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Top 5 Things That Moved Markets This Past Week

What will next week bring? – Top 5 things that rocked U.S. markets this week

1. First-Quarter Earnings Season Begins on Sour Note

The start of earnings season in earnest on Friday did not go according to plan as an earnings beat by major Wall Street banks failed to induce a stock market rally.

JPMorgan Chase & Co (NYSE:JPM), Citigroup Inc (NYSE:C), Wells Fargo & Company (NYSE:WFC) posted above street consensus first-quarter earnings Friday but fell more than 1%, dragging the broader market lower.

Wells Fargo was the biggest decliner among the trio, falling more than 3%, as the lender warned it may significantly change its first quarter results amid a looming regulatory settlement that could set the bank back by as much as $1 billion.

Geopolitical tensions and trade-war fears were a constant threat to risk appetite as equities ebbed and flowed to tweets from President Trump on Syria. While a WSJ report Friday, suggesting the White House would continue its aggressive stance on trade and threaten to block Chinese technology investment in the United States weighed on risk appetite.

Facebook (NASDAQ:FB) was also in the spotlight this week as CEO Mark Zuckerberg made the rounds on Capitol Hill, testifying in a two-day congressional hearing.

Zuckerberg didn’t fluff his lines, much to the delight of Facebook shareholders, as the social media giant’s shares snapped a four-week losing streak to close up nearly 5% for the week.

The S&P 500 index closed about 2.0% higher for the week.

2. Crude Oil: Traders Up Bets on ‘Fear Premium’

Crude oil prices ended the week at three-year highs after rallying for five-straight days as concerns about rising U.S. oil output and supplies took a backseat amid geopolitical tensions.

The oil price rally this week was supported by expectations that producers in the Middle East, could suffer supply disruptions in the wake of rising geopolitical tensions, adding a “fear premium” to oil prices, according to RBC.

Sentiment on oil was also bolstered by a trio of reports from the Energy Information Administration, OPEC, and the International Energy Agency confirming that OPEC cuts continued to lower global supplies, which are predicted to reach the five-year average levels later this year.

Total OPEC production fell to the lowest since March 2017, according to a monthly report from OPEC.

On Friday U.S. crude futures gained 0.48% to settle at $67.39 a barrel on Friday, and notched a 8.6% gain for the week.

3. Dollar Slips as Fed Minutes Fail to Boost Appetite

The dollar struggled to find its footing this week after forays higher were met with resistance as geopolitical tensions weighed, while a strong rally in sterling also kept a lid on upward momentum.

The weakness in the dollar came despite growing investor expectations for a June rate hike after the Federal Reserve’s March meeting minutes revealed policymakers were more certain about inflation hitting the Fed’s 2% target, raising the need for gradual rate hikes.

The dollar was knocked back by sterling’s solid gains this week on expectations the Bank of England would likely raise interest rates next month.

The dollar fell 0.01% to 89.48 against a basket of major currencies on Friday.

4. Gold Continues to Shine as Geopolitical Tensions Flared

Gold prices notched a second-straight weekly gain Friday, benefitting from continued safe-haven demand as traders sought refuge from geopolitical headwinds.

The yellow metal enjoyed its biggest move earlier in the week following a tweet from President Trump warning Russia to “get ready,” hinting at U.S. missile strikes on Syria. But gold prices gave up some of their gains after Trump backed away from his aggressive stance.

Dollar weakness, meanwhile, also supported upside momentum in the precious metal as the greenback struggled for direction amid geopolitical tensions and mixed inflation data as producer inflation topped expectations, while consumer inflation fell short.

Despite the bullish week for gold prices, traders appeared to take some profit on recent gains as data Friday showed bullish bets on the yellow metal declined.

CFTC COT data showed money managers reduced their net long positions in gold futures to 155,400 lots from 166,600 lots for the week ended April 10.

5. Bitcoin: What a Difference a Week Makes

Bitcoin had its best week in almost two-months, as an impressive rally on Thursday turned sentiment positive on both the popular digital currency and the wider crypto market.

While there wasn’t any specific reason behind the move, some cited news that Spanish banking giant Santander (MC:SAN) was starting a blockchain based international payment service as the catalyst for the rally which got underway Thursday.

Santander rolled out its cross-border payments system, “One Pay FX,” for its customers in Spain, the UK, Brazil and Poland on Friday. One Pay was said to use distributed ledger technology developed by Ripple.

The move by the Spanish bank revived battered hopes that the digital ledger technology - which powers most cryptos including bitcoin - has a role to play in the mainstream payments space.

The turn in sentiment on cryptocurrencies was characterised by a $75 billion leap in the total cryptocurrency market cap to about $325 billion, at the time of writing, from about $250 billion last week.

Bitcoin rose 3.03% to $7,955.2, on the Bitfinex exchange, while Ethereum rose to $500, up 7.68%. Ripple XRP rose to $0.66203, up 13.81% on the Poloniex exchange.

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