Daily Market Reviews by UWCFX

[UWC Neeraj]

17 OCTOBER 2012: EURO/USD HITS ONE MONTH HIGH

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Euro/USD jumped to its highest level since September 17th trading at 1.3092 in Asia this morning. The Euro has increased more than 100 basis points over the last 24 hours after the rating agency Moody’s affirmed its investment grade sovereign rating of Baa3 on Spain, giving investors hope that Madrid shall be able to handle its huge public debt. Moody’s stressed the European Central Bank’s (ECB) willingness to purchase Spanish government bonds and Spain’s willingness to undertake austerity measures.

Some analysts saw, however, the strong increase of the Euro over the last couple of days as merely short covering. Many market players remain cautious of unwinding their bearish stand on the single currency, given the uncertain prospects of how to resolve the euro zone debt crisis anytime soon. A test on how high Euro/USD shall reach in the short term perspective is whether the Euro will push through the strong technical resistance level on 1.3170 which it reached in September.

Stock markets in USA, Europe and Asia had their best days in months helped by stronger than expected quarterly results from major US-companies. Dow Jones added 0,95 % while the technology index, Nasdaq, jumped 1,21 percent. Intel, Caterpillar, United Technology, American express and Boeing all added close to 2 percent and more. Growing risk appetite among investors weighed in on dollar index, measured against a basket of six key currencies, which fell to 10 days low boosting dollar based commodities and commodity linked currencies as the Australian and Canadian dollar and the Norwegian krones (NOK).

Japanese stocks continued to gain after last week’s sell out which took Nikkei to a two and half month low. Investors seem to realize that the stocks have fallen, too, fast and see present prices as a buying opportunity. Precious metals as gold and silver have rebounded from early week’s losses. Gold is at 1753 and silver 33.10. NYMEX, New York crude, continues up and reached above USD 92a barrel. Brent crude is losing momentum from its high yesterday and trades at 114.

Copyright: United World Capital

 

[UWC Neeraj]

18 OCTOBER 2012: ASIAN SHARES STRIKE SEVEN-MONTH HIGH

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Asian stocks reached a seven-month high this morning on positive US housing data and signs of stabilization in China. The MSCI-index for south east Asia, Shanghai composite and the Australian stock market rose between 0,5 and 1 percent. This, in spite of the fact that China’s GDP third quarter domestic product grew 7.4 percent from a year earlier. This is the seven straight quarter of slower growth.

The numbers, however, met expectations; it is furthermore encouraging that asset investment, retail sales and industrial output exceeded forecasts. Statistical figures for September, the last month in the quarter, are much stronger than the previous two months. The political succession which has created question marks and economic instability seems closer to a solution. These combined factors point to stabilization of the Chinese economy and have lifted the economic sentiment which is more positive than in months reflected by the jump in the Shanghai index over the last days.

The US markets ended flat yesterday night. IBM which constitutes 11 % of Dow Jones, fell 4,91 percent. Intel and Cisco delivered weaker than expected results. US home building came in much stronger than expected and surged to its highest level since the summer of 2008. Together with better than expected third quarterly company results and stabilization in China, the housing numbers shall probably increase investors risk appetite and higher demand for commodities. The bell water Copper futures are pointing strongly upwards. Japanese yen, a safe haven for investors, have fallen substantially during the last week. USD/JPY is trading at 79,165.

The Euro/USD is at 1.3097 after reaching 1.3125 in yesterday’s trade. The Euro has fallen somewhat back in early trading in Asia. That might be seen a technical correction after a strong rally over the last days. Gold has fallen back from yesterdays high on 1753 and trades at 1749. Silver is stabile on 33,18. Brent crude has recovered in Asia again trading close to USD 114 a barrel after falling back to 113. NYMEX is stabile on USD 92. Australian dollar touched a two-week high of USD 1,0395 after the Chinese data. It is now trading at 1.0384. The Scandinavian currencies, Swedish krones (SEK), Norwegian krones (NOK) and Danish krones (DK) are posting gains against the dollar.

Copyright: United World Capital

 

[UWC Neeraj]

19 OCTOBER 2012: EU BANK UNION READY BY 2014

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

EU leaders agreed yesterday to establish a single banking supervisor for the 6000 banks inside the Euro zone by 2014, opening the way for its rescue fund to inject capital directly into debt ridden banks. A legal framework shall be adopted by the end of this year giving the European Central Bank (ECB) overall responsibility for banking supervision. Most day-to-day oversight will still be delegated to national bodies. An effective banking union is regarded as a first important step to overcome the euro zone three-year old debt crisis.

Asian shares eased on Friday as markets consolidated gains from a three-day rally. Last night also Dow Jones and Nasdaq ended in negative territory. Both Google and Microsoft delivered weaker than expected quarterly results. This weighed in on market sentiments.

