Daily Market Reviews by MAYZUS.com - page 2
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05 FEBRUARY 2013: EURO PLUNGES ON SPANISH TURMOIL
DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments
After sniffing on 1,37 EURO/USD plunged below 1.35 yesterday and trades at present at 1.3493. The Euro has rallied against most currencies in January. At its peak Friday the EURO had since January 1st risen from 2 to 5% against all major currencies. The decline of the Euro came amidst market turmoil and volatility in the currency markets. Oil prices dropped. Brent crude fell two dollars a barrel to 115.
Political turmoil and renewed fear on the sovereign debt crisis in the euro zone hit global equity markets strongly. After weeks of impressing gains shares fell steeply in Europe, United States and Asia. The Standard & Poor 500 Index faced its worst fall since November, the technology index, Nasdaq, dropped 1,5% and the MSCI index for Asia Pacific fell 0,8% after reaching a 18-month high at the beginning of the week.
A grooming corruption scandal in Spain and the possibility for a return to power of Silvio Berlusconi in Italy had global markets to shiver. Prime Minister Mariano Rajoy and his party have rejected the corruption allegations, but the accusations come amidst harsh austerities and 25% unemployment furthering political instability. Spanish and Italian 10-year government bond yield rose to the highest levels in weeks and raised questions whether Spain and Italy would be able to fix their fiscal problems.
Markets have over the past few months been increasingly comfortable with European risks. Political turmoil has not been taken into consideration. The outcomes in Spain and Italy are far from certain and may pose a stumbling block for further risk appetite which. This might seriously hit the Euro which also would be in for profit taking. In the short term perspective the Euro might fall back to 1.32 – 1.33. USD/JPY has taken a short pause at 92,30, but seems set for 95 during the next coming weeks. The Australian central bank kept the interest rate at 3%. This has strengthened the Australian dollar. USD/GBP is stabile trading at 1,5751.
Copyright: MAYZUS Investment Company Ltd
06 FEBRUARY 2013: ASIA RECOVERS ON EURO ZONE DATA
DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments
Asian shares recovered on Wednesday as solid euro zone data calmed nerves stirred by potential political turmoil in Spain and Italy. Strong balance sheet numbers from the European Central Bank (ECB) and new signs of recovering inside the euro zone gave the Euro a new boost. The single currency rebounded strongly. EURO/USD trades at 1.3579. Stock markets in Europe and US also rebounded after dropping steeply on Monday. The Japanese Yen continues to be under pressure. USD/JPY touched 93,91, the highest seen since May 2010.
Investors’ optimism returned when the vast US services sector extended a three year expansion in January. Business activities in the euro zone, simultaneously, showed signs of recovery. US and European stocks rallied and recouped most of their losses after a sharp sell-off and profit taking the previous session sparked by renewed worries on the euro zone debt crisis. Oil- and commodity prices rebounded. Brent crude is trading close to USD 117 a barrel. Also copper prices are up.
The Japanese yen was further weakened by the prospect of a new appointment of Governor of Bank of Japan. The actual candidate is said be “dovish” and in favor of further active monetary easing steps. The present Governor would leave his post in mid-March. These news had Japan’s benchmark Nikkei index to soar 1,3% to a 33-month high. The Australian stock markets are also up accompanied by a strong Australian dollar. British Pound (GDP) is back on lowest levels seen against USD this year at 1.5661.
In the US president Barack Obama urged Congress to pass a small package of spending cuts and tax reforms to delay larger, automatic cuts from going into effect and damaging the economy on March 1. The proposal was quickly rebuffed from Republicans who saw it as a bid for new tax increases. The US Justice Department yesterday initiated legal proceedings against the rating agency, Standard and Poor, which it accuses for manipulating markets and actively contributing to the financial crisis in 2008.
Copyright: MAYZUS Investment Company Ltd
VIDEO MARKET REVIEWS
6 February 2013: Daily Market Reviews from Mr. Arne Treholt (Vice-President of Business Development and Investments MAYZUS)
07 FEBRUARY 2013: MARKETS ATTENTION ON DRAGHI AND ECB
DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments
Growth prospect for the euro zone is in the focus of investor’s interest when European Central Bank (RCB) President Mario Draghi meets with ECB colleagues in Brussels today. The policy meeting comes amidst optimism that the worst for the euro zone might be over. Public tiredness over harsh austerity measures and political turmoil in Spain and Italy, however, gloom in the background. Asian and American markets as well as EURO/USD took a pause waiting for ECB’s directions.
