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January 18, 2021

Volatile Trading Session on Friday!

All Eyes on China and Facebook in Trouble

All Eyes on China and Facebook in Trouble

All eyes on China this morning and their economic numbers, which have disappointed. The Chinese GDP data shows that the economy expanded by just 2.3% in 2020, and this is a discouraging figure, which has been triggered by the coronavirus.

As the second-largest economy in the world, consumer spending is key in China, and it affects not just the local economy, but the global economy too. Meanwhile, the number of coronavirus cases has started to climb once again in China. The province of Hebei has seen a jump in the number of cases. As we know, Beijing was very fast in controlling the spread across the region in 2019, and once again, they are locking down the region and applying very restrictive measures to the residents. We may start to see a slowdown in the supply chain for our everyday goods if the spread isn’t contained very fast there.

GDP in China climbed 6.5% in the last quarter of 2020, whereas the forecast was 6.1%. Meanwhile, the economy contracted in China over the first three months of 2020. The issue is consumer spending in China and just how reluctant locals were in their spending as evidenced by the retail sales data. This contracted 3.9% over 2020, although the final quarter showed a recovery and gained 4.6% from a year earlier.

WhatsApp and Facebook

WhatsApp and Facebook

WhatsApp has been making the news as millions have flocked to other instant messaging services including Signal, who’s servers were unable to cope with the massive influx of new subscribers over the weekend. This follows WhatsApp news that they would start to share user data with Facebook, who own them. They confirmed they would also share all users messages and users must opt-in by February 8th or lose access to the service.

Facebook did an about-turn over the weekend as they saw just how many users they would lose as a result. There are already issues over security with WhatsApp messages as more hacks and scams circulate. As the US stock market is closed today, we will not see just how strong an impact the news will have on Facebook but watch out for tomorrows price.

Good as Gold

Good as Gold

Gold prices are reaping the benefits of traders concerns that the economic recovery across the world is not yet back on track. This is pushing up the price of gold as a safe-haven play. Even with the vaccines, which have rolled out in most countries, the recovery will take longer to settle in. The Chinese GDP numbers are the main reason for Gold’s price climb.

Even with that, the price trend for Gold remains under pressure and is well away from its all-time high of $2075. It is currently priced at $1837.

Finally, Joe Biden is pushing for a major rollout of vaccinations across the US to begin as soon as he takes office. His goal is for 100 million people to be vaccinated in his first 100 days as president – an ambitious goal.

Global Equity Markets

Global Equity Markets

Equities around the world sold off drastically as concerns about stimulus not being big enough could cause some major issues in the United States. At this point, this shows just how much stock markets around the world are hoping for easy money, as the FTSE 100 dropped 1.15%, DAX dropped 1.61%, France dropped 1.49%, and then by the time we got to midday in the United States, the S&P 500 was down roughly ½ of a per cent.

Index Change
FTSE100

FTSE100

-1.15

DAX

DAX

-1.61

CAC40

CAC40

-1.49

Nikkei 225

Nikkei 225

-0.62

S&P 500

S&P 500

-0.49

Currencies

Currencies

Currency traders went decidedly “risk-off” by selling the Euro against the greenback, causing it to lose 44 basis points. The British pound lost 62 basis points as well, while the Australian dollar was crushed, losing 7/10 of a per cent. The US dollar was relatively unchanged against the Japanese yen, which makes quite a bit of sense considering both of these currencies are considered to be “safety currencies.”

Index Change
EUR/USD

EUR/USD

-0.4491

GBP/USD

GBP/USD

-0.6282

USD/JPY

USD/JPY

-0.0366

AUD/USD

AUD/USD

-0.7008

Commodities

Commodities

Commodity traders sold everything they could get their hands on, as precious metals got crushed. Gold lost 1.3%, silver lost over 3 ½%, while platinum lost 3.3%. Furthermore, crude oil markets got hammered by losing 2.6%, while copper lost 1.4% due to the idea of stimulus being smaller, meaning that there may be less demand for construction-related assets such as copper.

Index Change
Gold

Gold

-1.31

Silver

Silver

-3.69

Brent

Brent

-2.62

Platinum

Platinum

-3.36

Copper

Copper

-1.43

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