The Euro was resilient trading at 1.3070 in morning hours in Asia 70 basis points down from the one-month high on 1.3140 reached on Wednesday. The single currency edged higher toward Japanese yen which also continued to fall against the USD. The down-side risk for the Euro is looking weaker short-term. The Euro/USD will probably remain in its recent broad range. Momentum seems to build up to a new test on the technical resistance level on 1.3175. The dollar index against six most traded currencies remains stabile.

Gold prices slipped to 1735 and trades at present on 1739. Recent positive third quarter company results have together with better housing numbers boosted US Treasury bill yield and supported the dollar. Appetite for precious metals bullions have consequently decreased over the last days. Silver reached 32,70 yesterday down from 33.30. Brent crude fell to USD 112 a barrel. It has stabilized in morning trade, at 112,40. NYMEX. New York crude is still trading above 92.

Copyright: United World Capital

 

[UWC Neeraj]

22 OCTOBER 2012: ASIA FALLS ON WEAK US EARNINGS

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Asia started in red this morning in line where the US and European markets ended last week. Disappointing corporate earnings from General Electric and McDonalds, along with steep fall in oil prices and increased worries on Europe’s dept crisis, influenced market sentiments. Negative sentiments are once again prevailing at when a new trading week opens in Asia. Numbers for Japanese exports, a key driver of the world’s third-biggest economy, saw a sharp fall impacting the MSCI-index of Asia-Pacific shares which fell 0,6 percent. Also Korea and Australia are down.

The result season is continuing in the United States this week with Facebook, Yahoo and Apple ready to present third quarterly results. First out is Facebook on Tuesday. Google, Microsoft and Intel disappointed investors last week. That turned around the positive trend we have seen in the stock markets since the Federal Reserve and European Central Bank’s decisions for monetary easing. The outcome of the forthcoming US presidential elections are also weighing in on investor’s sentiments encouraging profit taking and sitting on the fence.

The euro is resilient despite mixed signal from the euro zone over the progress of its three years debt crisis. Euro/USD is trading 0,3 percent up at 1.3046. The final outcome of the Spanish municipal elections which is regarded a test on the government’s austerity policies, are not final. Japanese yen continues to fall. USD/JPY is at 79,50 with the yen 0,3 % weaker. Brent crude has recovered from its bottom close to USD 110 a barrel trading at 110,85. Precious metals that fall steeply last week have recovered somewhat this morning. Gold is at 1726 up from 171. Silver is trading at 32,30, one percent up from bottom levels seen on Friday.

The rating agency Standard and Poor raised over the weekend question marks whether the last Chinese GDP numbers of 7,4% economic growth have been politically manipulated? The real figures were presumed to be closer to 6,5 %. Some analysts see this as part of the Chinese bashing; which has been “popular” in some American political circles lately. From Beijing there is news that Chinese top leaders have asked policy think-tanks to present the most ambitious economic reform proposals for decades. The proposals shall contain to curb the power of state companies and open for bigger discretionary freedom to set interest rates and the value of the Yuan currency.

Copyright: United World Capital

 

[UWC Neeraj]

23 OCTOBER 2012: APPLE SAVED WALL STREET

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Apple again saved the day on Wall Street. After the US markets had hovered in the red for most of the session, Apple brought new life into Dow and Nasdaq at the last hour before closing yesterday. Apple is going to announce at press conference today its biggest market product move since the debut of the iPad two years ago. Apple is going to launch a smaller, cheaper tablet in competition Amazon and Google. Apple’s clear intention is to protect its market share and make innovative inroads into new markets. Analysts have for the last month claimed that Apple was planning a less expensive version of the iPad to take on cheaper competitive devices.

Apple shares jumped four percent on the news. In Asia shares inched down on caution over the region’s new corporate earnings season. Global shares faltered overnight on weak earnings reports and outlook. The MSCI index of Asia-Pacific shares outside Japan eased 0,1% dragged down by a decline in South Korean stocks. Nikkei was also down. US stocks were in the red for most of the session after Caterpillar slashed down its forecast for 2012, warning that the global economy was slowing quicker than expected.

USD rose to 80,02 yen, the highest level seen since early July, on expectations on announcements on new monetary easing from the Bank of Japan. The Yen has recovered in early Asian trade. USD/JPY is at 79,85. Euro/USD is steady at 1.3050 level on expectations on bailouts to Spain and Greece in coming weeks. The Euro was also strengthened by a statement from a high European Central Bank official reiterating that ECB is committed to do everything to show the Euro is irreversible.

Crude prices fell one dollar during yesterday. Brent is at 109,30 and NYMEX trades at 89. Gold fluctuated heavily during the New York session. It reached 1730 to within minutes fall back to 1718. Gold is again trading up at 1726. Silver rose to 32,40 but has fallen back to 32,25. Copper prices are stronger in morning trade.

