Market Summary
Asian markets ended in a sea of red Friday as investor sentiment soured in response to overnight losses on Wall Street and the news that the U.S. tax reform legislation that had been so highly anticipated by markets could be delayed by a year. Japan’s Nikkei led the way lower, falling sharply in response to the above factors, and facing additional headwinds from a stronger Yen, which makes Japanese exporters less competitive overseas. Technology shares were weak all across the region, leading to declines for markets from Hong Kong to South Korea. The Australian benchmark index fell as well, with profit taking in the mining sector, and weakness from banks contributing. The one bright spot in the region was mainland China, where the Shanghai Composite edged higher.
European markets were broadly lower Friday, with the strength of the Euro continuing to weigh, and some disappointing corporate earnings putting additional downward pressure on equities. By the close the Stoxx Europe 600, the broadest measure of European equities, was down 1.8% for the week, which was the worst weekly performance for the index in three months. With no economic data or other catalysts due on Monday it’s likely that markets will continue their retreat. London’s FTSE was no better off, falling to a six-week low by the close as the reemerging strength of the Pound weighed on the market.
U.S. markets opened lower and struggled to reclaim unchanged levels in the afternoon, but never quite made it. Both the Dow and S&P 500 closed lower for the day, and slightly lower on a weekly basis, snapping an eight week string of weekly advances. The energy and health care sectors led the way lower, while the consumer staples sector showed resilience as it gained nearly 1%. Investor sentiment remains dampened by the prospect of the corporate tax reform proposed by the House of Representatives being watered down and delayed by the Senate. One big surprise was Walt Disney Company (NYSE:DIS), which rose 2.1% despite weaker than expected third quarter earnings as the company announced it was beginning a new Star Wars project.
Today’s Assets
Cryptocurrencies
Even though Segwit2x, the hard fork of Bitcoin, was called off there remains controversy surrounding the contentious split of the coin. Groups of miners have begun claiming that they will go ahead with the split on November 15th, and that furthermore Bitcoin Cash is the “real” blockchain for Bitcoin. This turmoil has caused Bitcoin to drop more than 6% on Friday and as of Saturday it settled around the $6,500 level. Sunday saw further declines as Bitcoin tested the $6,200 level for support. Concurrently, most other coins dropped Friday and Saturday, but were recovering by Sunday. The beneficiary of all this turmoil has been the Bitcoin Cash token, up nearly 100% since the beginning of last week. Currently at $1,480 some are calling for Bitcoin Cash to trade as high as $3,000 by November 15th, and that Bitcoin will fall to support at the $4,200 level in the wake of the turmoil.
Silver
This precious metal is often linked to gold as a store of value, but unlike gold it also has industrial applications, and those could be the catalyst that sends silver considerably higher from current levels. Silver has spent most of 2017 trading in a range of $16-$18 an ounce, but demands from the automotive, health care and solar industries could change that in the coming months and years. Right now the prospect of rising interest rates is keeping precious metals depressed, but when investors realize that rates are not going to rise rapidly their appetite for gold, and silver could increase rapidly. This could see silver surge upwards, slicing through the $20 highs of 2016 and potentially testing the $24 levels last seen in 2013.