Daily Market Reviews by UWCFX

[UWC Neeraj]

27 DECEMBER 2012: MARKETS WAIT FOR NEWS FROM WASHINGTON

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

The European stock exchanges were closed yesterday, but American indexes showed not so positive dynamics and were closed with a decrease. Dow Jones lost 0.18%, but Nasdaq and S&P500 were closed with a fall of 0.74% and 0.47% accordingly. Fears of the American investors are again connected with a dependence of the main problem of year - "fiscal cliff", and also with a ceiling of the public debt which limit, according to the Minister of Finance - Timothy Geithner, will be reached already on December 31 of the current year.

Also oil to fire was added by data on retails which were record-breaking low, their volume from October 28 till December 24 grew only by 0,7% in comparison with the similar period last year. Master Card also specifies that many people show today restraint in the purchases, being afraid of "fiscal cliff" which can come on January 1 and bring with itself increase of taxes.

Futures for WTI brand oil yesterday jumped up for $2,37 to $90,98 for barrel. Today WTI oil is traded on a level of $91,18 for barrel, Brent is decreasing less than 0,2%, bargaining at the level of $111,05 for barrel.

Gold loses the positions in one of the last days of 2012, trading passes very inertly as many participants of the market already left for holidays. Gold is losing 0.25% and traded on a level of $1656.50, silver is bargaining around level of $30.00 second day in a row.

Absolutely other situation is observed in copper futures which add more than 1.3%. Quotations break through a level of $7900 after the National bureau of statistics of the People's Republic of China reported that the profit of the industrial companies in the country grew in November by 22.8% in comparison with the similar period last year. China is the largest consumer of copper therefore investors hope that recovery of the Chinese economy will positively influence demand for metal.

Copyright: United World Capital

 

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28 DECEMBER 2012: LAST TALKS ON “FISCAL CLIFF” STRENGTHEN EURO

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

President Barack Obama and lawmakers are launching a last chance round of budget talks just days before a New Year’s deadline to reach a deal to avoid a “fiscal cliff”: an increase of USD 600 billion of taxes and budget cuts to be automatically executed from January 1st if politicians fail to find a budget compromise. Obama and Vice President Joe Biden will meet with congressional leaders from both parties in the afternoon today. The news has for now strengthened risk appetite and Euro/USD is up.

The two political parties remained far apart particularly over plans to increase taxes on the wealthiest Americans to help close the US budget deficit. The coming days are likely to see intense bargaining over numbers or political theatre as each side attempt to avoid blame if a deal looks unlikely.

US stocks sharply cut losses and rose on news of the House reconvening as investors clung to hopes of an 11th –hour deal. Even a partial agreement on taxes that would leave tougher issues like entitlement reform and the debt ceiling until later could be enough to keep markets calm. US stocks recovered, but fell for a fourth day after a jittery session which saw a one % fall after Senate Majority leader, Henry Reid, initially warned that a deal was unlikely. Stock markets recovered and ended flat on news on new negotiations. Dow Jones ended down 0,14 % to 13 096 after a one percentage free fall in the opening of yesterday’s session.

Asian shares inched higher on signs that Washington is making a last ditch effort to reach a budget compromise. The USD/JPY fell to its lowest level in 2 years trading at 86,64, and Japanese stocks to 21 months high on expectations of drastic monetary easing. Australian shares rose to a 19 month high and are on track to post its strongest annual gain since 2009. Oil prices rose on hopes of a US political deal. Brent crude reached USD 111 a barrel.

EURO/USD has recovered to 1.3240 after falling to 1.3170 before Christmas on news of failed budget negotiations. A budget settlement will create renewed optimism for continued US economic growth and increased risk appetite which will strengthen the Euro and smaller currencies. Australian dollar hit a 20-month peak against the yen at 89,93 and is also up against the USD.

Copyright: United World Capital

 

[UWC Neeraj]

31 DECEMBER 2012: LAST DITCH EFFORTS TO AVOID “FISCAL CLIFF”

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

Democratic and Republican leaders pushed the United States to the edge of the “fiscal cliff” on Sunday as they struggled to reach a last-minute deal that could protect the world largest economy from a politically induced recession. Senate lawmakers are still hoping to clear the way for swift action thereby avoiding sweeping tax increases and spending cuts due to tick in on Tuesday, January 1st. The two sides are, however, still at loggerheads in talks. Senate was adjourned yesterday and meet again today for a last ditch effort to reach a compromise.

Senate Democratic leader Harry Reid last night postponed any possible votes; “There are still significant differences between the two sides”, Reid stated. President Obama had originally proposed a USD 250 000 income threshold for increased taxes. The Republicans are in principle against all tax increases, but has voiced a compromise threshold on USD 1 million. The parties are also wide apart on possible budget spending cuts.

As hours ticked away it appeared increasingly unlikely to avoid a USD 600 billion hammer blow to the fragile US economy recovery. Americans could see a bigger bite taken out of their pay checks starting on 1st January as payroll and income tax cuts expire. Two million unemployed Americans could see their jobless benefits run out. The uncertainties have weighed in on global, financial market. Investors are likely to sell off stocks at the beginning of the new year expressing their displeasure with a no deal.

In a rare appearance on Sunday’s NBCs “Meet the Press”, president Barack Obama warned against the immediate negative effects on markets and blamed the Republicans for rejecting significant presented compromises. His accusations were flatly refused by Republican spokesmen.