Growing optimism that the euro zone economy may be near a bottom has propelled the euro to a 14-half-month against the dollar and a 34 month peak against the Japanese Yen. Euro/USD is trading at 1.3520. Against British sterling, GBP, the Euro has also gained substantially and stands at a 15 month high. ECB is expected to keep interest rates at a record low 3,75%. Traders will focus on comments on the Euro’s strength and outlook for the euro zone economy.
Draghi’s strong verbal commitment to defend the Euro last autumn proved decisive for the Euro. The ECB’s bond buying scheme has further helped erase the funding strains on highly indebted euro zone members. The bond buying has strongly reduced the risks of the region’s crumbling debt. A corruption scandal in Spain and uncertainty over the outcome of the Italian elections has, however, brought focus back on the region’s political instability.
Crude oil and gold prices have been trading up the last hours. Brent is again sniffing at USD 117 a barrel. Gold is at 1680. USD/JPY trades at 93.45 after reaching 94,075 on Wednesday. In US the attention on budget cuts are back in the headlines. It is indicated that if automatic government spending cuts are kept in place only for a month or two, this may have a serious negative impact on the US economy and possibly trigger a brief recession.
Copyright: MAYZUS Investment Company Ltd
VIDEO MARKET REVIEWS
7 February 2013: Daily Market Reviews from Mr. Arne Treholt (Vice-President of Business Development and Investments MAYZUS)
08 FEBRUARY 2013: DRAGHI TALKS DOWN THE EURO
DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments
The Euro dropped to its lowest level in two weeks on Friday. The fall back came after the President of ECB (the European Central Bank), Mario Draghi, at a press conference yesterday warned against a strong Euro’s negative impact on the European economy. The French President had issued a similar warning prior to the ECB meeting, underlying the risk for a currency war spurred by monetary easing in US and Japan. Currency policies will be on the top of the agenda when the G-20 meets later in the month.
Draghi stressed that the exchange rate is important for growth and price stability. Draghi expected that economic activity in the euro area would gradually recover in 2013, but there are more negative than positive risks. Euro/USD traded at 1.3410 after falling close to one percent on Thursday. The Euro slipped to a two week low against the British pound which broadly strengthened on comments from the incoming Bank of England director, Mark Carney. Carney gave no hints that he favored immediate British monetary easing.
Despite the decline the Euro seems relatively strong. The common currency might be supported by the perception that ECB’s monetary easing is much weaker than US Federal Reserve and Bank of Japan. While the ECB is shrinking its balance sheet, FED and BOJ are expanding theirs. The Euro is probably going to stabilize in 1.33 – 1.35 area unless there is a major upset in the forthcoming Italian elections.
Shares were weaker yesterday prompted by Draghi’s comments on the Euro and Europe’s outlook. Wall Street fall and Growth sectors were especially hard hit. Asian shares, however, rose on solid Chinese trading data. China said that exports grew 25 % compared with January 2012. This confirms a solid recovery trend. Oil prices continue to rise. Brent crude is trading close to USD 118 a barrel. Copper prices are up 0,5%.
Copyright: MAYZUS Investment Company Ltd
VIDEO MARKET REVIEWS
8 February 2013: Daily Market Reviews from Mr. Arne Treholt (Vice-President of Business Development and Investments MAYZUS)
11 FEBRUARY 2013: BRENT CRUDE JUMPS TO 119
DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments
Most Asian markets were closed with the Lunar New holiday shutting financial centers in China, Japan, Hong Kong, Singapore and South Korea. Trading was light and volatile. Australian shares were flat after closing on 34-month high on Friday following positive export figures from China. Brent crude oil which touched its highest in nine months on Friday, remained unchanged just below USD 119 a barrel.
Foreign exchange trading was choppy with thin volumes. Traders interpreted this as a result of last week’s slightly dovish comments from the European Central Bank (ECB). The President of ECB, Mario Draghi, indirectly warning against that the raising strength of Euro may hurt economic development inside the euro zone. Euro/USD fell briefly to 1.3325 Monday morning and is now trading at 1.3375. The Japanese yen is also strengthened both against Euro and USD. USD/JPY trades at 92,25.