Copyright: United World Capital

 

[UWC Neeraj]

24 OCTOBER 2012: FACEBOOK SURPRISES AND JUMPS 13%

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Facebook surprised markets and delivered much better than expected when presenting third quarterly results yesterday. The number one social network rose 13 percent helped by strong mobile advertising revenues. 14 percent of its advertising revenue comes from mobile ads. This is a clear indication that Facebook starts to figure out how to earn money of smartphone and tablet users. Mobile ad revenues totaled USD 150 million in the third quarter compared with 50 million in second and nothing in the first quarter of the year.

Apple launched its mini iPad during the last session. The cost would be USD 299 considerably more expansive than the competitors, Google and Amazon, but half the price of its iPad. The presentation failed to impress markets, and the share fell 3 percent. It was a new dismal session at the US stock exchanges. Dow Jones fell 1,82 and Nasdaq 0,82 percent. The markets are somewhat stronger in Asia this morning helped by stronger PMI-results from China in September. The HSBC’s bank Flash Manufacturing Purchasing Managers index (PMI) rose to a three month high in October signaling a strengthening recovery.

The PMI results are seen by investors as a token that the bottom in the short term downward cycle might be reached in China. The Shanghai composite is up, and futures for Europe and US are positive helped by better commodity prices. Copper prices are stronger than in one week. The Australian dollar which has been under pressure earlier this week is trading stronger on the better perspectives for commodities and a recovery in China. Weak quarterly company results and uncertainties regarding the upcoming presidential elections have put the stock markets under pressure during the last days and reduced the appetite for risk. This has strengthened the dollar and put the Euro under new pressure. EURO/USD is trading at 1.2987 pulling back from last week’s high on 1.3140, but well above October month’s low at 1.2804. The President of the European Central Bank (ECB), Mario Draghi is meeting the German Bundestag today in an effort to convince skeptical parliamentarians on the importance of monetary easing.

Oil prices fell anew dollar yesterday. Brent crude has recovered to 108,50. Also gold and silver prices are trading higher in Asia after new steep falls yesterday.

Copyright: United World Capital

 

[UWC Neeraj]

25 OCTOBER 2012: ASIAN SHARES EDGE HIGHER

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Asian shares edged higher in early Asian trading as signs of recovery in China and the United States eased fears of deteriorating global growth. Market sentiment remained, however, vulnerable when weak corporate earnings continued to undermine investors confidence. The MSCI index for the Asia-Pacific shares were up 0,3 percent. The South Korean Kospi and Australia were also up after a new week session in New York. Both Dow Jones and Nasdaq fell.

Oil prices fell for its seventh consecutive session on Wednesday after US oil storages were reported higher than expected. Brent crude has recovered in morning trade at 108,25. NYMEX, New York crude, is at its lowest level since July trading at USD 85,73 a barrel. Copper, a reliable barometer for commodities added 0,9 % to 788,685 a metric ton. Gold which has a strong technical support level on 1700, rose to 1709 after trading close to 17600 yesterday. Silver seems to stabilize on bottom levels in the range between 31,50 and 32.

The USD dollar was stronger against an index of six major currencies. The Japanese yen is at 79,95 against the USD. The stock markets in Japan have stabilized over the last days after the steep fall in previous weeks. The yen is regarded by many investors as a “safe haven” and tend to increase on uncertainties in the market. The Euro has gained ground both against the yen and the USD, trading close to the 1,30 level against the dollar. The President of the European Central Bank, Mario Draghi, met German parliamentarians yesterday in an effort to convince law makers on the soundness of ECB’s monetary easing.

New numbers from the US housing sector gave further evidence that the sector is picking up. New single family home sales surged in September to the highest levels seen in two and a half years. Weak earnings outlooks and US multinationals missing targets, made investors nervous about a slowing economy. Apple which is the biggest capitalized company in the world is going to present quarterly results today.

Copyright: United World Capital

 

[UWC Neeraj]

26 OCTOBER 2012: APPLE IPAD SALES DISAPPOINTS

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Apple, one of the most valuable public companies in the United States, posted quarterly earnings that fell short of expectations after the close of the US markets yesterday. Earnings a share came in lower than expected and Apple fell 1,4 percent in after hour trading. Equity futures fell on the news Dow Jones and Nasdaq ended up in another uninspiring session on Wall Street. Investors continue to worry about the US economy and a string of weaker than expected company results. 70 % of the companies hitherto reporting have reported lower results than expected.

