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Patrick Rejaunier

Senior Analyst
Overlooking markets with his 35 years of experience, Patrick Rejaunier knows the financial world inside out. As a senior analyst, he takes a zen look at current events without ever letting himself be overwhelmed by emotion. An expert on all topics, patient and a fine communicator, Patrick is the privileged contact for our clients and is in charge of the brokerage side of the business.

Weekly market update : Investors remain wary

02/11/2019 | 10:46am EST
February 11
Weekly market update
Last week, after a strong start, allowing the indices to rally to their highest levels since the beginning of December, selling pressure has resurfaced somewhat, against a backdrop of deteriorating global growth prospects and mixed quarterly results. The financial markets are thus experiencing some legitimate profit taking, especially with the probable absence of a Sino-American trade agreement before the fateful date of March 1 next.

Over the past week, the main European indices have finally lost ground, after a peak set last Tuesday. Clearances are getting deeper, as is the case with the CAC40, which is down by 1.2% in weekly data, and the DAX (-2.4%). For the peripheral countries of the euro zone, Portugal (PSI) and Spain (IBEX) simultaneously experienced a decline of 0.3%, while Italy (MIB) deteriorated by 1%. Alone, the Footsie increased by 0.8% over the last five days.

In the United States, on Friday, the Dow Jones recorded a negative performance over the week of -0.40%, as did the S&P500 at -0.60% and the Nasdaq100 at -0.5%.

In Asia, the Nikkei fell by 2%, while the Hang Seng stabilizes after three days of closure for the Lunar New Year. The Shanghai Stock Exchange was closed all week.

The CAC40 chart shows signs of weakening (in hourly data)


The weeks remain similar on the oil markets, where volatility levels have significantly decreased, as has the horizontal oscillation of Brent prices between $60 and $63. A wait-and-see attitude remains the order of the day, with operators focusing on Venezuela but also data showing a global economic slowdown. The price of Brent has changed little in the past week and is trading at $61.8 per barrel.

Despite headwinds, precious metals record a remarkable weekly sequence. Indeed, the sub-fund's prices have stabilised, despite the rise in the US dollar and the euphoria on the equity markets.

In this context, gold and silver are traded near 1314 and $15.8 respectively.
Base metals evolve in different ways. Copper (+2.1% to $6227), nickel (+3% to $12845) and tin (+1.3% to $21100) increased significantly while aluminium (-0.5% to $1862.5), lead (-1.2% to $2066) and zinc (-0.5% to $2719) lost ground.

Volatility subsides on the Brent contract

Equities markets

The aircraft manufacturers are soaring.

The competition between Boeing and Airbus is in full swing. This battle highlights the record sales of 2018 announced by Boeing(more than 800 aircraft delivered in 2018), as did Airbus. These 1600 new aircraft replace 30% of obsolete aircraft and the recurrence of these orders will double traffic in twenty years' time. Airbus is achieving this feat despite the difficulties encountered in the large capacity market, which is becoming less profitable, such as the A380.

The results on the stock market journey are clear with leading positions for both companies in their core indices.

Airbus has been in the top places in terms of earnings (+24%) on the CAC40 since the beginning of the year, while Boeing (+27%), a component of the Dow Jones, has made an identical performance over the same period.

Patent outperformance of Boeing and Airbus shares

Bond market

The European government bond market is seeing yields decline again after the European Commission's conclusions, suggesting a downward revision of the economic outlook. The institution's pessimism is concentrated in Italy, where growth fell from 1.2% to 0.2%, pushing the Italian 10-year period up to 2.9% (+30 basis points).

On the other hand, the German and French references experienced an additive downward trend to 0.10% and 0.54% respectively, a one-year low. In the same vein, the Spanish debt remains sought with a rate at 1.22%, just like the Swiss 10-year period, which is in negative territory at -0.33%.

In the United States, the Tbond stabilized at 2.64% pending the end of the Sino-American truce.

Sudden tension over the Italian 10-year period

Forex market

Forex traders have shown few convictions in recent weeks, such as the EUR/USD pair (1.132), which has been firmly established in a horizontal trend of 1.13/1.15 USD. This wait-and-see attitude is also reflected in other currencies such as the yen and the Swiss franc, even if the greenback symbolically passes beyond the parity at CHF 1.02.

