Daily Market Reviews by UWCFX

[UWC Neeraj]

28 NOVEMBER 2012: FOCUS SHIFT BACK TO “FISCAL CLIFF”

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

Budget talks and the “fiscal cliff” is back in focus after leaving the euro finance ministers agreement on Greek debt cuts on the agenda in the very start of the week. The euro’s short won gains against the USD were eaten up during yesterday. Euro/USD is trading at 1.2939 after falling fifty basis points in the afternoon of yesterday. The Japanese Yen strengthens versus dollar. After USD/JPY has traded in the interval between 82.15 to 82,65, yen is this morning below 82 at 81,95. Asian shares ended a seven-day winning streak this morning. The share index for Asia-Pacific stocks, MSCI, fell 0,5 % and commodities eased as lack of progress in talks on US budget threatened to threw the US economy back in recession.

President Barack Obama launched yesterday a public relations push for his bid to raise taxes on wealthy Americans. US lawmakers remained, however deadlocked over dramatic year-end tax increases and spending cuts known as the “fiscal cliff”. Obama met with small business leaders in the White House. They urged Obama to keep the tax cuts for the middle class to increase consumption and job creation. The US tycoon, Warren Buffet, simultaneously, called on the rich to pay more and proposed a minimum tax on 30 % on incomes between USD 1 and 10 million and 35 % on incomes above.

Senate majority leader Harry Reid expressed last night disappointment over modest progress in the budget negotiations. The remarks had US stocks to slide. Dow Jones lost 0,69 percent and Nasdaq 0,30. Statistics could on the other hand report on record high Thanksgiving sales and the highest US-consumer optimism in 5 years. The Shanghai composite Index slid 0,7 % and the Chinese stock markets to its lowest in nearly four years extending earlier losses and closing below 2000 points for the first time since January 2009. The weak Chinese stock market along with increasing doubts over US ability to resolve the fiscal crisis have over the last weeks strengthened demand for sovereign debt. Japanese government bond futures rise to a 9 and half year high.

Digesting the Greek debt deal comments on Twitter dismissed it as another exercise in kicking the can down the road. A degree of kicking is obvious. There is, however a critical element in the new deal which goes further than any step taken so far to get Greece back on its feet. There is an implicit understanding that Greece will undergo some form of official-sector debt restructuring with euro zone countries at some point in the future forgiving a portion of Greece’s debt. This sort of last-ditch measure is usually reserved for impoverished states in Africa and Latin America. German finance minister Wolfgang Schaeuble came close to acknowledging such an eventuality on a later press conference.

Oil prices are down a dollar since yesterday. Brent crude is trading at 110. Gold is also down from 1750 to 1741 breaking the good upward trend seen over the last days. Silver at USD 34 is also down.

Copyright: United World Capital

 

[UWC Neeraj]

29 NOVEMBER 2012: BIPARTISAN STATEMENTS TURN MARKETS AROUND

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

“The fiscal cliff” seems over the last couple of days to have taken over completely as the dominant theme in the market. Statements on Tuesday from the Democratic Senate leader, Henry Reid, expressing disappointing progress towards a budget compromise with the Republicans had the markets to tumble. Yesterday it was the other way around. When president Obama expressed hope for a deficit deal by Christmas markets made a sharp U-turn. Dow Jones and Nasdaq which had started in red territory, ended 0,83 and 0,81 percent up with Hewlett Packard, Chevron, American Express and Pfizer showing the way as cracks seemed to surface in the Republican front against any tax rises. Stocks rallied when House Speaker and leading Republican, Joe Boehner, stated that a compromise was possible to avoid the “fiscal cliff”.

Whether these remarks reflect the reality of the negotiations is another story. The “fiscal cliff” of budget cuts and tax hikes dominate the discussion and influence a world market driven by psychology. Optimistic statements are immediately given a positive spin regardless of realities. The markets are going to live with these sentiments in the coming weeks and we are most probably going to see volatility and big day-to-day changes in stocks as well as commodities and currencies. Yesterday gold was hardest hit and fell 40 dollar an ounce during the session. It has recovered and trades at present at 1722. Also oil and silver took a hard punch to normalize around USD 110 a barrels for Brent crude and 33,70 for silver.

Euro/USD fell 70 points during one session and saw a low on 1.2875 before climbing back to 1.2955 and the same level as last Friday when the common currency was strengthened by the prospects of a debt deal on Greece in Brussels. By finalizing the deal Monday night the Euro reached 1.3010 to plunge back to yesterday’s low levels. The comments from US policy makers rekindled hopes of avoiding a crash landing on the US budget; and strengthened the Euro.

USD/JPY has also demonstrated great volatility during the last week. It is now trading at 82,14 bouncing back from a week high on 81,68 against the dollar on Wednesday. The dollar has corrected after reaching a 7 ½ month high of 82,84 last week. The yen has been under pressure over the last couple of weeks on speculations about aggressive monetary easing in Japan after the elections in mid-December. It is expected that USD/JPY is going to continue to trade in a range between 81 and 83 till we have seen the outcome of the elections.

Asian shares touched their highest levels in more than three weeks. The MSCI-index for Asia-Pacific jumped 1 percent after ending a seven-day winning streak on Wednesday. Also commodities are up on “optimism” for reaching a compromise on the US-budget. Nikkei in Japan and Australian shares were up as the Shanghai composite index as yesterday saw its lowest level since January 2009.

