11 April 2013: Wall Street lifts Asian shares

Wall Street’s record closing and optimism on the Chinese economy lifted Asian shares in early Thursday morning trading. The Japanese yen continues to be under strong pressure. USD/JPY trades at 99,60, a hair’s breadth within the 100 level. Yen continues to test fresh lows against major currencies as the effect of the Bank of Japan’s (BOJ) bold monetary easing takes hold. The South East Asian Pacific index, MSCI, gained 0,8%, while the Japanese Nikkei jumped 1,3%.

The new Governor of BOJ has proven that is serious regarding a 2% inflation level bringing fresh impetus to a stagnating, deflationary economy. There are questions whether this is enough. Monetary measures ought to be followed up by a strong restructuring of the Japanese economy especially steps to encourage the private bond market. Japanese bonds have fallen on BOJ measures, and Japanese investors are said to be moving funds into foreign bonds.

The last published minutes from the Federal Reserve (FED) Board’s meeting gives new stimulus to the US dollar. According to the minutes FED officials have debated to slow down the pace of asset purchases or end them later this year. The Dow Jones industrial average and the Standard & Poor’s 500 gave also impetus to a stronger dollar. Both indexes ended at historic highs on Wednesday, led by cyclical shares on China’s rosier demand outlook. Chinese imports have increased significantly during the last quarters. Higher-yield commodity currencies also gained ground on the Chinese data with the Australian dollar jumping to 1,0553 Against the USD.

A report published by the European commission yesterday gave a bleak picture of the economic development inside the euro zone. One of the EU-newcomers, Slovenia, has been a stark warning to put his house in order. The banking sector’s debt ridden and suffers. Slovenia might therefore be the next in line to follow Cyprus. The EU Commission also points to serious weaknesses in the banking sector in Italy, France and Spain in and reminds that the European banking and financial crisis might only be in its beginning.

Follow up with or daily market reviews on http://www.MAYZUS.com/en/market-reviews.html

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.

Follow up with or daily market reviews on http://www.MAYZUS.com/en/market-reviews.html