barrel. Gold and silver recorded a positive weekly performance, partly due to a decline in the US dollar. Gold continued to rise to USD 1330, while silver stabilized around 15.8 USD. Optimism persists in the copper market, with operators paying for the progress of the Sino-American trade negotiations. Copper gained nearly 3.2% over the week at USD 6391 per metric tonne.

Equities markets Altium Limited: a fast-growing American-Australian company Founded in 1985 by Nicholas Martin in Australia, the company initially developed through electronics design activities in Silicon Valley, returning to Sydney and then listed on the local stock exchange in 1999. Through external growth, the company, whose activities are spread across the United States, China and Australia, has been able to intensify its activity. It has just published a half-yearly turnover of 109 million Australian dollars compared to 80 in 2018, for a net profit of 32.8 million. Total sales are expected to reach 241 million this year 2019, up from just 77 million in 2014. The company nevertheless remains a small cap with a capitalization of USD 3.2 billion. Although poorly rated in terms of valuation, its assets are rather on the growth side, which has enabled it to integrate our Asia portfolio as part of our Premium offer. The unrealized gain amounts to 58% since our purchase at AUD 21.4 (see graph). Altium ltd

Bond market The bond market is tightening slightly from last week's low. In Europe, the Bund regained a few basis points to 0.12%, as did the French OAT to 0.54%. In Spain and Italy, sovereign debt also offers a little more yield at 1.2% and 2.85% respectively. This slight tension is reflected in the American 10-year, which is now 5 basis points higher at 2.68%, but it is more pronounced on the English Gilt, following rumours of a downgrade of Great Britain (AA) by Fitch Ratings, based on the growing uncertainties surrounding Brexit. The ten-year is based on a remuneration of 1.21%.

Forex market Forex traders maintain their positions as all currencies stabilize. The euro confirms this neutrality since the major parity (EUR/USD) shows no clear directional sign, with prices fluctuating between 1.126 and 1.148. Markets are currently operating in "Risk On" mode, pushing safe haven currencies away from bullish paths. This is the case for the Yen (USD/JPY at 111), which is weakening against all major currencies. The same is true for the Swiss franc (USD/CHF at 1,008), which is struggling against its counterparts. The British pound remained in demand following rumours of an imminent agreement between the United Kingdom and the EU. This is reflected in a 200 basis point advance against the yen at 144.6 and as much against the Swiss franc at 1.30. The Cable (GBP/USD) has also gained ground to be processed at 1.30.

Economic data In the euro zone last week, consumer confidence recovered slightly (-7 vs. -8 previously), as did the German ZEW index (-13.4 vs. -15.0 last month). On the other hand, the business climate in Germany was disappointing (98.5 instead of the expected 99.0). The PMI manufacturing index fell below the 50 mark (to 49.2), indicating a contraction in industry (see graph), while the services index published above expectations at 52.3 (consensus 51.4). The consumer price index remained unchanged at 1.4% in January. This week, we will look at the second estimate of manufacturing indices in the euro zone, the unemployment rate and then February's inflation. In the US, orders for durable goods were disappointing, as was the PhillyFed index, which came out at -4.1 (against 14.1 expected). Weekly crude oil inventories amounted to 3.7 million barrels and unemployment registrations were pleasantly surprising at 216K. Many statistics are expected this week in the United States. Housing starts, building permits, Case Shiller Index and Conference Board Index will be released on Tuesday. Later, we will look at the Chicago PMI, housing sales promises, industrial orders, quarterly GDP and, as every week, oil inventories and unemployment registrations. Finally, to end the weekly sequence, the PCE index, household spending, the ISM Manufacturing PMI index and the Michigan index will be published on Friday. The Eurozone manufacturing purchasing managers index (PMI)

Markets rise despite signs of a slowdown in the global economy The financial markets are continuing to rise under the influence of investors who are anticipating a positive outcome both on Brexit and in the Sino-American trade dispute. Like a rocket, the market continues its upward trajectory but it is advisable to remain cautious because, in the event of an engine failure (a disappointment on its expectations), the correction could prove brutal. In parallel with this euphoria, the signal sent by bond yields is intended to be contradictory. The latter are returning to their lower areas, which are a real marker of current macroeconomic threats.The recent deterioration in manufacturing indices in the euro zone and Japan illustrate this scenario of slowing global growth.