Copyright: United World Capital

 

[UWC Neeraj]

30 NOVEMBER 2012: ASIAN STOCKS AND EURO TRADE STRONGER

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

Telecommunications and health stocks were the winners in New York last night as Dow Jones and Nasdaq rose marginally. The Dow Jones industrial average passed the 13 000 mark and seems to end the week in positive territory. Investors were buying on sporadic dips roiled by conflicting comments from Washington about negotiations on a budget compromise to avoid the “fiscal cliff”, fear for a combination of budget cuts and tax hikes. Wall Street reversed early gains and fell after the Speaker of the House, leading Republican John Boehner, dashed hopes that lawmakers were getting closer to a deal. It picked up at greater optimism for a compromise at the end of the session. The extreme volatility in the markets is probably continuing as long with the stalemate in Congress.

Stock markets in Europe ended in positive territory yesterday on initial compromise optimism from both President Obama and the House Speaker Wednesday night. The exchanges in Asia started the trading day on a positive note. Asian shares rose to a nine-month peak Friday morning. Japan’s industrial output rose unexpectedly 1,8 percent in October, up for the first time in four months. This along with a new announced stimulus package from the Japanese government helped Nikkei win 0,8%. Also the Shanghai and Taiwan bourses produced healthy gains. The mining giant Rio Tinto is up 3 percent upon presenting savings and restructuring measures worth USD 5 billion.

Japanese yen is losing on the stimulus plans after gaining against the dollar earlier in the week. USD/JPY is trading at 82,45 well inside the newly established 81 – 83 corridor. Euro/USD is again stronger at 1.2999 up 50 points from yesterday’s start. The euro reached 1.3015 on Thursday, the highest level seen since 31st October. The euro is helped by the bail-out package for Greece. It is expected that a skeptical German parliament will approve the support for Greece in a vote today. This will probably give the euro a new temporary boost.

The US government said yesterday that third-quarter gross domestic product expanded at a 2,7 percent annual rate, the fastest pace since late 2011. Export growth help offset weakest consumer spending and the first drop in business investment in more than a year. Brent crude is trading at USD 110, 49 a barrel marginally up from Thursday. US crude futures, NYMEX, is falling 0,4 percent. Increased tensions and escalating violence in Syria and Egypt are stoking permanent fear of oil supply disruptions. Gold has gained back 20 dollars from yesterday’s steep fall and trades at 1727. Silver is at USD 34,20 an ounce, the same level as seen at the peak earlier in the week.

Copyright: United World Capital

 

[UWC Neeraj]

03 DECEMBER 2012: EURO AND ASIA RISE ON CHINESE MANUFACTURING

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

Euro/USD rose to 1.3048 and Asian stocks jumped to a nine-month high on further signs of a stabilizing Chinese economy boosted investor’s risk appetite. China’s vast manufacturing sector quickened in November for the first time in 13 months. HSBC bank’s Purchasing Managers’ Survey, PMI, rose to 50,5. A further evidence that the Chinese economy is picking up after quarters of slowing growth. China’s official PMI was even higher at 50,6. An official PMI for the non-manufacturing sector reached 55,6 led by construction services.

The upbeat Chinese manufacturing data helped the Euro reach a six-week high against the dollar. The Euro was also strengthened by Angela Merkel’s careful remarks that Germany, in a medium, longer term perspective, might consider to write off Greek’s debt if the country succeeds in getting its house in order.

The rhetoric on the “fiscal cliff” increased during the weekend when Democrats and Republicans went on the air to trade accusations on whom are mostly to blame for the budget stalemate. This also helped the euro. In spite that there still seem to be a huge distance to cross before any budget deal sight is in sight, markets nevertheless seem to have discounted a compromise. All asset classes posted gains in November with higher appetite for securities. Security markets except the Shanghai composite rose.

The Japanese Nikkei continues to rise on a lower yen and expectations for monetary easing after the parliamentarian elections in mid-December. The dollar steadied at 82,40 yen not far from the 82,84 yen touched on November 22. Speculators have over the last weeks boosted a short yen position which was at its highest since May 2007.

US, NYMEX crude and Brent futures are inching up at 89,16 and 111,57 respectively. Copper gained 0,3 percent to USD 8018 a metric ton. Gold is slightly up to 1719 on a weaker dollar. The DXY dollar index against a basket of major currencies are down 0,2 percent.

Copyright: United World Capital

 

[UWC Neeraj]

04 DECEMBER 2012: WALL STREET FALLS ON WEAK DATA

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

Manufacturing activity in the United States surprisingly contracted in November, dropping to its lowest level in three years. The fiscal cliff remains, however, investors’ primary focus. The political haggling over how to deal with large automatic spending cuts and tax hikes scheduled to kick in at the beginning of the new year, threatens to threw the US economy into new recession. Both Dow Jones and Nasdaq fell back after three straight winning days for the US indexes. The S&P index which composes an average of US stocks, are in spite of yesterday’s weakness still up 12, 1 percent in 2012, making stocks one of the assets classes winners.