Due also to Christmas and the New year holidays investors have been sitting on the side lines waiting for Washington to act. US markets were down for a fifth straight session on Friday, and there were small changes in the currency and commodity markets. Euro/USD is trading around 1.3215 up from last week’s low on 1.3175. USD/JPY is stabile on 86 yen to a dollar. Oil prices are high with Brent crude above USD 110 a barrel. No major changes in commodity and precious metal prices. Gold is at USD 1660 an ounce.

Copyright: United World Capital

 

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02 JANUARY 2013: FISCAL DEAL GIVES RELIEF RALLY IN STOCKS AND COMMODITIES

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

A compromise in the 24th hour avoided the fiscal cliff at least for now. After tough negotiations running into the new year, Democrats and Republicans succeeded in reaching partial agreement on a threshold which imposes tax increases on incomes above USD 400 000. The “grand deal” of bigger taxes on the rich combined with spending cuts which President Barack Obama aimed for, has been suspended till March. The Senate and the House of Representatives voted during night hours in favor of the compromise deal, which has been difficult to swallow for all parties.

The drama around the fiscal cliff which has dominated US and global markets for the last months, has thereby found a temporarily solution. Markets reacted with relief and sent stock markets in Asia to new highs after a bumpy session in the US on New Year’s Eve. Investors shifted between optimism and pessimism till the majority gambled on a deal. Both Dow Jones and Nasdaq posted healthy gains. With president Obama’s signing of the deal this morning that gamble has paid off.

The compromise has given global markets a good start on the year in spite of general consensus that major economic and financial challenges have to be dealt with especially the big US deficits and the problems inside the Eurozone. Angela Merkel in her New Year speech reminded that problems inside the Euro-zone by no means had reached an end. The deal in Congress means, however, that there are good chances that the recovery of the US and global economy will continue. Better prospects for still high growth in China will boost global markets. This more positive sentiment is reflected in today’s trades where oil and commodity prices are up in expectations of increased growth. New York crude, NYMEX, is above USD 93 a barrel and Brent crude is above 111. Copper, gold and silver prices are also up.

The positive attitude is also reflected in the currency markets where there are increased appetite for more risky currencies as Euro and British pounds. EURO/USD trades at 1.3280 up 100 basis points. USD/GBP is above 1.63. Japanese yen, a “safe haven” currency continues to lose ground against both Euro and the USD. USD/JPY is above 87 yen a dollar. Typical commodity currencies as Australian and Canadian dollar are up together with the Scandinavian; Swedish, Norwegian and Danish krones.

Copyright: United World Capital

 

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03 JANUARY 2013: EURO FALLS BACK ON PROFIT TAKING

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

The relief rally in securities after the US avoided the fiscal cliff, continued in Europe, the United States and Asia this morning. The Dow Jones industrial average jumped 2,35 % to 13 412. Nasdaq reached 3 112 up more than 3 %. The technology and banking sectors posted the biggest gains with Bank of America up 3,7 % and Apple as the winners. The gains came on heavy volumes with funds leaving the bond market entering into equities. 7,8 billion shares were traded against an average of 6.42 billion.

The dollar slid against high-yielding currencies with investors selling “safe haven” currencies as dollar and yen on strong risk appetite. The losses in dollar and yen might, however, be temporary. Difficult negotiation on US spending restraints and the debt ceiling are waiting in the wings. The EURO which was favourite among investors in morning hours yesterday, lost all its gain during trading yesterday and plunged 150 points to Euro/USD 1.3136 on aggressive profit taking. Commodities which saw big increases on the budget compromise in expectations on stabile growth, have as well technically corrected with the exception of oil. Brent crude still trades above USD 112,40 a barrel.

The compromise agreement on the “cliff” is seen as a victory for President Barack Obama in succeeding to increase taxes on the rich , but set up potentially bruising showdowns between Republicans and Democrats over the next two months on spending cuts and a limit on borrowing. Republicans who on the top are fighting disarray in own ranks with member principally against any tax hikes, were furious that the obtained deal did little to curb the financial deficit. There is a tense atmosphere between the two parties. The Republican House Speaker, John Boehner, is said to have told his Democrat counterparty, Harry Reid, to “go fuck yourself” before a final deal was reached.

Asian stocks continued to post gains in morning hours Thursday on hopes for a steady economic revival in China. After Wednesday’s two % jump, the MSCI index for the Asian Pacific was up 0,3 %. Service sector data from China in December point to a healthy recovery. Both the China Enterprise index and Hon Kong’s Hang Sheng are up. A momentum that can last at least for some months seem to be building up.

The Japanese yen bounced back after hitting a 29-month low versus USD. Even if USD/JPY looks somewhat overbought any strength in the yen is likely to be short-lived. USD/JPY trades at 87,24. GBP has also fallen back against the dollar, but the trend seems to be in favour of a stronger British pound. The Scandinavian currencies, NOK, SEK and DKK which also boomed on the Congress deal, has technically corrected and fallen back 0,5 to 1 %.

