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S&P500 and Nasdaq close at new records; Powell comments reconfirm rates schedule – sending the USD lower. Bitcoin back above 6250

Aug 27, 2018 | Market Updates

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U.S indexes continued higher on Friday ending the week on a high. The S&P500 and Nasdaq closing at new records. The Nasdaq lead higher by strong gains in Netflix which added 5.8. Analysts at SunTrust upgraded the stock, noting it will keep going higher because of its success overseas. The Nasdaq closed 67.52 points higher closing at 7945.98. The S&P500 added 17.71 hitting 2874.69 led higher by gains in the materials and tech sectors.

The Dow Jones rallied by 133.37, DowDuPont outperformed adding to gains in the session. Fed Chair Powell spoke at Jackson Hole, Powell said he sees “further, gradual” rate hikes moving forward, noting the economy is “strong” and can handle tighter monetary policy. “The market wasn’t sure how hawkish he was going to be,” said Shawn Cruz, manager of trader strategy at TD Ameritrade. “I think the biggest takeaway from the speech is he doesn’t see inflation rising meaningfully above 2%, … so a gradual pace of rate hikes is still appropriate.”

Retail earnings figures supported optimism, Lowe’s and Target reported better-than-expected earnings this week, sending their shares up 9% and 5.1%, respectively. Datawise, weekly jobless claims fell to 210,000, near levels not seen since 1969. Core durable goods orders rose 1.4% in July, more than the expected 0.4% increase. “The numbers show the economy is strong and the consumer keeps spending,” said Tim Courtney, chief investment officer at Exencial Wealth Advisors. But investors are not pricing “stories that could add risk to the market.”

Equity markets in Europe closed despite a no progress between the U.S and China in their recent trade talks. The DAX added 28.94 and the FTSE added 14.27 points. Basic resources was the best performing sector during the session. Data from Germany showed that all sectors of its economy grew in the second quarter, confirming earlier figures of continued growth. In the U.K. mortgage approval numbers fell, consumer credit also slowing.

Crude oil continued its fightback, Friday buyers added 1.3% snapping a 7-week losing streak. Crude futures draw support from signs that U.S. sanctions on Iran are already reducing global crude supply.”Both crude markets are on track to end a steady run of weekly declines. This is largely due to a tightening fundamental outlook on the back of looming Iranian supply shortages,” said Stephen Brennock, analyst’s at London brokerage PVM Oil Associates. Iran is currently the third largest oil supplier.

Gold surged higher on Friday adding just over $20 to close above 1205. Price gapped this morning briefly hitting 1207. Dovish comments from the Fed supported Golds drive by sending the USD lower. The USD hit new session lows on Friday after Fed Chair Powells comments at Jackson Hole. Jerome Powell said steady rate hikes are the best way to protect U.S. economic recovery but suggested the Fed funds rate was getting closer to neutral. His statement that rate hikes are keeping job growth strong and inflation under control was a high-profile endorsement of the central bank’s current policy approach after U.S. President Donald Trump criticized the pace of rate hikes this week.-CNBC “The dollar’s reaction is a part of a narrative that was established earlier this week, one that we saw in the minutes, with respect to the Fed making progress towards neutral,” Mazen Issa, senior Foreign Exchange strategist at TD Securities in New York, said.

Risk currencies ended higher to the USD, and jumped to the Yen. The EUR and AUD adding over 85 pips. The EUR soared to the GBP adding over 50 pips hitting new highs not seen since 2017. Bitcoin added 187 USD on Friday closing around its 6002 resistance point. price gapped higher this morning hitting 6658 setting a new three week daily highs.

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Sources; CNBC – All times are AEST

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