Asian bourses and the Japanese Nikkei edged down in early Tuesday trading when the weak US data triggered profit-taking on exporters. The US economy is key to the fortunes of Japanese exporters which rely heavily on consumption in the world biggest economy. Asian markets got a boost over the weekend when the Chinese economy demonstrated healthy manufacturing data and strong signals for a rebound. Yesterday’s gains were eaten by a new cold shower from the US. The Japanese yen which recently has fallen against the USD, fluctuated heavily yesterday. After USD/JPY had traded at its lowest levels in weeks, JPY recovered strongly on the weak US manufacturing data. It is now trading at 82,10.

The Euro/USD is still strong. It rose to 1.3076 during yesterday’s trading, the highest level seen since October 22. The Euro dropped against yen after rising to a seven-month high on 107,67 on Monday. A Greek bond buyback scheme at 65 – 70 % reduction of nominal value has attracted interest and also strengthened the common currency. There are small changes in other currency pairs. Australian dollar is stabile against yen and USD, and the Scandinavian currencies are demonstrating strength both against USD and Euro. EURO/USD is trading at 1.3054 at present.

Oil prices are down. Brent crude has tipped down a dollar to 110,54. Precious metals are also trading lower. After recovering from end of last week’s steep fall from 1750-level to 1707, gold traded at 1721 yesterday. This morning gold has dropped down to 1703, a fall of 15 dollar an ounce.

Copyright: United World Capital

 

[UWC Neeraj]

05 DECEMBER 2012: OBAMA STAYS FIRM ON TAXES FOR RICH

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

President Barack Obama held his ground on the “fiscal cliff” Tuesday. In an interview with Bloomberg Television Obama stressed that no budget compromise was possible without the wealthiest Americans paying their fair share of common expenses. With less than a month left to confront budget cuts and tax increases that will take effect from January 1st unless Congress acts, Republicans seem increasingly in disarray over how far to go to compromise with Obama’s demands. In the interview Obama took a conciliatory tone, but excluded any further tax burdens on an embattled middle class.

The insecurity over whether total budget cuts and tax hikes amounting to USD 300 billion would be implemented in some few weeks’ time, has severely affected markets. Wall Street finished slightly lower in a quiet session with thin trading volumes. Hewlett Packard recovering from last week’s onslaught when its share prices dropped 15 % in one day, was together with Intel who announced a buy-back of own shares, the winners.

Asian shares rose Wednesday led by surging Chinese equities. The MSCI index for Asia-Pacific shares outside Japan were up 0,6 percent. Shanghai shares surged 3 percent to reclaim the 2000 point level. Hong Kong shares jumped 1,3 percent. Nikkei also inched up on a statement from Bank of Japan confirming willingness for more aggressive monetary easing. USD/JPY which during yesterday’s trading strengthened substantially and reached 81,75, fell back in morning trade to 82,25 supporting exporters.

Better than expected terms for Greek bonds buy-back plan raised optimism that Athens will secure much needed emergency aid to avert a default. The news took the euro/USD above 1.32 levels for the first time in months. The Euro was also helped by Obama’s statements that weakened the dollar and increased risk sentiments. Gold saw a new set-back and fell to 1685. It has recovered to 1701 in morning trade. Oil prices have as well recovered from yesterday’s lows. Brent crude is up 0,2 % trading above USD 110 a barrel.

Copyright: United World Capital

 

[UWC Neeraj]

06 DECEMBER 2012: NOKIA CAUSES FALL IN APPLE

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

US stocks ended mostly higher on Wednesday. Dow Jones gained 0,64 percent and is again trading above 13 000. Nasdaq ended in red after the largest US company by market capitalization, Apple, swallowed its biggest fall In share prices in four years. Apple fell 6 percent and is down more than 20 percent from an all-time high reached in late September. Market participants cited a host of reasons for the drop; the company is losing share in the tablet market and NOKIA joining ranks with China’s biggest smart phone maker will give Apple a tough fight on the Chinese market.

Banking shares went higher led by Citigroup which jumped 6,3 % on a 10 000 employees or 4 % cut in its workforce. Cyclical shares closely tied to economic growth, also rallied on optimism on progress on a solution to avoid the fiscal cliff. Obama met with business chief executives in Washington and stressed readiness for a compromise if Republicans acknowledged the need to raise taxes on the wealthiest Americans. If the Republicans demonstrate such willingness, a budget deal can be reached within a week. The Republican is under strong pressure not at least from their own constituencies and; cracks in the ranks and possible “defectors” are likely to appear.

In England the Finance minister, George Osborne presented a new austerity budget to the House of Commons admitting that to have fallen short to obtain former set targets set. The budget proposal is most probably going to raise a new heated debate on whether austerity measures as practiced in England, Greece and other Western European countries are the right medicine to fight sovereign debt, trade and budget deficits. “Osborne has no more tricks to play”, commented one of the biggest British dailies.

Obama’s “fiscal cliff” comments created optimism in Asia where shares rose to a 16-month high. The Japanese Nikkei climbed 0,8 percent helped by a weaker yen. USD/JPY trades at 82,45. Euro/USD eased to 1.3054 after reaching a seven-week high of USD 1.3127 Wednesday. A disappointing Spanish bond auction reminded investors of the fragile fiscal health both of Spain and inside the euro zone and prompted a sell-off in the single currency. The markets are today waiting for the European Central Bank’s policy decision and US labor market report tomorrow.

