News & Analysis

The Month of February

March 1, 2019

By Deepta Bolaky
 @DeeptaGOMarkets

The different looming deadlines were hovering over the financial markets throughout the month of February.

US-China trade and Brexit negotiations were therefore high on the agenda. There were a few meetings between Beijing and Washington, and the news that emerged were relatively positive. Brexit headlines were also all over the place with contradictory headlines, but news flows were much more hopeful late February. After a few resignations from both the governing and Labour party, the chances of triggering Article 50 to delay the deadline were higher.

Towards the end of the month, more geopolitical tensions and the Hanoi Summit took centre stage:

  • A war of words between the US and the European Union on auto tariffs crawled back into the financial markets.
  • Escalated tensions on the India – Pakistan border after the Pulwama terrorist attack
  • Hanoi Summit started off well whereby both leaders were seen praising each other but it ended abruptly with no deal.

Equity Markets

With much happening on the geopolitical front, the rally seen in the equity markets advanced on a cautiously optimistic tone.

  • Major equity benchmarks were broadly in positive territory.

World Equity Indices (%Change)


Source: Bloomberg Terminal

  • China’s stock market stood out and even had its best day in more than three years. The benchmark climbed on Monday by 5.6% and entered into a bull market.

  • In the Australian share market, the ASX200 has experienced its biggest monthly percentage gain since 2016. While there was a number of things that kept investors on edge, earnings were better than expected, and the mammoth Royal Commission report was not as penalizing as investors would have thought. All in all, a better scenario of events boosted the local share market.

Source: www.bloomberg.com

However, the last day of February was marred by rising global risks. There were less conviction and room to push the rally. Investors are now awaiting a significant trigger to push stocks higher. On Thursday, the S&P 500daily net change shows that towards the end of February, the gauge did little and moved less than 4 points in each direction.

Currency Markets

  • In the FX markets, the Pound emerged the best performer against the US dollar among the G10 currencies. Despite bearish Brexit headlines, there were enough optimism to push the Sterling pairs higher. The GBPUSD pair was seen trading at levels seen in July 2018. It is currently navigating in the 1.33 region which is a key resistance level. At this point, moves towards the 1.34 region will require convincing news on Brexit or a strong upbeat data.

GBPUSD (Daily Chart)


Source: GO MT4

  • The Antipodeans were supported by trade optimism. Economic data releases from Australia and New Zealand increased fears of growing signs of further slowing growth in their economy. The housing sector remains a significant laggard for the Australian economy. Home lending dropped significantly amid a more stringent lending environment.

Source: www.bloomberg.com

The Antipodeans are fundamentally weak, but the retreat of the US dollar has helped the currencies to regain a semblance of normality and has provided room for upside traction.

  • The shared currency is also facing domestic political challenges, and the Eurozone economy has not inspired confidence. Despite the slowing global growth, the US economy is still strong compared to other developed countries. The EURUSD pair was unable to sustain the January’s gains. On the technical side, we note that the pair is recently trading in a bullish channel and have reached a high of 1.14 in February from the H4 Chart.

EURUSD (Daily Chart)


Source: GO MT4

However, on the Daily chart, the price seems to be capped by a downtrend line.

EURUSD (Daily Chart)


Source: GO MT4

As of writing, the uptick in the Caixin Manufacturing PMI figures has set a positive tone for the Asian markets despite the rising global risks.

Monday, 04 March 2019
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
2.841 0 0.069 0.068 0 0 0
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0 0 0 0 8.385 0 0

This article is written by a GO Markets Analyst and is based on their independent analysis. They remain fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives carries a high level of risk.