Copyright: United World Capital

 

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04 JANUARY 2013: FED MINUTES BOOST USD. STOCKS AND GOLD PLUNGE

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

The Wall Street New Year’s rally came to an abrupt end yesterday when minutes from the Federal Reserve, FED’s, December policy meeting put severe questions marks to whether monetary policy stimuli will continue. The minutes were released Thursday and the optimistic markets reacted immediately by sending US and Asian markets down. The USD skyrocketed while commodities and precious metals were in free fall. Euro/USD trades at 1.3034, a 250 basis points fall from the first trading day in January. Gold plunged USD 45 from its new year’s peak, and oil prices lose ground.

The released minutes showed that some voting members of FED were increasingly concerned about the potential risks of FED’s asset purchases. The asset-buying policy has been pivotal in underpinning investor risk appetite and supporting global equities. The more hawkish FED minutes unnerved financial markets. Stocks gave up earlier gains and benchmark US Treasury yields rose to a near eight month high having a strong negative impact oil, commodities and equities lifting the dollar.

US private sector hiring was pointing upwards before the monthly payrolls report is due later today. The monthly payroll report is one crucial indicator for FED deciding on future policy course. The rise in the dollar hit precious metals and oil especially hard. A firmer dollar makes dollar-based assets more expensive for non-dollar holders. The strong moves in the markets reflect positioning after the recent rallies and before the nonfarm payrolls report which can tip markets either way.

While Nasdag and Dow Jones fell moderately, the MSCI index for Asia-Pacific fell 0,8 % after reaching a 19-months high on Thursday. The dollar hit its highest level against Yen since July 2010 at 87,78. The Euro fell to a three week low of 1.3018 against the dollar on Friday. The US dollar index, DXY, touched a four-week high against a basket of major currencies. The fall in the yen will probably continue with 90 yen against USD as likely in the short term. Yen’s fall continues to strengthen Nikkei which is at its highest level since March 2011.

Copyright: United World Capital

 

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07 JANUARY 2013: ASIAN STOCKS DRIFT ON PROFIT TAKING

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

Asian stocks drifted on Monday as investors booked profits from a New Year rally pushed market to highs not seen in months. Financial stocks gained after global regulators relaxed draft plans for tougher banking liquidity rules. The Asian Pacific MSCI-index retreated 0,9 % on Friday and was flat today after reaching its highest level since August 2011. The Japanese Nikkei retreated after last week touching a 23-month high.

US jobless claims reported in line with expectations on Friday adding 155 000 new jobs. The unemployment rate is at 7,8 % indicating a slow, but steady recovery in the US economy which has propelled Wall Street stocks to a five year high. Minutes from the December meeting of the Federal Reserve, FED, released Thursday led to tumults in global, financial markets having riskier currencies and commodities to plunge. The USD index towards a basket of currencies rose to its highest level in week as the minutes were interpreted as FED is considering to end its bond-buying program as early as this year.

The jobless data which strengthen the prospects of economic growth, had a stabilizing effect on commodity and precious metal prices. Gold rebounded from its USD 1625 an ounce level and trades at 1652 in the morning. Also silver has turned from USD 29,50 to 30,30. The dollar is close to a two-and-a-half-year high against the yen as investors adjusted to the possibility of more monetary stimulus from the Bank of Japan (BOJ) and less from FED. The dollar posted a gain on 2,7 % against yen after reaching a 88,40 peak on Friday. USD/JPY is currently trading at 87,941.

EURO/USD fell to 1.30 on Friday on the interpretation that monetary easing is about to end. It has recovered over the weekend trading at 1.3032. The US benchmark S&P index, SPX, closed at its highest level since December 2007 on Friday after the publishing of job data which also showed a healthy expansion of jobs in the services sector.

For the first time since 2001 the United States dominates the list of places that global real estate investors would prefer to put their money in 2013. A published survey reflects a sharply more optimistic view on the US economy and property market for 2013. New York and London top the list with San Francisco number 3 and Houston, Texas climbing to number 5 with Washington in fourth place. Among countries US is ranked number one followed by Brazil, UK and Turkey. Among emerging countries Brazil is the top spot followed by China, Turkey, India and Mexico.

Copyright: United World Capital

 

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08 JANUARY 2013: US AND ASIAN STOCKS FELL ON PROFIT CAUTION

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

US and Asian shares took a break from the new year’s rallies yesterday and this morning on negative anticipations ahead of the corporate earnings season for last quarter of 2012. The aluminum giant, Alcoa, is as usual the first to present its quarterly results later today. The MSCI-index for Asia-Pacific drifted lower and eased 0,3 % after the New Year rally lifted stocks 2 %. Dow Jones were down 0,38 % with Walt Disney and Boeing the big losers. McDonald was on the top of the winning list gaining 1,18 %.

In South Korea Samsung Electronics, the world’s number one producer of memory chips and handsets posted a record operating profit on more than 8 billion dollar. Samsung’s guidance is in line with forecasts for quarterly presentation on January 25th. The South Korean KOSPI lost 0,4 % in spite of Samsung’s announcement. Generally there are a cautious attitude towards the fourth quarter presentations. Results are expected to be generally bad. This is going to weigh in on stock markets the coming two – three weeks.

The Euro remained firm against the dollar trading in the interval between 1.30 and 1.3035 on speculation that the European Central Bank (ECB) might refrain from signalling more interest cuts when it meets on Thursday. USD/JPY which jumped to 88,40 at the end of last week, gaining more than 10 percent in two months, has corrected over the last two days trading at 87,50 yen to a dollar. The weakening of the yen is a result of speculation that the new Japanese government will push for aggressive monetary easing to fight deflation.