Oil prices have fallen over the last 24 hours. Brent crude is one dollar down and trades below USD 109 a barrel. Gold is under downward pressure and tested the lows for the week at USD 1685 an ounce yesterday.

Copyright: United World Capital

 

[UWC Neeraj]

07 DECEMBER 2012: EURO FALLS ON BLEAK OUTLOOK

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

The European Central Bank, ECB’s, bleak outlook for the euro zone presented at a press conference yesterday, created turbulence in the currencies markets. The euro/USD fell to its lowest level in one week at 1.2969, down 150 basis points from its high on Wednesday. The fall in the Euro has worsened by the political development in Italy where Silvio Berlusconi’s Freedom Party withdrew its support for the technocrat government of Prime Minister Mario Monti. This immediately put pressure also on Italian bonds.

The main trigger for the sharply negative euro reaction was the mention of a “wide discussion over rate cuts. ECB President Mario Draghi said policymakers had considered cutting its main 0,75 % policy rate before deciding to leave it on hold. Draghi added that the ECB also “operationally was ready for negative rates”. This caused the euro to tumble and led biggest one-day loss in the single currency in one month.

The Euro fell steeply also against yen and other currencies. USD/JPY is urging up at 82,48. The slid in the Euro helped push the dollar index, DXY, up to 80,236 rebounding from a six week low of 79,58. Investors’ eyes are now on US non-farm payrolls report to be published later today. A sharp slowdown in employment growth IS expected due to the disruptions caused by super storm Sandy.

Asian shares touched fresh 16-months on Friday following modest gains in global equities as investors watched progress in US budget talks. Recent indicators suggesting stabilized growth in China has helped improve sentiments in Asia. The MSCI index for Asia-Pacific shares rose 0,6 percent and has gained 17 percent during 2012. Hong Kong shares reached a 16-month high. In the US a rebound in Apple helped boost technology shares on quiet exchanges.

Oil prices fell heavily yesterday. Brent crude tipped below USD 107 a barrel, but has recovered somewhat. Gold is again trading above USD 1700 an ounce.

Copyright: United World Capital

 

[UWC Neeraj]

10 DECEMBER 2012: ASIAN SHARES FIRM ON US OPTIMISM

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

Asian stocks stayed firm at its 16-month high Monday morning as better growth outlook for US and China gave raise to modest optimism. This came after US consumer confidence plunged in early December as fear over imminent tax raises and spending cuts, the fiscal cliff, outweighed the better than expected raise in non-farm payrolls job data. Unemployment fall from 7,9 to 7,7 % in November adding 146 000 new jobs suggests a modest momentum in US economy. The drop in unemployment figures is, however, mainly due to 350 000 people leaving the labor market.

The Asia Pacific share index rose 0,3 percent. The index was up 1 percent last week for its third successive weekly gain. Regional Asian market was Sunday further boosted when China reported a pick-up in factory output and retail sales after stagnating for seven quarters. Chinese exports and imports were, however, delivering below forecast presenting a mixed picture.

The Euro/USD continues to slide. Euro reached a two week low of 1.2876 on Friday after the German central back warned that Germany, the biggest economy inside the euro zone, might soon enter into recession. The Euro is at present trading at 1.2893. The pro Euro Italian Prime Minister, Mario Monti, announced during the weekend that his government will withdraw. That will put the Euro under increased pressure. The development in ten-year Italian bonds which are seen as a main confidence barometer for investors shall be closely followed today.

The American dollar is up 0,3 percent against a basket of major currencies. Commodity markets led by copper are generally firmer on expectation of stronger Chinese industrial demand. Oil prices are stabilizing after falling steeply last week. Brent crude trades at USD 107,40 a barrel. Gold (1706) and silver (33,14) are up from Friday.

Copyright: United World Capital

 

[UWC Neeraj]

11 DECEMBER 2012: EUROPEAN LEADERS URGE MONTI TO STAY

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

EU leaders urged the next Italian government to stick to Mario Monti’s reform agenda after the Prime Minister’s surprise decision to resign earlier than expected. Silvio Berlusconi’s return to front-line politics rattled the financial markets in Europe. Ten year Italian bonds, a good barometer on investor’s confidence, fell to 4,75 percent. EURO/USD also fell well below 1,29 on Monday, but has since recovered and trades at 1.2942 in early Asian trading.

Monti’s surprise weekend announcement came after Berlusconi’s People of Freedom Party withdraw its support for his technocrat government which over the last year has brought some predictability back to Italian politics. Monti, a former EU-Commissioner, has been seen as Brussels’ man and enjoy strong support from Germany’s Angela Merkel. Monti is a strong supporter of the Euro in contrast to Berlusconi who is seen as a Euro skeptic. Italian shares fell along with bonds yesterday. New elections are scheduled for February.

In the US political haggling over the “fiscal cliff” continues with no solution in sight as the clock is ticking closer to the 31st December deadline. US indexes ended flat with low turn-over. Asian stocks are marginally up. Australian stocks gained 0,4 percent on stronger commodity prices and better prospects for China. The Japanese Nikkei dropped after successive days of gain. A 10 % rally over the last month has worried investors as see signs of over buying.

