Weekly market update : Persistent offensive strategies drive indices up

Monday March  4

Weekly market update

Investors maintain their offensive strategies, driving the indices into dynamic configurations. Recent statements on the trade dispute between the United States and China, coupled with improved stock performance in Asia,explain the acceleration of the index. Operators are focusing on the "future and possible" good news to temporarily avert risks on the various global fronts.

Indexes The week was a winning one for most of the indices. In Europe, only the FSTE fell by 1%, handicapped by the rise of the pound sterling, in the same proportions, thus making the performance flat in foreign currency. Otherwise, there was some gains accross the various stock exchanges. In France, the CAC40 continues its extension by 1.1%, as does the DAX (+1.5%). Spain is not to be outdone and sees the Ibex rise by 1.6%, but it is in Milan that investors have been more enterprising, pushing the FTSE MIB by 2.5%. The same momentum can be found in Asia, where the Nikkei gained 0.85%, Hang Seng 0.2% and especially the Shanghai Composite 6.5%. On the other side of the Pacific, the various index benchmarks are in line with the global trend, thanks to the Dow Jones and S&P500, up 1.1%, and the Nasdaq with +1.5%. CAC40's Bollinger Bands in monthly data. 20-month moving average test

Commodities Oil posted a week of additional gains, despite a further surge in US crude oil production (to 12.1 mbd) and Trump's criticism of OPEC policy. The market looks at the glass half full and welcomes on the contrary a surprising decline in US stocks (from -8.6M versus a consensus of +2.8M). In addition, Saudi Arabia suggested that an extension of production quotas in the second half of the year was likely. In this context, WTI's barrel increased slightly to USD 57.6. The time remains for profits to be taken on the precious metals segment. The strong upward trend since the beginning of the year and the renewed interest in risky assets limit purchases in favour of gold and silver, which fell by 1.5% and 2.4% respectively to 1306 and USD 15.5. The industrial metals segment continued its upward trend, partly supported by the extension of the commercial truce between Washington and Beijing. Copper rose to USD 6536 per metric tonne. Brent graph in daily data After a long period of dithering in zone (1), the price of Brent is extended to zone (2), a movement confirmed by a pullback (A), making it possible to aim at the upper target (B).

Equities markets Based in Smith Falls, Ontario, Canopy Growth remains to this day the largest company in the cannabis industry in terms of market capitalization. The Canadian company is capitalized to the tune of 20 billion Canadian dollars (approximately 13 billion euros) and has about ten cannabis production sites. The objectives are clear: to meet the supply shortages in the medical and recreational markets, which are suffering from unmet demand. Its market dominance is total, especially since the group is not restricted in terms of financing. To support this statement, it is necessary to briefly review the arrival of Constellation Brands, an American alcoholic beverage giant, in Canopy Growth. The American brewer invested C$5 billion (US$4 billion) in the Canadian producer, bringing its stake to 38%. This transaction allows Canopy Growth to take advantage of Constellation Brands' distribution system to develop cannabis-based soft drinks, but above all gives it the funds to achieve its global ambitions. This roadmap is welcomed by the market, reflecting the increase in the Canadian producer's share price, which has risen by 70% since January 1, the strongest performance on the Toronto stock exchange. To know everything about this new trend and the opportunities, do not hesitate to download our dedicated study, which is coming soon. Canopy Growth

Bond market The sovereign bond market highlights a slight increase in yields, such as the US 10-year rate, which rose to 2.71%. The latest US GDP release shows 2.9% growth for 2018, very close to the presidential target of 3%. This upward trend is confirmed by European references. Thus, the Bund gained 9 basis points over the week at 0.18%, as did the French OAT at 0.56%. Spain (1.17%) and Portugal (1.46%) follow suit. On the other hand, Italy's rate fell to 2.72% (-6 basis points). At the margin, Switzerland (-0.29%) and Japan (-0.01%) keep their negative rate over the 10-year maturity

Forex market The dollar was boosted by good macroeconomic figures, the greenback traded at USD 1.136 against the euro and JPY 111.2 against the Japanese currency, reaching an annual low. The yen suffered from profit taking following the more optimistic outlook for China (less pronounced contraction in Chinese production). The week was marked by the awakening of the British pound, which exploded against its major counterparts. The British currency rose 200 basis points against the Swiss franc to CHF 1.33. This movement is being replicated against the dollar, at USD 1.33 and against the euro, at GBP 0.85, a high since the Brexit vote.

Economic data Inflation in the euro zone recovered over the year (+1.5% in February, against +1.4% in January) while the unemployment rate remained unchanged at 7.8%. The PMI manufacturing index (49.3) came out slightly above the consensus and the previous estimate, and the business climate in Germany remained unchanged at 10.8. This week, the Sentix index, producer prices, retail sales, the PMI services index and the latest quarterly GDP estimate will be released. In addition, the ECB will hold a press conference this weekend. The Richmond Fed Manufacturing Index, December's building permits, the Conference Board Confidence Index and the Chicago PMI Index were above analysts' expectations. Quarterly GDP also improved, with 2.6% (consensus 2.2%) and 2.9% for the year as a whole, a level not seen since 2015. In contrast, household spending fell by 0.5% (-0.2% expected). Oil inventories fell by 8.6 million barrels (+2.8M expected) and unemployment registrations were disappointing (225K against 221K). This week we will be looking at the ISM Services Index, New Housing Sales, the Fed's Beige Book, Building Permits and Housing Starts. To close the five-day sequence, the employment report (average hourly wage, non-farm job creation and unemployment rate) will be released.

Persistent offensive strategies drive indices up When you can't find a solution to a complex problem, you give yourself time. Some investors remain stoic when it comes to the delays on Brexit, or on trade. Political leaders are forced to procrastinate on different fronts. Moreover, the upward trend has not been altered by the American stance against Europe. It must be said that the ECB's latest report continued to feed into the prospect of maintaining accommodative financing conditions, an appropriate context for taking positions on risky assets. The graphic extensions are intended to be historical over the last 50 sessions: +700 points on the CAC40, +1300 points on the DAX, +4500 points on the Dow Jones... This non-exhaustive list can make you dizzy. There is nothing more legitimate than to imagine soon the establishment of a secondary consolidation movement. To this day, it is repelled by a powerful buying current, and we will not complain about it.