Position adjustments are awaited in currencies ahead of the ECB meeting and earnings reports. Euro/USD might gain ground and push back to the 1,3050 level ahead of Thursday ECB meeting. After the strong rally in USD/JPY a downward correction is waited. There is, however, strong technical resistance at 86,50 yen.

Copper prices rose to USD 8 096 a tonne on rumours that China’s annual Gross Domestic Product (GDP) has picked up in the last quarter. It is likely to increase to 7,8 %, higher than the general forecast on 7,5 %. China is the world’s biggest consumer of copper and other commodities. Oil prices remain steady with New York crude, NYMEX trading at USD 93 a barrel. Brent is at 111,50. Gold and silver prices stick above USD 1645 and 30 an ounce.

Copyright: United World Capital

 

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09 JANUARY 2013: ALCOA OPENS RESULT SEASON WITH PROFIT

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

Alcoa, the largest aluminium producer, opened the result season posting a fourth-quarter profit after the closure of the trading session yesterday night. The company expressed cautious optimism that the demand for aluminium will continue to grow in 2013m helped by global growth in aerospace and construction markets. Alcoa-shares rose 1,3 % in after hour trading. The results of the first major company to report results, were welcomed news for investors which breathed a sigh of relief hoping other reporting companies would follow suit.

Asian shares rose Wednesday morning after a couple of days of profit taking on optimism on companies fourth quarterly results. The Asian-Pacific MSCI-index and Australia were up 0,4 %. Analysts have been cautious in their forecasts for the fourth quarter which generally is expected to present results in line with the third quarter. The Japanese Nikkei erased Monday’s losses and climbed 0,5 % as the rebound in the USD/JPY lost steam. USD rose from 86,825 yesterday to 87,43 yen to a dollar. The Bank of Japan, BOJ, is considering further monetary easing during its 21-22 January meeting and double the inflation target to 2 %.

The EURO/USD is steady on 1.3075 after reaching on 1.3120 yesterday. Euro/Yen is trading at 114,35 off from yesterday’s lows of 113,35. Statistics released yesterday shows that unemployment in the Eurozone continue to raise reaching 11,8 %. Greece and Spain are hardest hit with unemployment on 25 % with alarming number of unemployed between 18 and 25 years reaching above 50 %. The unemployment figures had no immediate effect on the Euro. There is no major news in the Eurozone before the ECB’s (European Central Bank) meeting on Thursday.

Oil prices are flat with NYMEX, New York crude, trading at 93.17 and Brent just below USD 112 a barrel. Gold prices have picked up and trade at 1658. There is also a firmer trend in silver trading at 30,44 after reaching a peak on 30,55 yesterday.

Copyright: United World Capital

 

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10 JANUARY 2013: CHINA BEATS FORECASTS AND RISES EXPECTATIONS

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

China’s export grew 14,1 percent compared with December2011 and hit a seven month peak, fresh data revealed. Market expectations were for a 4 percent rise. Import grew 6 % boosting the country’s trade surplus to USD 31,6 billion sharply up from November’s 19,6 and analysts forecasts.

The much stronger than expected trade data magnified the positive momentum created by Alcoa’s strong fourth quarterly results Tuesday which boosted Wall Street yesterday. Both Dow Jones and Nasdaq rose with 0,45 % led by Boeing and Hewlett Packard. Asian stocks rise with the Asian Pacific MSCI-index up 0,6 % keeping alive hopes for a recovery in the world’s second largest economy. The export figures also gave a boost to Chinese largest trading partner, Australia. Both the Australian stock index, AXJO, and the Australian dollar was up 0,3 percent.

The USD continues to rise against Japanese yen. USD/JPY is trading at 88,10 close to the peak reached last Friday. The dollar/JPY has risen 12 % over the last two months. With determined Japanese quantitative easing this trend is most likely to continue. Massive fiscal spending is set to weaken the yen and create conditions for lifting Japan out of a decade long deflation. Also the Euro/JPY has gained ground and is up 0,1 percent to 114,93 yen. Euro/USD is steady on 1.3146 ahead of today meeting in the European Central Bank (ECB).

The Japanese benchmark Nikkei stock exchange extended gains to 0,8 % after a couple of days pause as the yen continued to fall. Copper was up 0,2 %. NYMEX, US crude futures, rose to USD 93,38 a barrel as Chinese data raised hopes for firmer demand for commodities. Brent crude is trading in the interval USD 111 – 112 a barrel. Precious metals, Gold and silver, are trading just below USD 1060 an ounce and USD 30,35 respectively.

Copyright: United World Capital

 

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11 JANUARY 2013: DRAGHI BOOSTS EURO STRENGTH

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

As expected the European Central Bank (ECB) kept interest rate unchanged at 0,75 % in its board meeting yesterday. In a following up press conference its president, Mario Draghi, offered a carefully worded optimistic view, indicating a turnaround in the euro zone at the end of 2013. His cautious remarks had the EURO to jump 150 basis points against the dollar reaching a one week high at 1.3280. The dollar lost ground against most currencies, but on announcement of Japan’s economic stimulus policies, USD/JPY jumped to 89,35, the highest level seen since June 2010.