The negative trend continued in Asia this morning where the major indexes fell. Global concerns on the economic outlook are in the back of investors mind. This together with uncertainties on forthcoming leadership changes in the two biggest economies in the world, US and China, affect the market sentiments negatively. Asian exporters struggle against shrinking global demand for their products. Samsung Electronics, however, is an exception. Samsung reported third quarterly profits for a fourth straight quarter. Profits reached USD 7,4 Billion. Bank of China also reported good results with its biggest quarterly profit in a year. Procter and Gamble was yesterday’s positive exception on the US stock exchanges.

The dollar index and the Japanese yen are down. Bank of Japan has announced aggressive monetary easing which drove the Yen down to 80,05 against the USD. The Euro is also falling. Euro/USD is at 1.2937 after inching towards 1.30 during yesterday’s trade. There are no other big changes in the currency picture.

Oil prices recovered yesterday, but oil is again on defensive in early Asian trade after steep falls over the last ten days. Brent crude is at 107,63. Gold and silver prices, which also recovered yesterday, are again under downward pressure. After staring Asian trade on 1715, gold has fallen ten dollars to 1705. Silver has dipped below USD 32 an ounce. It is expected continued volatility in currency and commodity markets during the last trading day of this week. Stock futures are pointing down.

Copyright: United World Capital

 

[UWC Neeraj]

29 OCTOBER 2012: ASIAN SHARES EDGE UP ON US GROWTH

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Asian shares edge higher this morning in signs of stable growth in the United States. The MSCI index of Asia-Pacific shares outside Japan added 0,2 percent after posting its biggest drop in two months last week. Australia and the South Korean Kospi are also up. The Hong Kong and Shanghai indexes ended marginally down. The US markets are closed today due to the storm forecast. New York is expected to be hard hit by Hurricane Sandy and Mayor Bloomberg has ordered evacuation of parts of lower Manhattan.

The US Gross Domestic Product, GDP, rose a mediocre 0,2 in the third quarter to expected 2,0 % for 2012. Housing gave the economy a boost, but business investment is lagging. The growth data point to an economy with little momentum, and leave considerable doubt about its resilience to the so called “fiscal cliff” of tax rises and spending cuts due to take place at the end of the year. With little sign that the growth is poised to accelerate, the US Federal Reserve will have every reason to continue its third round of quantitative easing known as Q3.

Non-residential investment continues to decelerate. There seems to be two reasons for the reversal in capital spending: a weakening in global growth and worries about the fiscal cliff. It is hard to judge which effect is greater. The slowdown in China and other emerging markets which have soaked up US export in recent years probably accounts for a good part of the fall in investment. Investors are also reacting strongly to doubt s about the fiscal environments. Slow steady growth in consumption seems to be the main force supporting growth in the third quarter.

The USD is stronger against the Euro in early trading in Asia at 1.2932. It has though recovered from Friday’s two-week low at 1.2882. The Yen is gaining. USD/JPY trades at 79,72. Big and violent street demonstrations against austerity in Italia, Spain and Greece underline the social and economic explosives caused by the debt crisis in the Euro zone. The dollar index DXY measured against a basket of six major currencies hit a near seven-week high on Friday and is at the same level today. The grim weather forecasts and Hurricane Sandy has stabilized oil prices. Brent crude is trading above 109. Gold and silver are trading slightly higher; 1715 and 32.15.

Copyright: United World Capital

 

[UWC Neeraj]

30 OCTOBER 2012: USA MARKETS WON'T WORK THE SECOND DAY IN A ROW BECAUSE OF THE HURRICANE "SANDY"

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Boards of USA have cancelled it work in connection with hurricane for the second day in a row for the first time in a century. So, on Tuesday, October 30, in the USA trading will not be held not only in shares and options, but also bonds.

Also it has been reported that on Tuesday will be closed for citizens’ visits buildings of the federal government in Washington, and the staff of not emergency services will have holiday. Thus the personnel of the companies in the Wall Street will be presented at the New York offices in limited structure, the big part will spend the working day far off.

It is necessary to note that the Ministry of Labor of the USA declared the intentions on report publication for October on Wednesday, as it is planned according to the schedule, despite the problems connected with hurricane.

Hurricane can also influence oil prices. Earlier already it was noted that on its way there can be some oil refineries in the general capacity of 1,2 million barrels per day, or 7% of oil refining capacities of the USA. In this regard production on the majority of the enterprises is already closed. Also we will note that because oil refineries reduce the capacities, oil stocks this week should grow that indirectly conducts to decrease in the oil prices in North America and also to growth of spread of Brent-WTI.

Today, this morning oil is decreasing and traded on a level of 109.05 dollars per barrel for a BRENT and 85.33 dollars for LIGHT.

Gold and silver are moving in a positive direction and are traded on levels of 1711.43 and 31.88 accordingly. Euro is a bit stronger then dollar and is traded on 1.2921.

