Monday
January 20		 Weekly market update
intro Financial markets almost in unison set new annual or historical records this week, following the signing of the "phase 1" trade agreement between Beijing and Washington, which should help maintain the easing atmosphere on the eve of the "phase 2" negotiations. The good statistics and quarterly results of companies have also helped to maintain traders' risk appetite.

Indexes

With the exception of the Shanghai Composite Index, which fell 0.5%, all the major indices gained ground over the past week. For the other Asian places, the Nikkei recorded a weekly performance of 0.8% and the Hang Seng rose by 1.4%.

In Europe, the CAC40 was up 1%, the Dax 0.2% and the Footsie 1.2%.
For the peripheral countries of the euro zone, Spain rose by 1.8% and Portugal by 1%.

It is once again Wall-Street where the performances are the most significant, with records cascading. The Dow Jones and the S&P500 are up 1.7% and the Nasdaq100 is up 1.9%.
Commodities

Calm has followed volatility in the oil markets. Crude prices have effectively stalled this week. The price of Brent remains unchanged at USD 64.8 while WTI is still trading near USD 58.6.

Despite the strong surge in equity indices, gold stabilized above USD 1555. Silver has similarly not changed much at USD 18 per ounce. Palladium set a new all-time record with five consecutive bullish sessions at USD 2,375 and has already gained more than 16% since the beginning of the year (see chart).

The rise characterizes the weekly trajectory of the base metals compartment. The rather reassuring Chinese economic statistics and the Stage 1 trade agreement between Beijing and Washington are helping industrial metals to gain ground. Copper is trading at USD 6,300, zinc is accelerating to USD 2,438 and lead is trading at USD 2,027.

Sharp acceleration in palladium prices

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Equities markets

Hellofresh

Created in 2011 by two Germans, Dominik Richter and Thomas Griesel, Hellofresh offers meals to be cooked by delivering at home once a week, with a booklet of simple recipes. The subscription business model, with regular delivery, is fundamentally changing the way consumers buy food and developing new ways to prepare and consume meals, changing the traditional food supply chain.

As a result, HelloFresh is on the front lines of disrupting a multi-billion dollar industry at the very beginning of the industry's transition to digital.

The Berlin-based company currently delivers more than 70 million meals to more than 2.5 million subscribers in a dozen countries, 60% of which are in the United States. The company has just informed the market of an upward revision of its targets. Hellofresh is targeting between 1,808 and 1,811 billion euros for 2019 (+36%) and should generate its first profits in 2020.

Since the beginning of the year, the share has been on a quality track, with a 12% increase. It is part of the assets of the Europa One Fund and of our European portfolio.

Strong gain for the Hellofresh share

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Bond market

Neither buyers nor sellers have been able to take control of the market, indicating that the recent rise in yields last week is not widely supported, at least for now. The bond markets did not flinch at the announcement of the commercial "ceasefire", as far as Phase 1 is concerned.

The US 10-year is at 1.84%. The German Bund fell slightly to -0.22% and the French OAT to 0.04%.
Southern European countries are experiencing exceptional debt conditions. Italy can borrow over ten years at 1.38%, Spain at 0.45% and even Greece sees its rate remain at 1.39%.

For its part, the Swiss ten-year bond has the highest negative rate in the financial world, with a yield of -0.61%, supported by the rise in the Swiss currency.
Forex market

Forex traders are focusing on the Swiss franc, the big winner of the last few weeks. The SNB is in the Fed's sights as the Fed claims that the Swiss institution is manipulating its currency. This is pushing the Swiss currency higher. This is taking place against the pound sterling (CHF 1.264) and against the dollar (USD 1.3). The EUR/CHF parity is also under pressure with a decline to CHF 1.075, a three-year low.

For its part, the United States has announced that China should no longer be regarded as a currency manipulator. The report adds that the Phase 1 agreement "contains commitments by China not to use devaluation and not to use its exchange rate for competitive purposes". The USD/CNY exchange rate falls back to a low of CNY 6.85, after a peak of CNY 7.18.

The greenback is not moving much against all its counterparts, the fluctuation bands remain narrow and do not offer a clear directional trend. The EUR/USD pair is trading at USD 1.11.

USD/CNY exchange rate chart

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Economic data

In terms of statistics, it was a relatively quiet week. In the United States, the Philly Fed index surprised positively by coming out at 17 vs. the expected 3.7, as did the Empire State Manufacturing Index (4.8 vs. 3.7). On the other hand, industrial production, down 0.3%, was disappointing.

In China, despite a growth rate of 6.1% in 2019, the lowest since 1990, industrial growth showed encouraging signs in December. After a continuous decline since March, industrial production rose by 6.9% compared to December 2018. However, December will not make us forget a year 2019 that was particularly hectic due to the trade dispute, with production up by 5.7% compared to 6.2% the previous year.

In the euro zone, the inflation rate was 1.3% in December against 1% the previous month, driven by the food and services sectors. In the United Kingdom, manufacturing output remained fragile and fell by 1.7% in December, whereas the consensus expectation was for a less marked fall of around 0.3%. For its part, growth remains affected by economic and political uncertainties: -0.3% in December against an expected 0%.

The signing of the phase 1 agreement should have a positive impact on business confidence.
Head in the clouds

It is difficult to find the right qualifier to define the current configuration of the world's main financial centres. The year 2019 had highlighted the impetuous nature of the markets, due to the notorious scores recorded by the American and European indices. The pace seems to be picking up again in the new year, as if nothing could stop or slow the rise of the equity markets.

The signals are indeed all positive. Investors welcome the signing of the first trade agreement between China and the US, in a context devoid of bad news. Geopolitical tensions in the Middle East have quickly dissipated while the latest macroeconomic statistics remain relatively reassuring.

It is against this euphoric backdrop that companies will publish their results. Investors will be refocusing on company fundamentals, an opportunity to find out whether the longevity of the business cycle is reflected in microeconomic forecasts.