Asian shares eased back on profit taking this morning on news on higher inflation in China. The annual consumer inflation rate accelerated in December to a seven-month high on higher food prices. The growth in Chinese export and a strengthened balance of trade numbers helped the US indexes towards new highs. Nasdaq and Dow Jones rose 0,45 % with the S&P at its highest level in 5 years. The Asian stock indexes are falling back on Chinese inflation fears.

Prime Minister Shinzo Abe announced today that the Japanese government is going to pump USD 150 billion into roads, schools and increased safety for its nuclear plants. These economic stimulus might lead to an increase of 2 % in Gross Domestic Product (GDP) and get Japan out of the vicious deflation spiral. His intended policies have had a very positive impact on Japan’s benchmark Nikkei stock average which climbed a new 1,7 % to a 23 month high. His Keynesian spending measures have, however, been met with criticism from finance traditionalists.

The Chinese export numbers and Draghi’s cautious optimism had a positive impact on oil and commodities. Brent crude jumped to USD 112,50 a barrel, but has eased back below 112 on the inflation fears. Spain first bond auction in 2013 raised more money than expected on lower borrowing costs. 10-year Spanish government bond yields fell to a 10-month low at 4,90 %. The result of the auction gave also a boost to the Euro. Gold and silver rose to USD 1672 and 30,85 an ounce respectively.

President Barack Obama yesterday appointed his chief of staff, Jack Lew, to succeed Tim Geithner as US secretary of finance. Lew a former Citibank manager and budget expert has also served under President Clinton. The appointment stresses that the focus in US financial and economic policies in the near future will be on the budget and how to tackle the difficult budgetary negotiations between Democrats and Republicans in the US Congress.

Copyright: United World Capital

 

[UWC Neeraj]

14 JANUARY 2013: YEN PLUNGES – EURO JUMPS

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

EURO/USD started the week in Asia with impressing gains trading at 1.3368 while Japanese Yen continues to plunge. USD/JPY plunged to its lowest level in two-and-a-half-year at 89,58 with focus on the Central Bank of Japan’s (BOJ)promise to deliver bold stimulus. Prime Minister Shinzo Abe said Sunday that BOJ must set a 2 percent inflation target and show markets it was determined to pursue tough monetary easing to end decades of deflation. A public poll shows that Abe has strong support for his efforts to encourage economic growth.

The Euro reached a four month high against the dollar at 1.3404 in early Asian trade. The Euro continues to outperform greenback after European Central Bank (ECB) president, Mario Draghi, last Thursday gave no indication that the ECB would ease monetary policy. Federal Reserve (FED) Chairman Ben Bernanke is due to speak today, and investors are looking for clues on how long FED bond purchasing program will last. Individual FED board members indications last week that the program is coming to a halt immediately strengthened the dollar.

It is, however, assumed that Bernanke is in no rush to turn off the liquidity tap. The US economy is demonstrating steady, but fragile and by no means exceptional progress. New housing data is presented this week along with Chinese GDP numbers. These data are expected to give clear indications as to further momentum. Better data will support riskier assets. The picture is, however, mixed. Some currencies that usually are highly correlated with global economic prospects fell at the end of last week on news of higher than expected Chinese inflation. If Bernanke demonstrates that FED is no hurry to end quantitative easing, it would probably weaken the dollar and strengthen higher-yield currencies as Australian dollar.

Global equity markets continued to soar last week when billions were pumped into global equities. In the week from January 9 investors injected USD 22,2 Billion into global stocks, the highest level seen since 2007. Most of the funds were pumped into global stocks and actively managed funds. It is, however, some skepticism how long this rotation from bonds and more secure assets into securities will continue. Potential disappointing company earnings over the next weeks might constitute a possible set back as will Washington’s wrangling on a debt ceiling and spending cuts.

The Asian stock markets looking for more clear directions, ended flat this morning after impressing late gains. Oil and metals are slightly up as are gold and silver.

Copyright: United World Capital

 

[UWC Neeraj]

15 JANUARY 2013: NIKKEI SOARS ON YEN WEAKNESS

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

Japanese stocks surged to multi-year highs on when Asia opened this morning. Monday the Yen hit a 2-half-year low against the dollar on expectations that the Bank of Japan (BOJ) will undertake bold monetary easing measures. USD/JPY reached 89,67, but has retracted somewhat on the Japanese Minister of Finance comments warning against the consequences of Yen Weakness. The Euro which gained substantially against the green back at the start of the week has stabilized. Euro/USD trades around 1.3350 after reaching 1.3402 early Monday.

The USD/JPY also failed to extend recent gains and test the big number of 90 yen as FED chief Ben Bernanke in a speech Monday night said that US recovery was still fragile and warned that economy was at deadlock over the deficit. In a press conference Monday President Barack Obama as well warned that a refusal from Congress to raise the US debt ceiling would have disastrous consequences on US and global economies and trigger economic chaos.

Spurred by the weak Yen the Japanese Nikkei climbed 1,3 percent, the highest level seen since April 2010, while other Asian stock exchanges were struggling to keep early January gains. The Asian Pacific, MSCI-index, eased 0,2%, after a 0,7% decline in South Korean stocks. Investors in Seoul took profit on earlier gains in the technology sector after reports that Apple had slashed orders of screens and other component on weaker-than expected demand.