Copyright: United World Capital

 

[UWC Neeraj]

31 OCTOBER 2012: ASIAN MARKETS ARE RECOVERING

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Today Asian stocks markets except for China are gaining in price. Better than the others looks Japanese Nikkei which has lost yesterday before closing of a trading session about 1%. The bank of Japan expanded yesterday the program of repayment of bonds on 11 trillion yens (to 91 trillion) that practically coincided with expectations, thus was declared that fight against a deflation is a priority task. Accordingly to a regulator estimates, by 2014 inflation in the country should reach level of 0,8%, but the target level is 1%. On this background investors safely can expect further continuous monetary easing policies in Japan. Meanwhile the Japanese yen continues some strengthening after last wave of decrease, and today currency pair USD/JPY already bargains at level 79,6 against 80 on Friday.

Today the trading at the exchanges of USA should renew. The main blow of hurricane “Sandy” is over; the building of the New York stock exchange did not suffer. Investors with big tension expected information on renewal of the auctions - at the end of the week there is coming a lot of an important macroeconomic statistics. In the centre of attention there will be data on a labor market, the last one before the elections in the United States.

In absence of the trading in the USA, the prices for oil following the results of last session showed multidirectional dynamics. The spread in December contracts between the Brent and WTI brands makes at present 23,4 dollars. Volumes naturally appeared essentially below averages. According to Reuters, owing to elements on east coast of the USA, 2/3 of all oil refining enterprises appeared closed. Besides, the stop touched also the largest oil pipeline. Nevertheless, already in the nearest future the situation should be stabilized. Today in the morning we can see Brent traded on 109.20 and Light on a level of 85.99.

One of the world's largest investment companies BlackRock on Tuesday issued the review concerning the market of metals in which expressed opinion on an undervaluation of this type of raw materials. In their opinion, demand from China still remains high, despite decrease in growth rates of economy of Heavenly Empire, and the economic situation in Europe and the USA essentially improved. In this regard, in their opinion, it is possible to expect growth of cost of such goods, as copper, iron ore and others.

We could already observe the result of this statement during Asian trading session; there metal companies were measurably growing this morning.

Copyright: United World Capital

 

[UWC Neeraj]

01 NOVEMBER 2012: DAYS OFF IN USA DID NOT ADD ENTHUSIASM TO THE MARKETS

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Yesterday finally trading in the actions in USA were opened after two compelled days off. The American investors began with purchases; however a positive dynamic was reduced after. Following results of the session on Wednesday the index of Dow Jones decreased for 0,08 %, S&P rose by 0,02 %, Nasdaq - for 0,06 %. Moods of investors could worsen with adverse statistics which has been presented yesterday.

The European markets bargained yesterday in different directions, but before closing amicably went to "a red zone". The index of London stock exchange FTSE 100 fell by 1,15 %, index of the Parisian stock exchange CAC 40 fell by 0,87 % and DAX fell by 0,22 %. Influence on moods of investors was rendered by statistical data on inflation and unemployment in Euro zone. The main attention of investors at the moment is chained nevertheless to the Greek and Spanish questions.

Oil futures this morning bargain in different directions, Brent decreases to 107.38 dollars for barrel, Light grows to 86.81 dollars for barrel.

On the average analysts expects that the volume of stocks of oil in USA increased by 1,5-1,75 million barrels. According to the Reuters agency message, in October oil production by the OPEC countries slightly grew. Proceeding falling of production in Iran and interruption of deliveries from Nigeria were completely compensated with the growth of production in such countries as Iraq, Angola and Libya.

Gold with delivery in December on COMEX went up in price for 0,4 % to level of $1719,10 for troy ounce. At currency trading - dollar weakened against euro and the British pound, but got stronger against yen.

Today in USA will be presented a lot of macroeconomic data, which may affect trading on global exchanges. Will be known forecast of ADP on employment, will be published statistics on the number of initial claims for unemployment benefits. Important will be data on construction spending and auto sales.

Copyright: United World Capital

 

[UWC Neeraj]

02 NOVEMBER 2012: USA: THE EXCHANGES MISSED THE REAL RALLY

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Yesterday the stock market of United States finished trading session with considerable growth of main indexes, maximal for last 7 weeks. The index of economic conditions of ISM in the production sphere in October contrary to expectations increased from 51,5 points to 51,7 points; weekly data on number of primary requests for unemployment benefits showed decrease on 9 thousands to 363 thousands with average forecasts at level of 370 thousands; data of ADP showed employment expansion in October on 158 thousands whereas market average forecasts were 135 thousands; at last, the index of consumer confidence in October reached more than a 4-year maximum on a mark of 72,2 points, though a little didn't hold on to forecasts.

Following results of session the indicator of blue chips Dow Jones Industrial Average raised on 1,04 % to level of 13232,62 points, the S&P500 increased on 1,09 % to a level 1427,59 points, and the index of high-technology industries Nasdaq Composite added 1,44 % and reached a point of 3020,06.

