Monday, January 20, 2020

Market Recap: US housing starts surge to 13-year high; oil prices surge on Monday morning

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Wall Street continued its rally to fresh new highs on Friday. US housing starts spiked in December to 1.608mn from 1.365mn, beating economists' forecast of 1.380mn. The 16.9% jump in housing starts in December to a 13-year high signalled a likely recovery in the industry, driving stocks in the US. Consumer sentiment in January fell slightly to 99.1 from 99.3 in December. The slight drop was likely thanks to the conflict between Iran and the US earlier in the month, although the US-China phase one trade agreement was able to relieve pressure of the sentiment index. China's economy grew 6% in Q4 of 2019, further signalling that business sentiment is recovering.

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Global indices rose over the week as the US-phase one trade agreement boosted stocks around the world. The DJIA, S&P500 and the Nasdaq advanced 1.82%, 1.97% and 22.9% over the week.

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The dollar gained against most major currencies on Friday thanks to the jump in US housing starts. But the Dollar Index fell slightly by 0.03% over the week as traders using the greenback as a shelter from trade tensions likely shifted to more risky assets after global economic data signalled that global sentiment is recovering.

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Meanwhile safe haven assets extended gains on Friday. Gold gained 0.30%, The yen inched slightly higher by 0.02% against the dollar. The US treasury market was mixed, benchmark 10-year yields gained 1bps to 1.82% while 2-year yields inched 1bps lower to 1.56%.

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