Investing.com – Top 5 things that rocked U.S. markets this past week
1. Trade War Fears Wreak Havoc on US Equities
Wild swings in U.S. stock markets were a common theme through the week swayed by investor uncertainty on the prospect of full blown U.S.-China trade war, while a lacklustre jobs report did little to improve sentiment.
U.S. President Donald Trump upped the ante on the trade war front after instructing his administration to consider an additional $100 billion in tariffs on Chinese imports. Beijing as expected said it would fight back “resolutely” to protect its interest should the U.S. continue to adopt its protectionism stance.
The latest exchange of salvos on trade Friday between the two nations came just a day after the Dow Jones had notched a three-day winning streak on expectations that neither the U.S. nor China were pining for a trade war.
The wobble in the labor market, meanwhile, also pressured equities after the U.S. economy created 103,000 jobs in March, according to a report released Friday by the U.S. Department of Labor. That missed economists’ forecast for 193,000.
There was a spot of bullishness in the market, however, as Spotify Technology SA (NYSE:SPOT) made its public-listing debut, closing at $147.92 Friday, about 12% above its reference price of $132.
Tesla Inc (NASDAQ:TSLA) also garnered investor support after the carmaker beat Wall Street projections for Model 3 deliveries.
The Dow fell 572 points Friday, to close at 23,932.76.
2. Crude Oil Prices Fall For Second Straight Week
Crude oil prices slumped to a second-straight weekly loss as a larger than expected draw in crude stockpiles mid-week was mostly overshadowed by escalating trade-war fears, dampening demand for riskier assets.
While a jump in U.S. oil rig counts to 808, the highest level since March 27, 2015, added to fears over rising U.S. output. U.S. production rose to a record 10.46 million barrels a day, according to the Energy Information Administration Wednesday.
"We expect U.S. oil production to increase by 0.2-0.3 million bpd per quarter during 2018," Goldman Sachs said in a note clients earlier this week.
On Friday U.S. crude futures fell 2.3% to settle at $62.06 a barrel.
3. Dollar Posts Weekly Win Against Yen Despite Trade-War Jitters
The dollar closed roughly unchanged on the week as investors opted against initiating large bets on the greenback following a mixed jobs report and an ongoing China-U.S. trade spat.
The greenback posted a weekly gain against safe-have yen, despite falling 0.47% to Y106.88 Friday.
Yet, some view a potential trade war between the world’s largest two economies as a short-term positive for the dollar. A trade war would likely reduce competition, raise prices, boosting inflation.
“We remain focused on the constructive technical backdrop for the dollar and war of words on the global trade front, both of which have us leaning short-term positive on the dollar,” TD Securities said.
The dollar fell 0.37% to 89.79 against a basket of currencies on Friday.
4. Flight to Safety Helps Gold Notch Weekly Win
Gold prices bounced back from last week’s slump to post a weekly gain on Friday as escalating trade-war fears triggered safe-haven demand.
Dollar weakness, meanwhile, also supported upside momentum in the precious metal as the greenback struggled to find its footing amid a mixed jobs report released Friday.
Some market participants said the ongoing slump in equity markets could trigger a rotation back into the precious metal, pushing it as high as $1,450.
“When, rather than if, equities correct, we will still be faced with depressed yields,” Metals Focus director Nikos Kavalis said earlier this week. “At this point, investor rotation back into gold, even on a modest scale, should help take it to around $1,450 by year-end.”
5. A Swing and a Miss: Bye-Bye $7,000 Bitcoin?
Bitcoin remained on track to test its Feb. 6 low of $6,000 after its rebound earlier this week came under heavy pressure as regulatory concerns resurfaced.
India took measures this week to curb cryptocurrency activity, pressuring the already fragile sentiment on cryptocurrencies. The Reserve Bank of India ordered regulated entities to unwind their positions with individuals or business dealing in cryptocurrencies.
The Spanish Treasury, meanwhile, launched an investigation to crackdown on tax evading and money laundering crypto investors.
The regulator contacted 16 banks, around a dozen cryptocurrency exchanges and companies operating cryptocurrency ATMs and more than 40 businesses that accept online cryptocurrency payments, according to a report from Coindesk, citing a source at the country's tax agency.
While many remained fearful of entering crypto space, famed investor George Soros was said to be eyeing an entry into the market.
Adam Fisher, who oversees macro investing at New York-based Soros Fund Management, got internal approval to trade virtual coins in the last few months, Bloomberg reported, citing people familiar with the matter.
Yet, it would likely take a lot more than the $36 billion Soros family office fund to stop the current crypto rout amid scant demand for cryptos.
The total market cap of cryptocurrencies fell to about $250 billion – at the time of writing – from just under $300 billion last week, pointing to a lack of investor appetite for cryptos.
Bitcoin fell 2.47% to $6,592, on the Bitfinex exchange, while Ethereum fell to $368.79, down 2.31%. Ripple XRP fell to $0.46657, down 3.02% on the Poloniex exchange.