Asian markets were broadly higher on Tuesday, with investors remaining idle as they await the upcoming Jackson Hole summit, where global central bankers will meet to discuss policy for the remainder of the year. The top performing Hang Seng index returned to strength, leading the region higher with a gain of 0.91%. In Australia, the miners helped S&P/ASX200 finish 0.42% higher after BHP Billiton (LON:BLT) announced it would be tripling its final dividend of the year. Japan’s Nikkei struggled however, ending the session 0.05% low as the yen continued to show strength against USD.
European markets turned higher for the first time in four sessions, but analysts wrote it off as little more than bargain hunting. Investors may be hoping that good news will come out of Jackson Hole, but that may not be enough to create a sustained rally. Even Germany’s DAX managed to remain higher, gaining 1.35%, despite the ZEW economic sentiment survey resulting at a ten-month low. London’s FTSE was higher as well, supported once again by gains from the mining sector after BHP Billiton said it was selling its onshore U.S. oil and gas operations.
U.S. markets made significant gains on Tuesday as risk appetite returned following reports that the Trump administration is making headway on tax reform plans. The rebound snapped a three session decline for the Nasdaq as technology shares led the rally, while the Dow had its best daily percentage gain in four months, underpinned by gains from health care, technology, and materials shares. The rally was broad based, with ten of the eleven S&P sectors finishing the session in the black, and many sectors making gains in excess of 1%. Still, volumes were depressed, even for a slow August market, and some analysts opined that the rebound was investors stepping up to buy the dip as they have in the past, and wondering if that strategy is still sound with markets near all-time highs.
FOREX
EUR/USD
Euro-Dollar remained in the 1.1700-1.1800 trading range of the past 12 sessions. With both Fed chair Janet Yellen and ECB president Mario Draghi speaking on Friday at Jackson Hold summit the range will likely remain until then, but remarks from the two could lead to a break in either direction.
USD/JPY
The pair moved higher and topped 109 level as risk appetite returned to markets. Given the recent price actions, it can test the 110.00 level, depending on the news coming in from the Jackson Hole summit.
Cryptocurrencies
Cryptocurrencies slid lower in profit taking attempts. Bitcoin briefly traded into correction territory as it fell 16.7% off its recent high of $4425. The second largest cryptocurrency, Ethereum, also fell on Tuesday. Both cryptocurrencies are still outpacing traditional markets, with Bitcoin up roughly 400% and Ethereum gained 3,875% year-to-date.
Commodities
Metals
Precious metals fell as the U.S. dollar stabilized and risk appetite returned to markets. Gold fell off from eleven-month highs, retreating from the resistant $1,300 level. Silver, platinum and palladium all fell as well, but copper remained a pocket of strength within the metals complex as it added 0.2% and traded briefly at a three year high above the $3 a pound level.
Oil
Traders expecting the U.S. Energy Information Administration to report an eighth consecutive weekly decline in U.S. crude inventory levels bid crude higher on Tuesday. This is despite the fact that U.S. production figures remain elevated, which could easily cause another selloff in crude. There were also media reports that OPEC compliance in regards to production cuts fell from 98% in June to 94% in July.
Indices
S&P 500
The S&P500 gained for a second consecutive session Tuesday in a broad based rally that had ten of the eleven S&P sectors ending the day higher. The best gains came from the technology sector, but significant gains were also posted by the healthcare, industrials, and financial sectors.
Dax
Germany’s benchmark index lead major European indices, despite the German ZEW economic sentiment survey coming in at its lowest level in ten months. Analysts weren’t surprised by the result, saying that the falling optimism over business conditions in Germany was due to recent automotive scandals and worries that the strength of the Euro would derail Germany’s export oriented economy.
Stocks
Amazon (NASDAQ:AMZN)
Shares of the online retailer gained on Tuesday, but there are questions about a downtrend possibility in Amazon shares after the e-retailer’s profits dropped by 77% in the past quarter, and warned that spending will remain high, and profits will remain low in the coming months. Initially that was shrugged off as it is simply how Amazon conducts business, but some analysts suggest that Amazon is having strong competitive pressure from traditional retailers, who are beginning to understand the ecommerce side of their business. Of increasing concern for Amazon is Wal-Mart (NYSE:WMT), who posted solid ecommerce growth figures in the last quarter, and has recently launched its Jets delivery service, which looks to rival Amazon for speed of order delivery.