Flow Traders Investment Competition | Week 9 | Wall Street rebounds

Despite a rough beginning to the new year, global markets still managed to finish last week in the black. Federal Reserve Chairman Jay Powell announced that the U.S. central bank would be patient with interest rate increases in the new year, reassuring investor fears of a broader economic slowdown. Despite a sharp selloff on Thursday, the S&P 500 index closed the week up +1.3% thanks to a +3.4% rally on Friday while the Dow Jones gained +1.2% for the week. In Europe, the Euro Stoxx 50 etched another +1.4% and the Dutch AEX index gained +1.1%. Ultimately, the FTSE Global All-Cap index finished the week +3.5% higher as global markets benefited from Friday’s much needed rally.

In the U.S., investors were shaken on Wednesday by Apple’s announcement of lower than expected holiday sales due to disappointing iPhone demand from China. The stock fell 8% on the news also sending its FAANG peers down for the day. On Friday, however, the government reported the strongest job growth since February. Non-farm payrolls rose by 312,000 for the month of December versus an expected 177,000. Furthermore, in an unconventional response President Trump’s pressures to not increase rates, Powell reassured his independence by claiming he would not resign if asked to do so by Trump. In the meantime, the U.S. government continues its shutdown which begun on 22nd December of last year in what has become one of the longest shutdowns ever. Trump and Congress remain unable to reach an agreement for a budget for the new year, particularly caught up on funding for the infamous wall along the U.S.-Mexico border. Though only partial, the shutdown affects approximately 800,000 federal workers as funding for nine agencies and federal departments is temporarily put on hold. In other Trump shenanigans, White House Chief of Staff John Kelley and Defence Secretary Jim Mattis resigned over Trump’s announcement that all U.S. troops would be sent back from Syria after claiming terrorist organization Isis had been defeated.

Investors on the other side of the pond, meanwhile, also had a tense week marked by fears of an economic slowdown in the Eurozone. In Germany, factory orders slackened for the month of November, ending a streak of three consecutive increases. Orders in the largest European economy were significantly less than anticipated, thereby adding to unease about the broader Eurozone’s health. Concerns were worsened by data from the French private sector, which experienced its first decline in two and a half years. This decline was attributed to the protests against President Macron which began at the end of last year. Furthermore, Germany experienced one of its worst security breaches as private information from politicians was hacked. Notably, politicians from all parties were affected except for the far-right Alternative for Germany (AfD).

The investment groups have hit the ground running so far this year, with more winners this week than losers. The new year has gotten off to a particularly good start for Conquistadores Capital, which rose six places to become the riser of the week. Next Generation, on the other hand, clearly has not recovered from its New Year’s Eve hangover as it fell 26 places this week. Also notable is CFQ’s gain from the recovery of American engineering and construction company Mastec INC. Hermanszoon also profited from a similar company, namely Argan Inc, while Borsa rose thanks to its smart investments in FedEx and Netflix. Merx, meanwhile, gained from its positions in Alibaba and the German DAX index. All in all, the groups of this year’s investment competition have been able to ride out the tensions of the new year nicely –but there are many more weeks to come!

Written by Jasper Thouin