Daily Market Analysis – 14.11.2017

Market Summary

Asian markets ended Monday mostly lower, getting the week off to a poor start as investors worry about the fate of the U.S. tax reform bill, and prepare for the slew of data and central bank speeches due today. Japan’s Nikkei continued to get hammered lower in what is being called profit taking following a roughly 21% surge higher in September and October. Australia’s S&P/ASX 200 edged lower on weakness from the mining and oil stocks, and South Korea’s Kospi was lower as well despite gains from the technology sector. Chinese linked shares did well however, with the Shanghai Composite on the mainland and the Hang Seng in Hong Kong ending the day higher after Beijing unveiled plans for some deregulation in the financial sector.

European markets fell on Monday, marking their fifth consecutive session of losses as concerns over U.S. tax reform legislation remain, and worries over the Brexit are now beginning to emerge as well. A rising Euro hasn’t done much to help the situation with equities either, as the stronger currency makes European exporters less competitive overseas. Financial shares were the hardest hit for the session, though energy shares also took a hit on falling crude prices and a profit warning from French utility Electricite de France SA. The most disturbing news of the day came from the U.K. however, where The Sunday Times reported that Prime Minister Theresa May could soon face a no confidence vote and loss of her leadership after 40 lawmakers in the British parliament had agreed to sign a letter of no confidence against her. This is just 8 shy of the number needed for a leadership challenge. The Pound was sharply lower on the news, and the FTSE declined as well.

U.S. markets struggled in the morning, but had moved into positive territory by the afternoon, and managed to end the day with modest gains. The small moves higher keep the major indices within 1% of their all-time highs. The consumer staples sector performed well for the day, but the industrial sector was the worst performing sector as shares of General Electric dropped to an eight year low. The industrial conglomerate has seen its stock falling all-year and the latest drop comes after they announced that they would be cutting their dividend by 50%. Investor sentiment remains muted as investors are still awaiting resolution to the tax reform legislation issue.

Today’s Assets

Cryptocurrencies 

Those interested in the cryptocurrency space can see amazing gains or amazing losses, depending on how markets turn in the coming days. After the incredible gains made by Bitcoin Cash over the weekend the token has pulled back and fell more than 17% on Monday. The original Bitcoin recovered from its weekend lows, and looking at an hourly chart shows an almost perfect double bottom at the $5,640 level. This indicates we should get a resumption of the uptrend for Bitcoin, and could see new all-time highs by the end of the year. As Bitcoin recovers, so too are the smaller coins rising although Ethereum is struggling near unchanged levels, and DASH is falling after its own strong weekend rally.

GBP/USD

The pair dropped sharply at the open Monday, gapping lower as traders learned that there is a possibility that Prime Minister Theresa May could face a formal attack on her leadership. The drop took the pair as low as 1.3061, but throughout the day the pair recovered and by the close was back near its opening levels. It remained lower on the day however, as it had gapped lower at the open, but the candle that was printed today was a large bullish hammer candle, so we could see that gap closed tomorrow as price rises in response to that hammer candle.

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