In the raw market December futures for oil of Light brand rose in price for 1 % to level of $87,09 for barrel. At the same time volatility is increasing in trading of futures for oil of the Brent brand. Yesterday's statistics from Ministry for the Power Generating Industry of USA, shown essential reduction of stocks of oil in country which has supported prices of oil. As a result futures for oil of Brent brand continue to bargain around $108 for barrel. Gold with delivery in December on COMEX fell in the price for 0,2 % to level to $1715,50 for troy ounce. At the currency trading dollar got stronger against euro, the British pound and yen.

Today the long-awaited report from a labor market of USA for October will be announced. On forecasts data is expected to be quite different: unemployment rate can exceed previous indicator, but number taken out of agricultural sector can grow - that in turn can promote raised volatility of trading in the first half of session. It is necessary to note that as a whole this statistics is capable to set moods of investors. However reaction to it can appear to be short-term on the threshold of a coming election of the president of USA.

Copyright: United World Capital

 

[UWC Neeraj]

05 NOVEMBER 2012: ELECTION UNCERTAINTY TEMPERS OPTIMISM

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

The USD continues to climb against all currencies prior to a presidential election, too, close to call. The Euro is once again under strong downward pressure with Greece back in focus after what is described as a “disastrous” 2013-budget. Both deficit and debt targets seem to overshoot due to a deeper than forecast Greek recession.

Greek and Euro zone policy makers’ effort to shape a deal to prevent the collapse of the Greece’s rescue packages, hang on the cliff. There remains room for nasty surprises and potentially a failure of the intended bailout. This has brought the possibility for a Greek exit from the Euro zone back on the agenda. Euro/USD is trading at 1.2831. USD is also stronger against JPY trading at 80,42.

Last week saw a string of encouraging data releases from the US culminating in Friday’s robust non-farm payrolls report on 171 000 new jobs created in October. The unemployment rate was up from 7.8 to 7,9 percent indicating a slow, but sustained economic recovery.

Uncertainty ahead of Wednesday’s US presidential election along with worries about the “fiscal cliff” of tax increases and spending cuts facing the United States, limited the feel good factor of investors. With the outcome of the elections hanging on the edge, markets are left concerned whether the newly elected president will have the political capability to deal with the fiscal cliff. Uncertainties related to automatic fiscal tightening may undermine the recent economic rebound. This does not bode well for general risk appetite.

Wall Street’s initial positive reaction to the positive labor figures quickly faded and gold and industrial metal prices sank with the dollar climbing sharply.

Copyright: United World Capital

 

[UWC Neeraj]

06 NOVEMBER 2012: EURO DROPS TO TWO MONTHS LOW

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

The Euro continued to fall and reached its lowest level against the USD in two months trading at 1.2787 Tuesday morning. The outlook for the Euro is clouded by uncertainty over the outcome of a Greek parliamentarian vote on further austerity steps needed for Athens to secure international aid. Prior to the vote in the Parliament on Wednesday Prime Minister Antonis Samaras stated that Greece would run out of funds within some few weeks without a quick international bailout injection.

The Greek Parliament shall vote on a package of measures of cost cuts and tax hikes of a total value of 13,5 billion Euros by 2016. Approval of the measures are crucial to unlocking 31,5 billion Euros in aid from the International Monetary Fund, IMF and EU. Release of the bailout funds have been kept on hold for months. The uncertainty surrounding the outcome of the parliamentarian vote, has pushed the euro out of the 1.2800 – 1.3000 trading range held since mid-September. The next immediate technical support level is around 1.2740.

Stocks advanced modestly in New York on Monday in a quiet session the day before the presidential election. President Obama has a slight lead in the last opinion polls, but whatever the outcome the election’s resolution will finally end the uncertainty that has kept the markets stagnant for the past few weeks. Reelection of Obama or a Romney victory could anyhow lead to a relief rally. Nasdaq was the strongest performer yesterday helped by a rally in Apple. Apple’s stocks rose 1,4% after falling 17 percent since its closing high of USD 705 on September 21.

The Australian dollar is steady at USD 1,0369 prior to Australian Reserve Bank’s rate decision later today. A rate cut of 25 basis point to cash rate to 3,0 % is expected. In relation to Japanese yen the USD eased to 80,23 after rallying to a six-month high of 80,68 on Friday.

Oil prices steadied. Brent crude is trading at 108 a barrel caught between uncertainties on the outcome of the US presidential elections and worries about Greece and the euro zone crisis which could delay a global economic recovery and hurt oil demand. Gold (1686) and silver (31.10) have picked up from its lows on Friday.