Apple lost 3,6 percent in Monday’s trading ending at 501 dollar, 150 dollar down from last September. Apple’s losses had a heavy impact on Nasdaq and the S&P 100 when investors braced for fourth quarter earnings disappointments. The Apple news were somewhat countered by Dell that jumped 13 percent. The result came after reports that the number 3 personal computer maker is in talks with private equity firms to go private. Dell’s gains offset some tech-sector weakness.

The news and a growing sentiment that Apple is slowing down after being a product everybody wanted to have, is adding to investors unease when fourth –quarter earnings kick into high gear during this week. Dow Jones was flat and Nasdaq lost 0,26 percent. The European markets were down for a third straight day. Oil prices are picking up. Brent crude trades at 112 USD a barrel. Gold and Silver are stabile hanging on to gains from Monday.

Copyright: United World Capital

 

[UWC Neeraj]

16 JANUARY 2013: NIKKEI FALLS AS YEN INCHES UP

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

Asian stocks were weaker this morning as the Japanese Nikkei erased earlier gains. The Yen rose for a second day in row on warnings on excessive weakness from its Finance Minister expressing worries for overheating and a, too, quick fall in the currency. USD/JPY trades at 88,33 yen a dollar after hitting a a two-and-a-half-year peak on 89,67 on Monday. The Euro also slipped after a top EU official complained about its recent gains.

Many market players see the latest rebound in the Yen as a small correction in a long-term downtrend which started at the end of last year on expectations that the Bank of Japan (BOJ) will be forced to take bold action to reflate a sluggish economy. The New Prime Minister Shinzo Abe has in January taken active steps to encourage growth and called for BOJ to set a two percent inflation target. BOJ is expected to follow this call up at their meeting on January 21-22.

The dollar fell as low as 88.06 yen breaking through a technical support level on 88,20. The Euro slipped 0,6 percent to 117,28 yen as the Euro also lost momentum against the dollar. Euro/USD trade below 1.33 after the chairman of euro zone finance ministers, Jean-Claude Juncker had warned against “dangerously high” Euro. Euro/USD reached a peak on 1.3404 on Monday.

Junker’s comments were by investors seen as an excuse to cash in on recent gains. His statement did not necessarily represent a reversal in upward trend seeing the Euro rallying 3 percent in the past few sessions. With traders concentrating on the yen there has been small changes in other currencies. Swiss Franc lost ground against the Euro on Wednesday. The Euro hit a 13 month high of 1,2413 francs on Tuesday, but has fallen back to 1.2365 this morning. The Scandinavian currencies have lost one percent against the dollar over the last 24 hours.

Equity markets in the US were flat yesterday on uncertainty on companies’ fourth quarter earnings. Retail figures for December came in much stronger than expected indicating consumer optimism that augurs well for quarterly earnings. Manufacturing data for the state of New York for December fell back underlying the somewhat mixed picture of where the US economy is heading. These contradictions were also stressed in FED head Ben Bernanke’s speech on Monday being used as an argument for continued monetary easing.

Copyright: United World Capital

 

[UWC Neeraj]

17 JANUARY 2013: CAUTIOUSNESS BEFORE CHINESE GDP-DATA

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

Asian shares consolidated posted modest gains after better than expected US company earnings. Investors’ sentiment was, however, cautious ahead on Chinese GDP (Gross Domestic Product) data to-morrow. Dollar and Euro regained against yen after two days of profit taking on the sharp fall of the Japanese currency since November. USD/JPY trades a 88,24. The benchmark Nikkei index inched up after tumbling 2,6 % on Wednesday. World stock markets were flat.

The serious earnings season in US were off to a good start yesterday led by major banks as JP Morgan/Chase, Goldman Sachs and Bank of America. Goldman Sachs nearly tripled and JP Morgan fourth-quarter net income jumped 53%. Earnings for 2012 set a new record illustrating that banks, “too, big to fail”, with strong support and injections of government funds, have recovered from the 2008 break down in the financial markets. The rest of the economy is, however, still lagging behind, fighting to get out of recession.

Investors’ eyes at the end of the week are on China’s release of fourth-quarter GDP, December industrial output, retail sales and house prices. The data will offer clues to the health of the world’s second biggest economy. Individual numbers have given rise to cautious optimism that the downtrend in Chinese economy has come to a halt. Certain Western circles have seeded doubts on these numbers, stressing that China is manipulating statistics and not to be trusted.

Australia, very much dependent of the Chinese market, presented surprisingly bad employment figures yesterday. Unemployment rose with 5 500 in December bolstering odds for another interest rate cut. This prospect boosted shares and sent the Australian dollar down before the presentation of Chinese data. In In recession-stricken Europe car sales fell to a 17-year low in 2012. The challenges facing the global economy were outlined in the World Bank’s outlook for 2013. Citing slow recovery in developed nations the bank sharply cut its growth forecast to 2,4% economic growth down from 3 percent.

In an independent analysis, one of the world’s leading bank, HSBC, predicts that reduced concerns over the euro zone debt problems, last year’s more solid economic fundamentals and Chinese recovery will present buying opportunities in cyclical shares and boost commodities. The recent 3 months rally in platinum regaining its premium over gold is seen as an indication that investors start to be more proactive and take risks. There were small changes in the commodities yesterday. Brent crude dips below USD 110 a barrel, while NYNMEX is up on lower than expected US oil storages. Precious metals hang on to earlier gains.

