UWC Currency - page 19
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Market update - 19.12.2011
Fitch and Moody’s have
fired a volley across Europe...
On Friday, on December, 16th, after abundance before the various American macroeconomic data published during a week, the statistics of the USA has given out only one significant result. The consumer price index in November hasn't undergone changes at expected increase on 0.1 % and after decrease on 0.1 % in October. Thus without foodstuff and energy carriers the increase in consumer prices has made 0.2 % against 0.1 % last month. In aggregate these indicators confirm FR'S statements that there is no serious inflationary pressure that allows it to continue to keep interest rates at exclusively low levels.
In the middle of day stock markets have painfully reacted and in the moment have fallen on negative territory after it became known that the international rating agency Fitch though has kept the higher credit rating of France ААА, but has changed the forecast on it with stable on negative and in addition has placed ratings of Italy, Spain, Belgium, Ireland, Slovenia and Cyprus on revision towards deterioration. Fitch motivated the actions by that the summit which has taken place on last week of EU in Brussels hasn't promoted to the main task permission, despite acceptance of some positive steps on struggle against debt crisis in the Euro area countries. In turn, rating agency Moody's, being guided by similar preconditions, has lowered a sovereign credit rating of Belgium on 2 points with АА1 to АА3 at the negative forecast of development of a situation.
The price for gold with has risen for 21.00 dollar or 1.3 % to value of 1595.60 dollars. Gold has risen in price owing to certain easing of dollar and as the price for a precious metal became again attractive to investors after decrease almost for 140 dollars following the results of 4 previous trading sessions. As a whole for a week loss has made 6.8 %.
Oil has gone down in price to the minimum mark since November, 2nd against concern in prospects of global demand for the energy carriers, burdened by the European debt crisis. In comparison with final level of last Friday oil has had loss in 5.9 %.
Today Ministers of Finance of the European Union countries will have a teleconference on which will discuss the further steps on overcoming of debt crisis of a Euro area. Representatives of 27 EU countries will discuss a question on bilateral credits of IMF and the EU countries, and also some points of the new tax agreement.
It is difficult to foretell a direction of the markets, undoubtedly that Christmas rally to which investors got used – this year won't take a place.
Market update - 20.12.2011
Pessimism still is present
in the market
On Monday, on December 19th, the basic American indexes were closed with a fall. After short trade in plus the market has rolled down against comments of Mario Dragi that economic prospects in the European region remain very uncertain, and laws don't allow to increase purchase of bonds.
Article in Wall Street Journal about FR's possibility to make to banks more rigid requirements to the capital, in turn, "has added fuel to the fire", and the bank sector has appeared in leaders to decrease.
It seems that in Asia threats also accrue and situation every day becomes more and more heated. The basic indexes in Asia have shown negative dynamics yesterday. The death of the head of the North Korea Kim Jong II became one of the latest news, which has provided prompt falling at stock exchanges. According to investors, younger son of the dictator appointed as its successor, could be not strong enough to settle the unstable political situation observed in the country.
We will notice that problems of Europe remain significant news, which put pressure upon investors. Yesterday came news that additional 150 milliards are going to be released in order to help Europe to overcome debt crisis. Germany and France should make the greatest payments. The countries not entering into an Euro area, but being thus members of EU, are going to allocate funds to IMF too.
Prices of oil will be also considered as a significant fact. Oil prices has gone up and recovered a bit from the bottom levels and reached 104,02 dollars per barrel in price. Gold is picking up a little bit and is traded on a level 1600,19.
There are expected statistics from Germany and statistics on house building in USA – we will see if these numbers will have any positive or negative effect in the market.
Market update - 21.12.2011
The positive on the American, Asian and
European markets can last not for long
After quite long time of corrections and large falling, yesterday has brought positive sentiments and growth on stock exchanges all over the world.
The European indexes have finished trading session in a green zone: British FTSE100 - +1,02 %, German DAX - +3,11 %, French CAC40 - +2,73 %.