The dollar firmed against Yen trading at 82,40. JPY is also under pressure by expectations of monetary easing by the Bank of Japan (BOJ). Oil prices were up during yesterday’s trade. Brent crude reached USD 108 a barrel, but has as gold and precious metals fallen back in early Asian trade. Brent trades at 107,25 and gold has dropped from 1715 to 1708.

Copyright: United World Capital

 

[UWC Neeraj]

12 DECEMBER 2012: WORLD STOCK MARKETS GROW ON POSITIVE EXPECTATIONS FROM FRS MEETING

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

The stock market in the USA has finished trading session rising on positive expectations concerning results of negotiations of politicians about reduction of state expenses and a country budget deficit. Index Dow Jones reached level of 13248.44 and added 0.59%, S&P increased for 0.65%.

Today in Vienna the next meeting of the countries of exporters of oil of OPEC will take place. Main question: discussion of quotas of oil production. According to Platts agency the cartel extracts 31,08 million barrels per day at a quota in 30 million. There will not be eventual influence on an environment of the oil market. This morning the oil futures are adding in price with Brent traded on 106.90 and Light on 86.35.

In India industrial production in October grew by 8,2%, increase for 4,5% was expected. In the last three months the government of India undertook a number of measures for attraction to the country of foreign investments, and also developed the steps directed on maintenance of internal demand and export. The reserve bank of India also tries to support economic growth and, in particular, gave a feeling that can reduce the main rates in the next quarter.

Democratic People's Republic of Korea carried out Ynkha-3 rocket start with an artificial Earth satellite "Kvanmenson-3". This is the second attempt then North Korea was trying to send the satellite on orbit, the rocket firing which taken place in April has ended with a failure. Japan regarded rocket start as violation of the international norms and decisions. Special session of UN Security Council on start of "Ynkhi-3", which Japan demanded to carry out, can pass already today.

Euro grows the second day in relation to dollar after the report showed that the trust of the German investors grew in December to a 7-month maximum. The German index of economic expectations of ZEW in December unexpectedly jumped up from -15,7 points to positive value in 6,9 points though -12 points were expected. This morning EUR/USD managed to stabilize above level of 1.30 and is traded on a level 1.3001.

Copyright: United World Capital

 

[UWC Neeraj]

13 DECEMBER 2012: BERNANKE UNDERMINED ENTHUSIASM OF BULLS

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

Investors finally got the most awaited news of a December after FRS announced its decisions. Results of meeting were quite expected: was made the decision on repayment of state bonds with longer circulation periods for $45 billion. Plus to it will remain the QE3 program of $40 billion a month. Total $85 billion a month.

And the markets fell into thoughtfulness: in fact, FRS finally undersigns that constant injections is the only thing that can help economy and a financial system. The debt market reacted to it with the sales of treasures - rates on 10-year bonds grew to 1,7%. Dow Jones, Nasdaq and S&P500 could not continue its upward development and were closed practically at a zero level.

EUR/USD tested a reasonable demand from the very beginning of trading day though it is impossible to tell that movements had large-scale character. The British positive data gave optimism; however confusion with the Greek debt and expectation of the next meeting of Ministers of Finance of Europe limited growth, but further publication of the accompanying statement of FOMC which has coincided with expectations of the QE expansion led the prices to a maximum of 1,3097. This morning EUR/USD is traded on a level of 1.3082.

Today the Japanese yen is again sharply weakening and bargains on the minimum levels since spring of the current year against euro and dollar. Dynamics of yen also gives support to the Japanese market, helping to show a steady growth. Pair yesterday from levels of opening 82,53 broke through higher than 83,00, reached a maximum 83,29 and was rolled away to the area 83,20 on closing. This morning, we can already see USD/JPY traded on a level of 83.61. There is not much time left till elections, so movements will be warmed up upward not only with USD strengthening, but also on expectations on political change in Japan.

Prices of oil following the results of last trading session showed positive dynamics. The OPEC countries following the results of the meeting on Wednesday, as expected, kept a quota of oil production at former level - 30 million barrels a day. At the same time, the OPEC plans to reduce gradually raw materials production to correspond to the designated quota. Today Brent crude bargains with fall, losing 0,23% to level of closing of previous day.

Prices for metals and precious metals are strongly falling, gold is losing more than 1% and traded on a level of 1699.38; silver is on a level of 32.97 and decreasing for 2.40%.

Copyright: United World Capital

 

[UWC Neeraj]

14 DECEMBER 2012: THE PROBLEM OF "FISCAL CLIFF" AGAIN CAME TO THE FOREFRONT

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

After decisions coming from meeting of FRS nothing distracts investors from a problem of "fiscal cliff", especially, taking into account that till Christmas there is less than two weeks, and gleams in negotiations between democrats and republicans aren't observed yet. For example, the speaker John Beyner noted that the president Barack Obama “isn't serious" concerning a question of decrease of expenses which republicans consider as the main priority. Even successful data on a labor market according to which the number of primary requests for unemployment benefits fell in one week to 343 thousand at being expected 370 thousand couldn't affect moods of investors. Dow Jones and S&P500 ended up with loosing 0.56% and 0.63% accordingly.