Copyright: United World Capital

 

[UWC Neeraj]

18 JANUARY 2013: CHINA GREW 7,9% IN 2012

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

The Chinese economy grew 7,9 percent in the fourth quarter of 2012 rebounding after seven straight slowdown quarters. An uncertain global outlook reflected in the World Bank’s forecast for 2013 reducing global growth from 3 to 2,4 percent, might, however, mean that Chinese authorities would have to undertake strong stimulus in 2013. 7,9% is up from 7,4% in the third quarter, the lowest since the financial crisis started in the end of 2008. 2012 is the weakest year in Chinese economy since 1999. The presented numbers are slightly stronger than market expectations.

Analysts were pleased with the numbers. The momentum at the end of 2012 is fairly strong, but the rebound in Chinese economy is not astonishing, BNP Paribas stated. Data for industrial output in December saw a growth of 10,3% while 10, 1% was expected. Retail sales in December rose 15,2% demonstrating a strong growth in domestic consumption. This indicates that the Chinese government is succeeding in turning the economy from export to domestic consumption. China’s target for annual growth was 7,5% in 2012. That is lower than the 8% goal set for the previous eight years. The GDP growth target will be 7,5% in 2013. To encourage growth China has increased infrastructure investments and encouraged energy-saving measures for consumers.

Asian stocks rose on the Chinese data cementing positive market sentiment after presentation of strong US labor and housing mark reports yesterday. Dow Jones increased 0,63% and Nasdaq jumped 0,59. Intel, Home Depot and Walt Disney were among the winners. The Asian Pacific index, MSCI, rose 0,5%. Shares also rose in Hong Kong and Shanghai. The better market sentiment strengthened riskier assets and currencies. Euro/USD has gained 100 basis points since yesterday morning trading at 1.3382 close to the 1.2404 peak seen a week ago.

Euro and USD posted new highs against the Japanese Yen which after two days rebound earlier in the week continues down. Yen passed the critical 90 yen level in relation to USD. Expectation of monetary easing has put the yen under strong pressure over the last two months. Bank of Japan (BOJ) will probably next week announce removal of the 0,1% floor on short-term interest rates and commit itself to open-ended asset buying with a 2% inflation target as demanded by the new Prime Minister Abe.

The Chinese and better than expected US jobless claims and housing data have strengthened commodities and the appetite for risk. New York crude, NYMEX, rose stronger than Brent crude yesterday. Brent futures have recovered and trade again with the interval between USD 111 and 112 a barrel. Precious metals like Gold and silver jumped yesterday.

Copyright: United World Capital

 

[UWC Neeraj]

21 JANUARY 2013: YEN VOLATILE PRIOR TO BOJ MEETING

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

Yen firmed this morning after USD/JPY dipped below 90 yen a dollar last week. Investor’s eyes are on this week’s Bank of Japan’s (BOJ) meeting which starts today. BOJ is expected to follow up the newly elected Abe’s government’s call for strong monetary easing measures. Asian shares were steady at the start of the new trading week after searching to multi-month highs on Friday. Dow Jones gained marginally in New York on Friday with Nasdaq weaker. General Electric and Caterpillar were up, while the technology company Intel lost 6,31%.

Euro/USD has stabilized in early Monday trading at 1.3325 while British pound, GBP, continues to fall against the Euro and the dollar. Commodity and oil prices are up on last week’s 7,9% growth in the Chinese GDP and better than expected US labor and housing data. Brent crude trades at USD 111,54 a barrel. Precious metals, Gold (1690) and Silver (31,95), seem to follow up the upward trend from last week.

The dollar reached 90,25 and a fresh two-and-a-half-year high against the yen when markets in Asia opened today. The Euro rose to 120,27 yen near its peak of 120,73 reached on Friday. Profit taking pushed dollar and euro down, but short covering lifted them off their lows. The last two month’s fall in the yen will continue if BOJ decides on tough measures such as a firm commitment buy assets till the 2% target for inflation is reached.

A weaker yen has strengthened Japanese exports and have already been met with accusations of unfair competition from the US car industry. The US government has for years accused China for deliberately manipulating their currency to the disadvantage of US exporters and home producers. A currency war, where countries again are looking for precious metals as a buffer and basis for their currencies, seem to loom in the background. These speculations have gained ground on the recent decision by the German Central bank to have 20% of their gold reserves in US and their total reserves in France transferred back for storage in Germany.

Copyright: United World Capital

 

[UWC Neeraj]

22 JANUARY 2013: ASIAN STOCKS DROP ON BOJ EASING DELAY

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

Bank of Japan (BOJ) at its meeting yesterday delayed to set a 2 percent inflation target and will wait until January 2014 to start Federal Reserve-style open ended asset purchases. This had the immediate effect that Asian stocks retreated and USD/JPY turned around. After trading above 90 yen a dollar, USD/JPY has dropped to 89,18. A closer scrutiny of the BOJ records would, however, be necessary to decide whether this represents a more permanent change back towards a stronger yen.

The big open question is how the combined fiscal and monetary stimulus presented by the new Abe-government will work. Observers stress that the Japanese Nikkei stock exchange seems overbought. The yen on the other hand does not seem to be oversold. Asia’s benchmark equities index is poised to gain for a third month amid signs the US and Chinese economies are recovering and as Japanese stocks have rallied on Prime Minister Shinzo Abe’s more aggressive stimulus policies.

