10 April 2013: Dow closing at record high

US-Stocks advanced on Tuesday with Dow Jones closing at a record high following a rally in cyclical shares and as the earnings season started to heat up. Asian stocks edged higher in Wednesday morning trade. Chinese trade data signaled a recovery in the world’s second largest economy as imports grew 14,1% year on year, much higher than expectations. The yen remained under pressure. USD/JPY stayed on 99; not able to break through the psychological 100 yen a dollar barrier.

The return to record levels indicates that investors again are using market declines as buying opportunities. The two winning groups, technology and energy, are closely tied to the pace of the economic growth. Microsoft jumped 3,6% as the top gainer on Dow Jones which advanced 0,41% to a record high on 14 673. Stocks were given a boost from the earnings session. ¾ of the 5% of the companies hitherto reporting results, have delivered higher than expectations.

In advance of the reports of earnings for the second quarter expectations have deliberately been plaid down. Alcoa, the aluminium producer, which traditionally is first out with its quarterly report, filed its adjusted results late on Monday, setting the tone for the earnings season. Alcoa’s results were slightly better than expectations. The Alcoa stock ended flat. First Solar Inc was the shining star with a surge of 45,5%. Solar’s results lifted the whole solar sector.

The dollar which has jumped 7% against yen since the Bank of Japan (BOJ) last Thursday stated that it will pump USD 1,4 trillion into the Japanese economy, was not able to break through the 100 level. This might easily happen during the week. Australian dollar continues to demonstrate strength after the surge in Chinese import. Euro/USD is steady in the interval between 1.3050 and 1.31.

Oil prices have recovered after the steep fall last week. NYMEX, New York crude, trades at 93,91 and Brent crude is at USD 106,40; up two dollars from the lows yesterday. Precious metals are up with gold trading at USD 1585 an ounce.

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05 March 2013: Wall Street higher in closing rally

In a late-day rally Wall Street pushed major stock indexes near all-time highs despite concerns about growth and China’s housing market. Any slowdown in China could affect US growth. Commodities and US-materials have a big exposure towards China. This goes especially for giants as Caterpillar and Alcoa which lost respectively 1,8% and 1,1% and were the big losers in yesterday’s trade.

Asian shares followed suit and rebounded strongly on Tuesday after a sharp sell-off triggered by slumping Chinese stocks the previous session. The MSCI-index for Asia-Pacific shares won back 1.1% of the 1.3% lost on Monday. In a prepared statement for the opening of China’s annual parliament meetings, outgoing Premier Wen Jiabao, stressed that China would boost fiscal spending in 2013 in a bid to deliver on the promised 7,5% economic growth for 2013.

This boosted the Australian stock market which rose 1,5% outperforming its Asian peers. Japan’s Nikkei stock average rose 0,8% to 53 month high. At least for now markets continue to be bullish in spite of spending cuts in the US, lack of any kind of political resolution in Italy and weaker data from China including an overheated property market. Markets are flush with capital due to monetary easing and continuous low interest rates. For the time being this seems to trump every other concern.

There are no big movements in the currencies. Euro/USD is steady on 1.3015. EU Finance Ministers met yesterday to discuss bail-out terms for Cyprus (see separate article). USD/JPY is at the same 93,50 levels as seen at the start of the week. British pound, GBP, has avoided to slump below 1.50 and trades above 1.51. Oil prices have recovered from yesterday’s low. New York crude, NYMEX, is above USD 90 a barrel. Brent crude trades at 110,25. Gold and silver are marginally higher than at the start of the week. Gold at USD 1580 an ounce.

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