The consolidation of the pound is taking shape as the countdown approaches zero for a Brexit with or without a deal (1.29 on GBP/USD parity).

Among the currencies of the southern hemisphere, the Australian dollar is falling despite the 30th consecutive status quo in the RBA. This decision therefore postpones a possible rate cut, especially since growth should be close to 3% in 2019 for the country-continent.
Economic data

Retail sales were disappointing last week (-1.6%), as was the Sentix index, which once again deteriorated (-3.7). The producer price index fell for the second consecutive time (-0.8%), the consensus was -0.7%. Nevertheless, the PMI euro area services index (at 51.2) exceeded expectations and the previous publication. The same is true in Spain (54.7) and France, although it remains below the 50 threshold (at 47.8).

Next week, few statistics are on the agenda. Only industrial production, quarterly GDP and trade balance will be released.

In the United States, the PMI services index (56.7), unemployment registrations (234K) and industrial orders (-0.6%) came out below analysts' expectations. The trade balance was better than expected and crude oil inventories, as expected, at 1.3 million barrels.

This week we will look at consumer and producer price indices, retail sales, weekly crude oil inventories and unemployment claims. Finally, the New York Fed Manufacturing Index, import prices, industrial production, production capacity utilization rate and the Michigan Index will be released on Friday.
Investors remain wary

The recovery in equities in January is beginning to weaken. The recent downward revisions to growth prospects in Europe, combined with Chinese uncertainties, triggered the consolidation phase, after 5 weeks of interrupted growth.

These recent economic expectations give credence to the Fed's "sharpened" discourse of a 180-degree turn to block its standardization policy.

At the same time, index funds are regularly redeemed despite the recovery of recent weeks and the liquidity generated is focused on sovereign debt, whose yields are constantly falling. This tactical observation shows the cautious attitude of investors towards the extension of the bullish phase that began at the end of 2018.

© MarketScreener.com 2019
Stocks mentioned in the article
ChangeLast1st jan.
BASE CO., LTD. -1.63% 4230 End-of-day quote.-31.22%
BASE, INC. -3.50% 662 End-of-day quote.-66.09%
CAC 40 1.48% 6865.78 Real-time Quote.22.41%
CANADIAN DOLLAR / AUSTRALIAN DOLLAR (CAD/AUD) 0.07% 1.112557 Delayed Quote.7.44%
CANADIAN DOLLAR / JAPANESE YEN (CAD/JPY) -0.03% 88.878 Delayed Quote.8.69%
DAX 1.39% 15380.79 Delayed Quote.10.58%
DJ INDUSTRIAL 1.87% 35227.03 Delayed Quote.13.18%
EURO / AUSTRALIAN DOLLAR (EUR/AUD) 0.07% 1.60179 Delayed Quote.0.37%
EURO / BRITISH POUND (EUR/GBP) 0.02% 0.8509 Delayed Quote.-4.28%
EURO / JAPANESE YEN (EUR/JPY) -0.04% 127.981 Delayed Quote.1.42%
EURO / SWISS FRANC (EUR/CHF) -0.03% 1.04402 Delayed Quote.-3.61%
EURO / US DOLLAR (EUR/USD) 0.00% 1.12827 Delayed Quote.-7.44%
HANG SENG -1.55% 23348.23 Real-time Quote.-12.91%
IBEX 35 2.40% 8439.7 Delayed Quote.2.81%
NASDAQ 100 0.85% 15846.158597 Real-time Quote.24.07%
NASDAQ COMP. 0.93% 15225.152466 Real-time Quote.17.05%
NIKKEI 225 -0.36% 27927.37 Real-time Quote.1.13%
PSI 20 INDEX 1.72% 5510.33 Real-time Quote.10.60%
S&P 500 1.17% 4591.67 Delayed Quote.20.15%
SHANGHAI A INDEX -0.50% 3762.1032 Real-time Quote.2.89%
SHANGHAI STOCK EXCHANGE B SHARES INDEX -1.43% 281.8857 Real-time Quote.17.46%
SILVER 0.02% 22.385 Delayed Quote.-14.49%
SWISS RE LTD 1.43% 89.4 Delayed Quote.5.09%
THE LEAD CO., INC. -0.76% 519 End-of-day quote.-38.21%
US DOLLAR / JAPANESE YEN (USD/JPY) -0.03% 113.427 Delayed Quote.9.39%