Copyright: United World Capital

 

[UWC Neeraj]

07 NOVEMBER 2012: DOLLAR FALLS ON OBAMA VICTORY

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Securing victory in important swing states as Ohio, New Hampshire and Florida, President Obama seems to have won a clear majority and reelection in the US Presidential elections. As the results started to come in during the night, stock futures and the dollar fell against a basket of major currencies. Euro/USD which slipped to 1.2760 on Monday is up to 1.2860 in morning trade in Asia. Gold jumped 40 dollar to 1725 and benchmark treasuries rose. Also oil prices are up. NYMEX at 888 and Brent crude trading at 110,80. Asian shares rose on Obama’s reelection. The result means an end to the uncertainty which have ridden the markets for last weeks, and signals no dramatic shift in US economic policy.

Obama’s victory is in line with market’s expectations. A close race was, however, expected. The general view is that a second Democratic term under Obama would favor bonds. It is perceived that Obama favors bonds and low interest rates. The Republican challenger, Mitt Romney, is generally seen as more business friendly. As a former business executive he is seen as more supportive for equities. As results came in, US futures fell while Asian shares rose amid relief that there was a clear-cut result. The South East Asian Pacific Index, MSCI, was up 0,4 %.

The general signal coming from world markets is that the election outcome is in line with expectations. The temporary fall in the USD suggests that any precautionary positioning in USD has been premature. The Australian AXJO index rose 0,5 percent supported by overnight rise in commodities that boosted mining stocks. The Australian dollar hit a five-week high at 1.0461. Euro/USD touched a session high on 1.2876 being safely backed in the corridor between 1.28 and 1.30 which we have seen over the last five – six weeks. Analysts see Obama’s victory as a continuation of monetary quantitative easing. Active use of the printing press would put pressure on the dollar and boost bonds.

The big domestic challenge for Obama is seen to be cooperation with a Republican dominated Congress in how avert the looming “fiscal cliff” where USD 600 billion worth of spending cuts and tax increases risk pushing the economy into deep recession. Any sharp downturn in the world’s largest economy would raise concerns about demand for industrial metals. The markets first reaction has been to send commodities, oil and precious metals higher.

In Greece parliament later today is going to vote on a package of 13,5 billion Euro of spending cuts and tax hikes. These austerity measures are crucial to unlocking 31,5 billion euro in aid from global lenders to keep the debt-ridden country afloat. A negative vote is going to put the Euro under new pressure.

Copyright: United World Capital

 

[UWC Neeraj]

22 NOVEMBER 2012: GREEK EXPECTATIONS TAKES EURO HIGHER

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

German Chancellor Angela Merkel breathed new life into the Euro yesterday when she stated that a deal on the Greek emergency package was still within reach when Euro finance ministers meet on Monday. The Euro hit a 6-1/2 month high against the yen which continue to fall on expectations of more forceful monetary easing in Japan. Euro/USD is also stronger trading at 1.2844.

Investors initially dumped the Euro after Euro finance ministers and IMF, International Monetary Fund, failed to reach a compromise on release of emergency aid for Greece Tuesday night. Merkel’s comments turned the downward trend around. Euro last traded up 1 percent at 105,94 yen. The dollar has over the last seven trading sessions gained 3,9 percent against yen. USD/JPY stands at present at 82,38 giving Japanese exporters a welcomed boost. Yen is broadly falling against other currencies including the Australian dollar.

Analysts are expecting the yen to continue weakening into the Japanese elections in the middle of December. Bank of Japan’s (BOJ) firm intention for asset purchases and forceful monetary easing makes it likely that the yen shall remain vulnerable in the near term.

After relatively quiet equity sessions in Western Europe and the US Asian stocks rose Thursday morning after a survey showed that China’s manufacturing sector in November expanded for the first time in 13 months. Along with US factory data it raised optimism that the global growth slowdown is turning. MSCI broadest index of Asia-Pacific shares outside Japan raised 0,8 percent to a one week high.

Market sentiments were also boosted by the truce between Hamas and Israel on Gaza. Brent crude trades above USD 110 a barrel. Precious metals and commodities show a firmer upward trend. Gold stands at 1730 and silver trades at 33,40.

Copyright: United World Capital

 

[UWC Neeraj]

23 NOVEMBER 2012: GOOD WEEK FOR ASIAN SHARES AND EURO

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Stock indexes continued to rise Friday morning as Asian shares were on course for a weekly gain of more than 2 percent. The Asia Pacific MSCI rose 0,4 percent and reached the highest level seen in two months after manufacturing surveys from China and the United States raised hopes for an improving global growth outlook. Japan and US were closed due to public holidays and Thanksgiving.

EURO/USD is trading at 1.2887 with the Euro enjoying a one percent lift since last Friday’s close. This in spite of yesterday’s data pointing to the Euro zone sliding into its deepest recession since 2009. The Euro has, however, been helped by optimism that a funding deal for Greece will ultimately be found when euro finance ministers meet in Brussels on Monday.