In the last day of the current working week the index of China SSE again shows growth almost for 3%, practically coming back to the autumn maximum levels. As occasion to such positive became preliminary statistics on the production index PMI from HSBC bank according to which the index grew again and reached level of 50,9. It is a maximum level since October of last year, besides value of an index increases the second month in a row that testifies about growth of business activity in production sector.

Important news were coming from Europe where Ministers of Finance agreed to give a right to European Central Bank to regulate the main European banks of the Euro zone, however while it isn't known when the regulator will be able to start new duties. Besides, today the Euro group approved allocation of the following monetary tranche to Greece as it estimated efforts of the country on national debt reduction. This factor is a positive moment for the EU markets. 34 billion euro will be available to Greece immediately, and total amount for a repayment of a debt will be 49.1 billion euro.

The European currency still keeps above a level of 1.30 in relation to dollar, however today it was corrected from 1.3090 to 1.3045 points, and now reached a level of 1.3105.

Meanwhile the Japanese currency continues to fall. Today USD/JPY pair bargains at the level of 83,9, against yesterday's level of 83,5. On this background the exporters sensitive to fluctuations of exchange rates, still are leaders of growth, Sharp rises in price for 4,4%, and Toshiba and Pioneer for 1,8%.

Prices of oil following the results of last trading session showed negative dynamics against decrease in the majority of world stock markets. Further weakening of dollar in case of resolution of a collision around the budgetary agreement in the USA can become a key factor of growth of the oil prices. Today this morning Brent crude is traded on a level of 107.01.

Copyright: United World Capital

 

[UWC Neeraj]

17 DECEMBER 2012: USD/JPY AT 20-MONTH LOW AFTER ELECTIONS

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

The yen slumped to its lowest level against the dollar after Japan’s conservative Liberal Democratic Party (LDP), which is committed to aggressive monetary easing, won a landslide victory in Sunday’s Japanese elections. The LDP surged back to power giving ex-Premier, Shinzo Abe, another chance to push through his agenda which includes outspoken active steps towards deflation, possibly revival of Japan’s nuclear energy program and a more nationalistic policy that might cause more tense relation towards China.

The dollar rose to 84,18 yen reaching its highest level since April 2011 from around 83,50 yen on Friday. There has been active profit taking in the morning, but USD/JPY is still trading above the 84 level. The Euro jumped to 111.30 yen from 109,81. The Australian dollar climbed above 89 for yen for the first time since May 2011. The Bank of Japan meets later this week and most analysts expect the central bank will ease policy further by asset buying and lending program which will continue to put downward pressure on the yen.

The open question is whether Prime Minister Abe shall follow up on his tough talk. Strategists at Barclays bank recommend long positions in three-month dollar/yen call options on estimates suggesting that a 10 percent multilateral nominal yen depreciation would be needed to get a one-off inflation boost of just 1,5 percent. Other analyst and market participants warned that the yen might be poised for a rebound as Abe’s actions are likely to fall short of tough intentions.

In the US House of Representative Speaker, John Boehner’s offer to accept a tax rate increase for the wealthiest Americans knocks down a key Republican obstacle to deal with the revolving year-end “fiscal cliff”. Boehner shall presumably have offered extended tax hikes for everyone who has less than one million in net annual income. Taxes for all income above USD 1 million shall rise. President Obama’s reaction on this presumed offer is going to be decisive for a possible solution within the 31st December deadline.

Copyright: United World Capital

 

[UWC Neeraj]

18 DECEMBER 2012: “CLIFF” OPTIMISM BOOSTS MARKETS

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

Both US and Asian shares inched higher as optimism grew for a “fiscal cliff” deal as President Barack Obama yesterday met with his Republican counterpart, House of Representative Speaker, John Boehner. Obama presented a counter-offer to the Republicans that is said to include a major change in position on tax hikes for the wealthy in efforts to hammer out a compromise to avert steep tax hikes and indiscriminate spending reductions set for the beginning of 2013.

According to informed sources the White House in a dramatic change of position has proposed leaving lower tax rates for everyone except for those earning above USD 400 000. That is up from the former threshold of USD 250 000 proposed by the President, but still far from the Republican proposal of USD 1 million. Obama is also said to be willing to compromise on budget cuts and revenue figures.

The rumors on movement in the negotiations had the US stock indexes to soar led by financials and other growth-orientated sectors. Bank of America jumped by 3,97 % followed by other major blue chips as Home Depot, JP Morgan, General Electric and Sisco. Dow Jones were up 0,76 % to 13 235. Nasdaq rose 1.32 % and ended at 3010 again passing the 3000 threshold. The positive trend continued in Asia this morning where Australian shares outperformed with a 0,7 percent increase. Also Nikkei, Shanghai and the MSCI index for Asian Pacific rose.

The more optimistic market attitude had a positive impact on commodities and precious metals. Oil prices led by Brent crude are up to 108,18 and gold again passed the USD 1700 ounce level after falling back to below 1690. The pressure on Yen following the Japanese elections continues. USD/JPY is trading at 83,98 after reaching 84,48 on Monday. The dollar has probably still an upside against yen prior to the Central Bank of Japan’s meeting later this week. Prime Minister Abe’s comments yesterday strengthened the assumption that BOJ would initiate monetary easing. EURO/USD stands at 1.3170, in line with the new higher level seen established in relation between USD and Euro. The Euro countries principle decision to establish a banking union has positively impacted the strength of the Euro.

