Asian markets were mixed on Thursday, with some countries benefitting from a stronger U.S. dollar. While Japanese and Australian markets both made gains, Chinese markets underperformed due to potential profit taking and a liquidity squeeze. Both the Hang Seng and the Shanghai Composite ended the session lower as the People’s Bank of China refrained from injecting liquidity into markets, despite the fact the some $6.1 billion in repurchase agreements matured on Thursday.
European markets rallied on Friday, but the gains weren’t enough to keep major indices from a monthly loss. It was the third consecutive monthly loss for European stocks, which have suffered from the summer doldrums. Meanwhile, Eurozone inflation rose more-than-expected and unemployment remained at 8-year lows. The data lifted investor expectations that the ECB will soon move to begin cutting its massive bond buying stimulus program. In London, the FTSE100 booked a solid gain that took into positive territory for the month. Strength came from the mining sector, which rose strongly following better-than-expected Chinese manufacturing data.
U.S. markets gained strength throughout the day, as investor sentiment was improved by positive news. Both the Dow and S&P500 gained for the day and the month, making it the fifth consecutive month that both indices have climbed higher. The Nasdaq outperformed on a monthly basis as technology remains the leading sector. In economic news consumer inflation ticked higher in July, and initial jobless claims remained near their lowest levels since the Great Recession. Friday will see the release of the closely watched U.S. non-farm payrolls, which could give markets a boost at the start of September as well as giving a clue towards future Fed action.
FOREX
EUR/USD
The pair plunged during European trading, but once North America opened for trade it reversed and headed right back to starting levels. The drop came in reaction to stronger-than-expected inflation data from the European Union, while the rebound was a reaction to inflation in the U.S. remaining little changed.
GBP/USD
The Pound dropped during the London session, only to recover during U.S. trade Thursday. There was little reaction from traders when a member of the rate-setting board at the Bank of England, said the central bank should raise interest rates now. Michael Saunders is one of the MPC members who voted for a rate increase at the most recent BoE meeting, so his remarks were no surprise.
Cryptocurrencies
Cryptocurrencies are still rallying, as Bitcoin topped $4,800 for the first time. Ethereum also gained, but the strongest moves were made by Litecoin and Ripple, which were 10.0% and 11.1% higher respectively. Litecoin was up as much as 17%, hitting an all-time high itself.
Commodities
Metals
Cryptocurrencies are still rallying, as Bitcoin topped $4,800 for the first time. Ethereum also gained, but the strongest moves were made by Litecoin and Ripple, which were 10.0% and 11.1% higher respectively. Litecoin was up as much as 17%, hitting an all-time high itself.
Oil
Crude gained on Thursday, rebounding from recent losses, but finished the month with over 6% loss. Traders mulled the loss of more than 20% of U.S. refining capacity, while in other news the U.S. Energy Department announced the release of 1 million barrels per day. It amounts to just 1 hour of gasoline demand, which indicates that refineries are having trouble finding enough crude.
Indices
Nasdaq
The technology heavy index gained 1.3% in August, a slow month for U.S. equities. The technology sector continues to outperform and the end of August also saw strong gains coming from biotechnology and healthcare, giving NASDAQ a further leg up. Continued signs of improvement should lift the Nasdaq higher after hitting a record closing high on Thursday.
FTSE 100
The FTSE gained on the back of mining shares Thursday, rising 0.9% and managing to book a 0.1% monthly gain, extending its monthly winning streak to two consecutive months. Shares of copper and iron ore producers moved sharply higher in response to solid Chinese manufacturing dat. A stronger Chinese economy should increase demand for industrial metals, which pushes the miners higher.
Stocks
Alphabet (NASDAQ:GOOGL) (Google)
Shares of Alphabet have remained flat in August while most of the tech sector has moved higher. However, it appears to be reaching a key technical level that could send it higher in the coming weeks and months. Drawing a trendline on a Google daily chart will show the current uptrend began in July 2015 at the $525 level, and over the past two years Google’s stock price has touched the upwards trendline some dozen times. As it dipped last Wednesday, a bounce off from that level could take Alphabet shares to a new all-time high above $1,000 a share, especially if the stock becomes leader in the technology sector.