At the opening of the yearly Davos conference among the world’s leading business and political leaders the sentiment was more upbeat reflecting belief in a turnaround in markets and a bullish attitude towards stocks. In spite of the somewhat confused reports from the BOJ meeting both the South East Asian Pacific, MSCI, Hong Kong Seng and the Shanghai indexes were slightly up. It was a good day for stocks in Europe yesterday while the US markets were closed due to the Presidential inauguration.

Euro/USD trades at 1.3341 slightly up form yesterday, while GDP is under continued downward pressure. Both EURO and USD are up against the British Pound. Prime Minister David Cameron is Wednesday going to deliver his most expected speech on England’s future relation to the EU. Cameron is under strong pressure from EU-critics inside his own party to renegotiate the EU-treaty. The US government is pressing for stabile relations and no changes in England’s relations to the EU. The German chancellor Angela Merkel suffered a setback in local elections during the weekend. With her strong position in the EU and EURO-cooperation this might have a negative long term impact on the Euro.

Copyright: United World Capital

 

[UWC Neeraj]

23 JANUARY 2013: INCREASED RISK APPETITE DRIVES GLOBAL MARKETS

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

Asian shares edged higher on Wednesday as investors’ appetite for riskier assets improved. The MSCI-index for Asia-Pacific outside Japan reached a 17-and-a-half month high after recent positive data from United States and China improved investor sentiment. Revenue from the world’s largest internet research company Google’s core internet business outpaced analyst’s expectations pushing the stock 5% up. Google benefited from a new product listing during fourth quarter and business growth in international markets.

The Japanese yen is up for the second day after the monetary easing announced by Bank of Japan (BOJ) failed to meet market expectations. A US-Federal Reserve inspired aggressive bond buying was postponed to 2014. USD/JPY is trading at 88,50 down from its above 90 yen a dollar peak. BOJ’s 2% inflation target boosted, however, commodities and precious metals. BOJ’s move is seen as supportive for global economic recovery and boosted gold and silver as a hedge against rising prices.

The stronger yen had a negative impact on the Japanese stock market. BOJ’s delay of action disappointed exporters, and Japan’s benchmark Nikkei average fell 0,8%. Experts see a stronger yen as a technical correction to its rapid and sharp decline. After consolidation it is most likely that the yen would continue its downward trend. The yen has over the last two months declined from 81,69 to a bottom of 90,25. 95 yen against the dollar is seen as realistic. The fact that BOJ is joining other central banks to support growth is generally seen as positive for the global economy.

Euro/USD is steady above 1.33 level. The Euro was helped by better investor sentiment in Germany and by successful bond auctions in Portugal and Spain. Spain has succeeded to reach 14 percent of its 3013 funding target. GBP is still under downward pressure, USD/GDP is fighting to keep above the 1,50 level. Prime Minister David Cameron is today making his much awaited speech on UK's relations to EU. It is expected that Cameron will offer a Euro critical British public a referendum on the EU if he is re-elected in 2015. The wording of his speech might have an impact both on the strength of the GBP and the future direction of the Euro.

Copyright: United World Capital

 

[UWC Neeraj]

24 JANUARY 2013: USA INDEXES UPDATED 5-YEAR MAXIMA

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

On Wednesday, January 23, the stock market of the United States finished trading session by the moderate growth of the main indexes, S&P500 and Dow Jones appeared on fresh 5-year maxima. The positive information background on stock markets was provided by quarterly reports of representatives of hi-tech sector and favorable forecasts of a number of industrialists.

However the reporting of the Apple company which came after closing of the trading session disappointed investors. Within the additional session price of shares of Apple fell in price for 11%. Futures for the Nasdaq 100 index at the morning electronic trading are decreasing by 1,4%. Thus, the technological sector appeared under pressure today.

Asian stock indexes today "is in a fever", session began with decrease, subsequently the Chinese statistics allowed to resume purchases and helped indexes to reach profitable zone, but at a present moment sales again reign in the markets, and only Japanese Nikkei continues growth. Purchases in Japan are caused by the renewed decrease in yen, USD/JPY pair grew by 0,7% to level 89,2, after a release of data on trade balance. According to these data, in 2012 Japan recorded annual deficiency of foreign trade the second time in a row, thus the negative balance this year was maximum for all history and made 6,927 trillion yens.

Coming back to China, it should be noted that the production index PMI, from HSBC bank, increased the fifth month in a row, and according to preliminary data, it was in January at the level of 51,9, against December value 51,5. In the moment this news was apprehended by traders very positively, the Chinese continental SSE index came in plus of 2% and pulled for itself other Asian indexes, however so sharply growth was leveled.

Prices of oil between the Brent and WTI brands considerably differ. Brent raised to 112,83 dollars for barrel while the price of WTI fell almost by 1,5% and bargains at the level of 95,57. So essential distinction is caused with the advent of news about an operational malfunction on the key oil pipeline - Seaway. Through this branch oil is delivered from Cushing storage in Oklahoma to key oil processing regions on the coast of the Gulf of Mexico. Capacity is reduced from 400 thousand to 175 thousand barrels per day. Stocks are in Cushing at maximum levels, and at such technical failures they can only continue to increase. It also is at present the main factor of sales of a WTI contracts.

Copyright: United World Capital