The American stock exchanges have opened in plus. Moreover, in first half of day growth of the basic indexes has proceeded. Following the results of day, the American stock exchanges were closed positively. Yesterday, we have been mentioning upcoming statistics from USA - on Tuesday the following data has been published: the number of the given out building licenses of new houses in November has made 685 thousand, it was expected 628 thousand; the number of bookmarks of new houses in November has made 681 thousand while it was predicted 653 thousand. As a result: Dow Jones - +2,87 %, SnP500 - +2,98 %, NASDAQ - +3,19 %.
Oil of mark Brent 107,32 dollars/barr. The EUR/USD pair bargains close 1,312. Oil is strengthening and returning from the low levels of last week. Definitely, it is also giving positive support to the markets.
On the other hand, there is another set of the statistics to be issued: data regarding import from Germany and consumer trust index in Euro zone, data on oil and oil products in USA.
We shall admit that the positive on the American, Asian and European platforms, connected with optimistic macro statistics from the USA and Germany, can last not for long time. Moreover, investors could prefer to fix some profit already today.
Market update - 22.12.2011
Today's statistics on world economy
can become a push to growth of the markets
Yesterday pessimistic moods prevailed in the world markets, due to the results of granting of liquidity to commercial banks from ECB. Cost of loans is quite low - in this connection, demand has considerably exceeded the offer. The excessive demand, which has exceeded the forecast, has been regarded by investors as a signal about weakness of the European bank system. However, the American indexes managed to be closed in plus as the trading session was affected also by statistics on economy of the USA. Sales of the properties in November have grown on 4,0 % though the increase only on 1,9 % was predicted.
Signals from the raw market are more positive: Brent has tested $108 for barrel. Increase was promoted by announcement of the data on stocks of oil and oil products in the USA: stocks of crude oil were reduced to 10,57 million barrels, gasoline stocks - on 0,412 million barrels. The pair of EURO/DOLLAR was consolidated at levels a little above of 1,30, so signals from the currency market were neutral and didn't render pressure upon raw platforms.
The potential growth on world indexes remains, the statistics on world economy, which will be issued today, can become a push to growth. There will be issued data about GDP of Great Britain in the afternoon and closer to trading session end - the traditional week data on unemployment from the USA and gross national product of the USA for III quarter according to the third, final estimation.
We shall not to forget that volatility in the markets is very high also movement can be in any direction, therefore it is necessary do not to make any hasty decisions.
Market update - 30.12.2011
Better home sales
sent exchanges up
The number of pending home sales in US increased more than expected and created better sentiments in the markets yesterday. Dow Jones jumped 1, 12 % and reached 12 278 far above the psychologically important 12 000 level. NASDAQ was also up with 1 % to 2 613.
On a year basis Dow Jones is up 6 %; NASDAQ has tumbled 1, 5 %. Banks had a good day in yesterday. After earlier steep falls Bank of America was up 3, 3 %. Citi Group, JP Morgan and Wells Fargo increased likewise more than 2%.
Iranian threats to close the Hormuz straits are keeping oil prices high: NYMEX is stabile just below 100 pr.
Barrel and Brent is 108, 16.
Gold and silver prices have recovered after Wednesday and yesterday’s falls. Gold, which reached 1522 on the bottom in early US-trading, has recovered 35 USD trading at 1558. Silver is likewise up from yesterday’s bottom on 26, 10 trading at 27, 57.
In the currency markets continues to be under pressure. EURO/USD is 1.2942, a recovery, however from yesterday’s low on 1.2850. Japanese Yen reached a three weeks high versus USD at 77, 5065.
Yen also climbed against the EURO. Market expectations are indicate that traders will try to push JPY below the psychologically important Y100.
United World Capital wishes all its traders a HAPPY and successful new year. It has been a difficult year with great challenges for traders. UWC hopes that our daily comments in that respect have been to some help and assistance.
Daily Update 14.02.2012
Moody’s includes England
on credit “watch” list
British pounds are falling
The international credit rating agencies have busy times. Yesterday it was Moody’s turn to downgrade the creditworthiness of Italy, Spain and Portugal simultaneously putting France, England and Austria under “active watch”. Moody characterizes their credit perspective as “negative”.
This has led to a substantial fall in the British Pound vs. USD. The USD world index shows a general strengthening in the short and medium term for the USD. USD/JPY is trading at 77,9725 up 0,65 % basically due to last quarter’s report on a 2 % fall in Japanese GNP.