The Euro has also weakened on the cash payment scandal in Spain which engulfs the Prime Minister. Confidence in Italy is also shaken prior to the February 24-25 elections. The worries on the euro zone debt crisis and uncertainties in the southern periphery of Europe is back on the agenda. This probably means that the upside of the Euro is likely to be short-lived and limited.
European Economic and Monetary Affairs Commissioner Olli Rehn said in an interview during the weekend that EU wants closer coordination on currencies to avoid potential damaging disruptions to world trade. The remarks came amid a standoff between France and Germany over whether a strengthened Euro needs an official EU- response or should be left to the currency markets.
Copyright: MAYZUS Investment Company Ltd
13 FEBRUARY 2013: YEN TURBULENCE PRIOR TO G-20
DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments
There is big nervousness in the currency markets prior to the G-20 meeting in Moscow Thursday and Friday. Yesterday the Japanese Yen was in focus. Since December the Yen has fallen 13% against the USD and lost even more ground to the Euro. After two decades of stagnation there is, however, an understanding among the world’s 20 biggest developed and developing states that Japan ought to take firm steps to better its economy and secure economic growth.
The Yen swung dramatically on Wednesday. A statement from the G-7 (the group of the leading 7 industrialized nations) on Japan was differently interpreted. The Japanese Minister of Finance said that the statement recognizes that Japan’s monetary easing measures were not aimed at influencing and distort foreign exchange markets. Then a G-7 official stated the exact opposite. The statement was indeed meant to express such concerns. The yen thereafter fluctuated wildly. USD/JPY was jumping up and down between 92 and 94 yen to a dollar after falling 13% since December.
The incident illustrates the fear for a currency war looming in the background prior to the G-20 meeting. An effort to soothe market and avoid excessive moves in Yen had exactly the opposite effect. Other currency pairs were also affected. Euro/USD was fluctuating between 1.3325 and 1.3450. Oil prices rebounded after falling in the first part of Wednesday. New York Crude, NYMEX, is at 97 and Brent crude trades at USD 118,40 a barrel.
Stocks on Wall Street closed modestly higher on Tuesday. Dow Jones was within striking distance of an all-time high as investors looked ahead to President Barack Obama’s State of the Union address. Obama challenged a divided Congress to back his proposals to create middle-class jobs and overhaul gun and immigration laws.
Copyright: MAYZUS Investment Company Ltd
14 FEBRUARY 2013: ASIAN SHARES RISE ON RISK SENTIMENT
DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments
Asian shares rose on improving risk sentiment while Wall Street took a breather ahead of the G-20 meeting which starts in Moscow today. The Asia-Pacific MSCI-index and Australian shares were both up 0,6%. Dow Jones Industrial fell 0,26%. Investors remained cautious after the S&P index briefly hit its highest intraday level since November 2007. S&P is up 6,6% so far this year.
The Japanese Yen continues to be in focus prior to the G-20 meeting with finance and central bank officials from the 20 biggest and most influential countries in the world. Since November Yen has lost or depreciated 20% against the USD. The fall against the Euro is even higher. The leading Western powers are all using the printing press as their major tool to stimulate economic growth and obtain trading advantages. The steep fall of the yen illustrates the depth of the non-declared currency war.
At its press conference after the meeting of Bank of England (BOE) yesterday, BOE as well kept the door open for monetary easing indirectly meaning considering active use of the printing press. Taken into account that China for 10 – 15 years were under continued US pressure to appreciate their currency, power talks. An ugly currency war, might easily develop into a trading war with outright military confrontations looming in the background.
The British Pound (GDP) lost more than 100 points against the Euro and USD after the BOE meeting. USD/JPY which was down in the first part of yesterday, continues to lose ground. This morning USD/JPY is trading towards 94,65 seen on Monday. This is the lowest since 2010. Euro/USD trades at 1.3450 after factory statistics yesterday demonstrated that the euro zone might have reached bottom. Copper is up while oil prices have lost ground. Brent crude trades at USD 117, 98; down one dollar a barrel since Wednesday.
Copyright: MAYZUS Investment Company Ltd