USD/JPY eased 0,1 percent to 82,39 pulling back from Thursday’s high of 82.84 which is the dollar’s strongest level since early April. The dollar has gained 3,7 percent versus yen over the last two weeks. The yen has been weakened on expectations that the Bank of Japan shall implement more drastic monetary stimulus.

Commodity markets were quiet with oil, copper and precious metals staying course to end the week higher than they started. Brent crude is trading at USD 110, 25 and Gold is flat around 1730. Last day’s markets have been subdued by Thanksgiving and enters a new week once again with major focus on the debt crisis in Europe. While a lot of ink has been spilled on the US fiscal cliff the biggest challenge for the global economy rests with the euro zone.

Copyright: United World Capital

 

[UWC Neeraj]

26 NOVEMBER 2012: EURO RISES ON GREEK HOPES

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

The Euro hit a seven-month high against the yen and held a one-month peak versus dollar when the trading week opened in Asia this morning. The Euro was supported by hopes that Greece will finally secure more emergency loans when EU Finance ministers meet in Brussels today. Euro/USD is trading at 1.2963 after reaching 1.2969 on Friday bringing its weekly gain to 1,75 percent and above the 1.2945 level which it began 2012.

Asian shares inched up on Monday on hopes that Greece can avoid a near term bankruptcy. A regional Spanish vote favoring separatist parties capped gains. The stock futures for US suggest a soft opening while European futures are falling. The Asian Pacific index, MSCI, rose 0,2 percent marking advance for the sixth consecutive day. There is market optimism on the euro area’s ability to reach a deal on Greece, but worries about the vote of Catalonian independence from Spain and its implications for Spain’s austerity measures and bond rates remain high.

Oil, commodities and precious metals saw gains on a weaker dollar last week. Brent crude is trading above USD 111 a barrel in Asia, and gold surpassed the 1750 level on Friday as central banks boost reserves. Both gold and silver fell somewhat back in early Asian trade. Gold dipped below 1750 and silver trades at 34,05. Gold saw its five week high helped by a weaker dollar and investor confidence. Both pension funds. Sovereign wealth funds and private investors have been buying gold along with central banks in Brazil, Russia, Mexico, India, South Korea and Thailand. The buying has also been prompted by devaluation concerns of major currencies.

Copyright: United World Capital

 

[UWC Neeraj]

27 NOVEMBER 2012: EURO MINISTERS FINALLY AGREE ON GREEK DEBT

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Euro zone finance ministers and the International Monetary Fund, IMF, finally reached a deal on Monday to reduce Greece’s debt. After 12 hour of negotiations Greece’s international lenders agreed on measures to reduce Greek debt by 40 billion euro, cutting the debt ratio between debt and GDP (gross domestic product) to 124 percent by 2020. Urgently needed loans to keep the bankrupt economy afloat were simultaneously released. In a significant new pledge ministers committed themselves to lower Greece’s debt below 110 percent by 2022. This is so far the most explicit recognition that some loans have to written off from 2016 when Greece is supposed to reach a primary budget surplus.

After two weeks of haggling, markets reacted with relief on the aid package. Stock markets in Asia continued up. The MSCI index for the south Pacific region outside Japan gained 0,6 percent, and the Euro/USD is trading at its highest level in weeks at 1.2985, marginally up from yesterday. Upon the release of the news from Greece, the euro reached 1.3010. Also the Australian dollar is trading at its highest level in two months versus dollar. USD/JPY was falling in early Asian trade, but has recovered at 82,15. Dow Jones was down and Nasdaq marginally up yesterday waiting for the outcome from Brussels.

Oil prices are steady. New York crude (NYMEX) is USD 88 a barrel. Brent crude is 111,04. Commodity prices are up helped by news on big infrastructural programs in China. Gold keeps around 1750 after reaching 1754 on Friday. Silver is slightly up in the morning trade in Asia at 34,20.

The agreement in Brussels has given the market a breathing spell. Investors focus is now likely to shift back to another major concern hanging over the markets, the looming US fiscal crisis. Republicans asked on Monday president Barack Obama to detail long term spending cuts to help solve the countries fiscal crisis. The Republicans are holding firm against any income tax rate increases for the wealthy that Democrats seek. If a compromise deal on the budget drags out, new focus on the “fiscal cliff” would for sure create nervousness and dampened investors risk appetite.

With big funds winding down their positions ahead of the new year-end, many analysts see it unlikely with major changes in the currency markets. The euro which has gained two percent over the last days is not set for major new gains in the short term. Any further rise in the Euro will likely be countered by selling to cap the euro’s upside. USD/JPY has fallen considerably over the last weeks and no major development is expected before the Japanese elections in mid-December and an eventual new government’s likely monetary easing.

Copyright: United World Capital