Copyright: United World Capital

 

[UWC Neeraj]

19 DECEMBER 2012: EURO OUTPERFORMS ON INCREASED RISK APPETITE

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

The Euro reached multi-months high against dollar and Japanese yen on Wednesday extending recent gains. Signs of progress in the US fiscal talks bolstered demand for riskier assets. Euro/USD is trading at 1.324655. USD/JPY stands at 84,282. The Scandinavian currencies, Norwegian, Swedish and Danish krones have gained substantially against the dollar over last week.

The US House of Representatives Majority Leader, Eric Cantor, said yesterday that he expected a vote on a Republican offer to avert the “fiscal cliff” on Thursday. Republicans plan a vote on a bill to raise taxes on income above USD 1 million while extending low rates on other tax payers. The White House has proposed a compromise USD 400 000 threshold. Cantor said he expected to have enough votes to pass the measure.

In spite of the big distance between the two parties’ stock markets all over the world rose on expectations of a compromise. Gains in Asia this morning came after Wall Street S&P 500 index for the biggest 500 companies rose more than one percent completing the best two-day rally in a month. The US market is higher driven by the fact that the parties now at least are engaged in constructive negotiations striving to find a middle ground.

Tokyo’s Nikkei rose 1,3 percent topping 10 000 points for the first time since April as Bank of Japan (BOJ)started their two day meeting. BOJ is expected to take measures for monetary easing and a more expansionistic fiscal policy. The Yen continues to fall against most currencies. Australian shares rose to a 17-month high led by miners and banks. Australian dollar, however, barely budged in part because currency speculators were already holding record long positions.

Boosted by optimism on a US budget compromise analysts predict that EURO/USD might reach the 1.33 level year-end targets. Oil prices are steady with Brent crude trading at 108,88 on better economic outlook. Copper is flat in the morning after falling Tuesday. Both Gold and silver fell rather dramatically yesterday slowly recovering somewhat this morning. Gold fell from a 1705 peak down to a 1660 bottom. It is now trading at 1670.

Copyright: United World Capital

 

[UWC Neeraj]

20 DECEMBER 2012: STALLED NEGOTIATIONS TURN MARKETS

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

After reaching a 18-month high Asian stocks eased and commodities fell in morning trade on stalled budget negotiations in Washington. President Barack Obama accused his opponents of holding a personal grudge against him and threatened to use his veto power. The top Republican negotiator branded the President “irrational”. The mutual accusations came after substantial progress to avert the so called “fiscal cliff” had been obtained during the last days. The personal taunts put a timely solution at risk and threaten the world largest economy with recession.

The harsh rhetoric had an immediate effect on markets. After a flat opening Dow Jones plunged 0,78 while Nasdaq lost 0,33 %. Financials and retailers, the big winners earlier in the week, were hardest hit. General Electric, Alcoa, Home Depot and the Bank of America were among the big losers. The Asian indexes with exception for the South Korean Kospi which rose 0,3 % on news of the election of its first female president, lost ground. Australia is still up. It is expected that European and US markets today will open lower on profit taking and risk aversion. Decreased risk appetite shall probably hit also smaller currencies.

Bank of Japan (BOJ) has according to expectations expanded its asset-buying program by 10 trillion yen to fight deflation. USD/JPY which saw 84,50, has fallen to below 84 as result of the stalled budget negotiations. Euro/USD peaked to 1.33085 on Wednesday has fallen back trading at 1.3210. Smaller currencies are due to the changed risk sentiment atmosphere losing ground.

Oil prices which rose on growth optimism, has retreated somewhat in early Asian trading. Brent crude stands at 110.08 with NYMEX just below USD 89 a barrel. Copper is down. Gold and silver are at the lowest levels seen for months.

US prosecutors have charged two former UBS (Union Bank of Switzerland) traders for participating in a scheme to manipulate Libor and other benchmark interest rates. This is the first individuals criminally accused in the Libor scandal. UBS has agreed to pay a fine of USD 1,5 billion to regulators in the US, UK and Switzerland. The Hong Kong Monetary Authority has simultaneously stated that UBS is under investigation for similar fraud in Hong Kong.

Copyright: United World Capital

 

[UWC Neeraj]

21 DECEMBER 2012: SERIOUS SET-BACK FOR “CLIFF” NEGOTIATIONS

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

In a statement to the House late yesterday, Republican Speaker, John Boehner, announced that there was not enough support to have “Plan B” to avoid the fiscal cliff voted through. Two options seem to remain: The Republicans can wash their hands on the entire matter or try negotiate a compromise with Democrats that could secure support from a sufficient number of Republicans. Plan B involved increased taxes on incomes above USD 1 million. President Obama’s proposals set the threshold at USD 400 000.

Dow Jones and Nasdaq gained on new expectations for a budget solution within year-end before the news announcement. A solution seems for the moment unrealistic. A possible compromise would mean that a substantial member of Republicans give up their bedrock resistance to all tax hikes. The non-vote in the House represents a serious set-back for the prospects to avert the “fiscal cliff”, automatic spending cuts and tax increases set to start in January. The news had an immediate effect on Asia. Asian shares slid. The MSCI index for the Asian Pacific dropped 0,7 %. Nasdaq and Dow Jones futures are down 1,7 %.