Moody’s downgrading of central EURO-members comes as no surprise, more or less in line with similar credit ratings done by other agencies. The most interesting is that England for the first time appear on thir credit watch list. Minister of Finance Osborne sees this as an active encouragement to continue the country’s drive towards ambitious austerity measures.
It is also likely that Moody’s downgrading would set the stage for a renewed debate on the very role of international rating agencies; are they really the neutral and objective observers as they would like market participants to believe; or do they have their own agendas as earlier strongly stressed by France and Germany, taking handsome profits for not even trying to play even handed?
Wrangling is continuing before EU Finance Ministers are meeting in Brussels tomorrow to decide whether the promised Greek government austerities are seen as binding enough. This comes among increased concerns on the effects of dramatic austerity measures: are they worth the price? All the Euro countries which have swallowed the medicine and as Greece have introduced harsh measures as Spain, Portugal, Ireland and Italy, have seen severe recession, fast climbing unemployment along with increased social unrest.
Monday’s securities markets were positive. Both Europe and US reacted favorably on Greece. The Apple share for the first time reached the USD 500 level; making the capitalization of Apple even bigger than the oil giant EXXON. The US market has risen for weeks. Analysts are voicing concerns, and stressing that Technical signals are pointing towards a correction.
Oil prices are flat this morning, while Gold is loosing ground dipping below 1720.
Daily Market Review - Thursday, February 16, 2012
EURO falls on
Greek wrangling
Assurances from the leader of the Euro-group, Jean Claude-Juncker that all necessary decisions regarding Greece shall be taken on Monday 20th, did not calm markets in today’s morning trading. The Euro is in free fall trading at 1.3017, down from high 1.3250 on continued uncertainties on Greece. This trend seems doomed to continue.
Written confirmations from the leaders of the the two big Greek parties assuring that they would continue to support the agreed austerities also after the parliamentarian elections in April, seem now to be in place. This along with agreements on how to cut an extra 310 M Euros in budgetary expenditures. This has, however, not been been sufficient to stop rumors that the leading EURO-countries now see Greece leaving the Euro as a foregone conclusion.
Remarks from the German Minister of Finance to his Portugal colleague has been seen as an assurance that the line goes with Greece. A Greek retreat shall not lead to further contagion inside the Euro-zone, and Portugal shall have the necessary backing. The general feeling is that especially the strong Northern European countries feel exasperated and more than willing to see Greece leave the Euro. Markets have consequently started to gamble on a Greek retreat.
The nervousness surrounding Greece is influencing markets. After heavy gains yesterday Asian exchanges lost ground in morning trading after both Dow Jones (- 0,76 %) and Nasdaq ( – 0,55 %) fall yesterday evening. Futures for Europe are down indicating that the promising New Years rally which have seen many exchanges jump 10 % , are running out of steam. Technical signals are pointing towards a correction.
Gold and metal prices which increased substantially yesterday have lost its gains. Gold is trading at 1720. Oil prices are going against the stream. Nymex is clinging on to the 101 – 108 level and Brent reached 118. The war of words going on around Iran still the main driving factor.
Daily Market Review - Monday, February 20, 2012
Greek debt deal
expected today
Global markets have over the last days calculated into prices that a solution is going to be reached when the EU Ministers of finance meet in Brussels today. Asia was no exception. Markets were in a positive mood and added new increases to former gains. The composite Asian Stock-index is up one %.
The US Finance secretary, Timothy Geithner, added his voice in support for Greece bail-out when he during the weekend strongly encouraged The International Monetary Fund, IMF, to extend credit to Greece. He characterized the “bail-out” package on 139 Billion Euros as “strong and solid” deserving the support of the international community.
The proposed “bail-out” package is though offering little comfort to ordinary Greeks who again took the streets yesterday protesting against austerities which have driven their country deep into recession and mass unemployment. Many see the “bail out” rather as a support for European banks bringing no relief to a struggling nation. During the week end Spain also saw huge demonstrations against austerities organized by the trade unions.
