Asia falls on weak US earnings

Asia started in red this morning in line where the US and European markets ended last week. Disappointing corporate earnings from General Electric and McDonalds, along with steep fall in oil prices and increased worries on Europe’s dept crisis, influenced market sentiments. Negative sentiments are once again prevailing at when a new trading week opens in Asia. Numbers for Japanese exports, a key driver of the world’s third-biggest economy, saw a sharp fall impacting the MSCI-index of Asia-Pacific shares which fell 0,6 percent. Also Korea and Australia are down.
The result season is continuing in the United States this week with Facebook, Yahoo and Apple ready to present third quarterly results. First out is Facebook on Tuesday. Google, Microsoft and Intel disappointed investors last week. That turned around the positive trend we have seen in the stock markets since the Federal Reserve and European Central Bank’s decisions for monetary easing. The outcome of the forthcoming US presidential elections are also weighing in on investor’s sentiments encouraging profit taking and sitting on the fence.
The euro is resilient despite mixed signal from the euro zone over the progress of its three years debt crisis. Euro/USD is trading 0,3 percent up at 1.3046. The final outcome of the Spanish municipal elections which is regarded a test on the government’s austerity policies, are not final. Japanese yen continues to fall. USD/JPY is at 79,50 with the yen 0,3 % weaker. Brent crude has recovered from its bottom close to USD 110 a barrel trading at 110,85. Precious metals that fall steeply last week have recovered somewhat this morning. Gold is at 1726 up from 171. Silver is trading at 32,30, one percent up from bottom levels seen on Friday.
The rating agency Standard and Poor raised over the weekend question marks whether the last Chinese GDP numbers of 7,4% economic growth have been politically manipulated? The real figures were presumed to be closer to 6,5 %. Some analysts see this as part of the Chinese bashing; which has been “popular” in some American political circles lately. From Beijing there is news that Chinese top leaders have asked policy think-tanks to present the most ambitious economic reform proposals for decades. The proposals shall contain to curb the power of state companies and open for bigger discretionary freedom to set interest rates and the value of the Yuan currency.
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EU bank union ready by 2014

EU leaders agreed yesterday to establish a single banking supervisor for the 6000 banks inside the Euro zone by 2014, opening the way for its rescue fund to inject capital directly into debt ridden banks. A legal framework shall be adopted by the end of this year giving the European Central Bank (ECB) overall responsibility for banking supervision. Most day-to-day oversight will still be delegated to national bodies. An effective banking union is regarded as a first important step to overcome the euro zone three-year old debt crisis.

Asian shares eased on Friday as markets consolidated gains from a three-day rally. Last night also Dow Jones and Nasdaq ended in negative territory.  Both Google and Microsoft delivered weaker than expected quarterly results.  This weighed in on market sentiments.

The Euro was resilient trading at 1.3070 in morning hours in Asia 70 basis points down from the one-month high on 1.3140 reached on Wednesday. The single currency edged higher toward Japanese yen which also continued to fall against the USD. The down-side risk for the Euro is looking weaker short-term. The Euro/USD will probably remain in its recent broad range.  Momentum seems to build up to a new test on the technical resistance level on 1.3175.  The dollar index against six most traded currencies remains stabile.

Gold prices slipped to 1735 and trades at present on 1739. Recent positive third quarter company results have together with better housing numbers boosted US Treasury bill yield and supported the dollar. Appetite for precious metals bullions have consequently decreased over the last days. Silver reached 32,70 yesterday down from 33.30. Brent crude fell to USD 112 a barrel.  It has stabilized in morning trade, at 112,40. NYMEX. New York crude is still trading above 92.

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18 October 2012| UWCFX Daily Market Video Reviews

Asian shares strike seven-month high

Asian stocks reached a seven-month high this morning on positive US housing data and signs of stabilization in China. The MSCI-index for south east Asia, Shanghai composite and the Australian stock market rose between 0,5 and 1 percent. This, in spite of the fact that China’s GDP third quarter domestic product grew 7.4 percent from a year earlier. This is the seven straight quarter of slower growth.
The numbers, however, met expectations; it is furthermore encouraging that asset investment, retail sales and industrial output exceeded forecasts. Statistical figures for September, the last month in the quarter, are much stronger than the previous two months. The political succession which has created question marks and economic instability seems closer to a solution. These combined factors point to stabilization of the Chinese economy and have lifted the economic sentiment which is more positive than in months reflected by the jump in the Shanghai index over the last days.
The US markets ended flat yesterday night. IBM which constitutes 11 % of Dow Jones, fell 4,91 percent. Intel and Cisco delivered weaker than expected results. US home building came in much stronger than expected and surged to its highest level since the summer of 2008. Together with better than expected third quarterly company results and stabilization in China, the housing numbers shall probably increase investors risk appetite and higher demand for commodities. The bell water Copper futures are pointing strongly upwards. Japanese yen, a safe haven for investors, have fallen substantially during the last week. USD/JPY is trading at 79,165.
The Euro/USD is at 1.3097 after reaching 1.3125 in yesterday’s trade. The Euro has fallen somewhat back in early trading in Asia. That might be seen a technical correction after a strong rally over the last days. Gold has fallen back from yesterdays high on 1753 and trades at 1749. Silver is stabile on 33,18. Brent crude has recovered in Asia again trading close to USD 114 a barrel after falling back to 113. NYMEX is stabile on USD 92. Australian dollar touched a two-week high of USD 1,0395 after the Chinese data. It is now trading at 1.0384. The Scandinavian currencies, Swedish krones (SEK), Norwegian krones (NOK) and Danish krones (DK) are posting gains against the dollar.
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