Risk assets from shares, oil to currencies as the Australian dollar and EURO, were sold off in the morning hours. Euro/USD is falling below 1.32 losing 60 basis points. The USD/JPY is slightly firmer at 83,93 down from 84,50 yen a dollar yesterday. The market uncertainty has generally strengthened the dollar. The DXY index where the USD is weighed against a basket of major currencies, gains 0,2%. The steep fall in precious metals continue. Gold is USD 1640 an ounce and silver has dropped two dollars during the last day trading to 29,72.

The Republican-led House of Representative which abruptly recessed late Thursday may return with a not yet decided new plan on December 27th. Markets see the event yesterday as major set-back for a fiscal compromise. The chance for a deal is downscaled from 60 to 30 %. Markets are extremely volatile and will continue to be swayed by the budget negotiations over the next days.

Copyright: United World Capital

 

[UWC Neeraj]

24 DECEMBER 2012: THE OPEC DOESN'T WANT THE PRICE OF OIL TO BE LOWER THAN $100

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

Last trading session in America was closed with drop, the index S&P500 lost 0,94%. Price stopped at the level of 1430,15 points. Dow Jones lost 0.91%. With approach of 2013 tension at the stock markets increases: the problem of "fiscal cliff" isn't solved, moreover, investors are getting new reasons for concerns. So, the speaker of the House of Representatives of the Congress of the USA John Beyner cancelled vote according to the project of republicans in connection with insufficient support of the ideas, thus, the resumption of negotiations between republicans and democrats is expected only after Christmas, and for achievement of the agreement they will have only 4 working days.

The most part of "blue chips" included in index finished session in "a red zone". The most notable decrease showed Bank of America (-2,00%), Exxon Mobil (-1,87%) and Walt-Disney (-1,86%), in plus there was only American Express (+0,44%) and McDonald’s (+0,16%).

Recently we heard news which can become the reason of correction of the world markets at the beginning of the next year. The prime minister of Italy Mario Monty retired on Friday, but thus declared on Sunday that he will consider opportunity to stand for the second term at parliamentary elections on February. Chances to get the second term are insignificant.

As a whole rather quiet situation remains in the oil market. Quotations are consolidating within the trade range of the last months. All attempts to leave out from these limits are unsuccessful. Among the latest news of the sector, it is necessary to note the message of several news agencies referring to the minister of oil of Iran - Rostam Ghasemi. According to him, the OPEC will hold an emergency meeting if price of oil falls lower than 100 US dollars. Besides he also noted that the price of oil is predicted to be higher than 100 dollars for barrel in 2013. This morning we can see Brent on a level of 108.78.

Gold and silver are stable this morning and a slowly recovering from the minimum levels we have seen last week. Gold is traded on a level of 1663.22 and silver is on a level of 30.236. As a whole, for this year prices of gold grew by 5.9% and this is the 12th year of growth of metal. One of the reasons of the high prices is demand of the world Central Banks which buy up metal for hedging of the risks. Nevertheless, judging the last data of the Commission of the market of futures of the USA, rates on further rally of gold fell to 13% to 112.42 thousand contracts.

Copyright: United World Capital

 

[UWC Neeraj]

26 DECEMBER 2012: MARKETS ARE WAITING FOR PROGRESS IN NEGOTIATIONS ON BUDGETARY QUESTIONS IN THE USA

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

Without special enthusiasm passed the pre-Christmas truncated trading session on Wall Street. Key indexes lost about 0,2-0,4% on small trading volumes. As a part of an index of blue chips - Dow Jones, the greatest contribution to decrease in the indicator made the representatives of hi-tech sector: Hewlett-Packard (-2,3%), Microsoft (-1,42%), Cisco Systems (-0,65%).

Besides, in the days which have remained to New year, statistical departments will submit data on the housing market, in particular housing prices, sales of new buildings and incomplete sales of houses. The research organization Conference Board will publish data on dynamics of an index of consumer confidence in the USA for December. While stock markets stiffened waiting for news from America regarding "fiscal cliff".

Asian share indexes bargain today in more expanded structure, than yesterday, however the stock exchanges of Australia and Hong Kong are still closed in connection with celebration of Catholic Christmas. At the same time the Japanese Nikkei index continues the ascending movement caused by the next round of weakening of national currency, but the index of continental China SSE corrects today a yesterday's steady growth.

The Japanese yen continues today to decrease, USD/JPY pair bargains at the level of 85,3, again updating thereby an one-and-a-half-year maximum, and approaching a maximum of 2 years, established at the level of 85,5.

Yesterday futures of gold rose in price in Tokyo for the first time for the last four days this is connected with statements of the new prime minister of Japan Shinzo Abe who is the supporter of "soft" approach to economy. He insists that if the Central Bank of the country will not raise a level of inflation for stimulation of economic growth, he will change his powers. All this promotes that gold acts again for investors as "smooth water". Today this morning, we can see gold traded on a level of 1655.98. Silver is slightly strengthening and traded at level of 29.95, getting closer to a level of 30 dollars per troy ounce.

Copyright: United World Capital