In the wake of the minister’s meeting EURO/USD is trading on on 1.3214. Expect a relief rally and a stronger Euro when the package is eventually adopted. The Yen is considerably weakened after a huge deficit on their balance of trade figures were presented last week. USD/JPY is at 79,515. Of the smaller currencies Norwegian krones (NOK) continue to climb gaining both versus EURO (7,4886 and USD (5,6691) helped by increasing oil prices and and strong reserves.
Oil prices continue to climb. NYMEX is up 3 dollars from Friday trading at 105. Brent is consolidating above the 120 and trades at 121. Metals are up with Gold posting a 0,75 % jump to 1735. The tensions around the Persian Gulf continue. As a reaction to renewed sanctions, Iran has cut oil deliveries to France and Germany. If Iran follows up its threat to close the Hormuz straits, oil experts foresee dramatic jumps in crude prices possibly to above 200 barrel levels.
Daily Market Review - Monday, February 27, 2012
The Summit has Come to the End,
but Questions Remained the Same
High appetite to risks remains in the markets, which helps indexes to be kept near yearly maximums. During weekends there were no any significant events, which could be capable to change an alignment of forces in the beginning of this week. At summit G20 the arrangement on possibility of allocation of additional funds of IMF has been reached, however it will be possible only if Europe will realize additional anti-crisis measures. According to the head of IMF, K. Lagard, it is a question of additional 500 billion dollars.
On Friday Government of Greece has directed the offer to private creditors on an exchange of bonds with reduction of their nominal value, now creditors have 10 days to consider this offer. The following provision has been included in the offer of an exchange: In case if 66% from total number of creditors will agree on "voluntary" restructuring - the remained bonds will be restructured compulsorily. In our opinion, it will have bad influence of the markets and fall of ratings.
Positive spirit remains in the commodity markets due to the upcoming LTRO: copper has returned to a level of 8.5 thousand dollars per ton; the oil of mark Light came nearer to a level of 110 dollars/barr., and Brent has finished week above a price of 126 dollars/barr., having updated a historical maximum. However, already today we can see some cooling in the commodity markets: the euro already is under symbolical pressure as expected in the middle of the week huge input of liquidity from ECB (on Wednesday), will break balance between dollar and euro. It is not excluded that probable correction on euro will have influence also on growth of raw actives.
From important events today, we are expecting news from Germany where the package of the help to Greeks should be discussed. However, it is improbable that the German parliament will refuse granting of additional funds to Greece. Therefore today, quite possibly, the markets will lie down in a side trend in expectation of events in the American stock market.
Daily Market Review - Thursday, March 01, 2012
FED’s Bernanke turned
markets upside down
The quantitative easing markets had hoped for were not included in FED’s Ben Bernanke statement to the Financial Committee in Congress yesterday. This had an immediate effect. Shares, bonds, oil prices and gold dropped dramatically in minutes. The gold prices fall 100 dollar to recover to 1721 during trading in Asia. Dow Jones had to give up its flirt with the 13 000 level and ended on 12 952. The dollar was strongly strengthened. The Euro fall back, but has recovered from bottom levels. Euro/USD is in the morning trade at 1.3345. USD/JPY at 81,01 with Yen falling further.
Bullish global markets which had been looking forward to Bernanke giving signals for a possible third round of quantitative easing with the Federal Reserve letting more funds into the money market, were disappointed. Bernanke repeated his sober message of moderate economic growth. BNP in the US increased in fourth quarter to 3 %. 2,8 % was expected. Quantitative easing would have given global markets fighting its way out if recession, an extra impetus.
The effects of Bernanke disappointing markets are probably not, however, going to be long lasting. News from Japan reveals stronger investments and Chinese manufacturing numbers for the last three months indicate that the growth problems in Europe and US are going to be temporary. The new strongly emerging markets keep their appetite for oil and metals. Oil prices have recovered and NYMEX is back at 107. Brent trading at 122,25.
After several bullish weeks Asian markets were marginally down this morning pointing towards a possible correction in world equity markets after big gains. It is Also worth noticing that China has reduced their US treasury bill holdings to proportionally its lowest level in years. This has been a gradual process. China has for a long time been aware of the vulnerability its big exposure in US treasury bills And bonds have created. It has therefore obviously been a deliberate policy to scale down this exposure to more balanced and controllable level.