08 MAY 2013: ASIAN SHARES RISE ON CHINESE TRADE DATA

The positive sentiment in global equity markets received a new boost on better than expected Chinese trade data. Asian shares rose to their highest level in two years after China reported a 14,7% export increase in April. Imports were up 16.8% with a trade surplus of USD 18,16 Billion for the month. The Chinese data comes on top of new Wall Street highs with Dow Jones closing above 15 000. In Germany industrial orders showed unexpected strength last week and pulled the Dax index into record territory.

The Australian Reserve Bank became yesterday the last central bank to cut interest rate creating an opening for parity between Australian and US dollars. Share prices are helped by decreased bond returns. The cut in interest rates play into the hands of equities. The Asian Pacific MSCI-index rose 0,8% and reached the highest level since August 2011. Global market sentiments were helped by strong quarterly results by one of the world leading banks, HSBC, and a profit jump for the US Disney. Cut in the labor seems to be the driving force behind HSBC’s result.

The Chinese trading numbers are likely to ease recent concerns about weakness in the recovery in the world second-largest economy. Doubts remain, however, over real demand in China, and the accuracy of their figures. Oil and commodity prices are trading firmer after the Chinese data. A successful bond trade in Portugal supported the upbeat mood and strengthened the Euro. Euro/USD is steady at 1.3080. There is still no breakthrough in USD/JPY which sticks to the 99 yen a dollar level. USD/British sterling, GBP is trading at 1.5479 slightly down from yesterday.

Gold continues to be under pressure. Gold lost one percent during yesterday’s trade. It has recovered to 1455. Gold backed exchange traded funds fell to their weakest level since 2009 indicating that investors money is leaving gold for booming stock markets. This suggests that the super cycle of commodities might be over and that tough times might lie ahead especially for metals. Analysts see that commodity prices in the future probably may be more determined by normal supply and demand balances than by speculative money flows.

Gold traders take an opposite opinion. The present equity boom is driven by low interest rates and central banks money printing. This will create inflationary pressure and challenges for the market system as witnessed by the financial crisis in the autumn of 2008. In such an environment investors will still use gold and precious metals as a hedge. Gold bulls, therefore, stress that a rebound to the USD 1700 level is most likely also in a shorter term perspective.

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07 MAY 2013: BULLISH STOCK MARKETS SET FOR NEW RECORDS

US and Asian stocks reached new record highs as the Japan’s Nikkei average soared 2,8 % on Tuesday morning.  For the first time since June 2008 the Nikkei broke above 14 000 as the market played catch-up from an extended holiday. The strong US jobs data eased concern over the health of Japan’s biggest export market. Japanese exporters as Toyota, Honda and Sony led the rally jumping more than 3 %.

In the US the S& P led by Apple and financials pushed further above 1600. The S & P has gained 13,4 % since the beginning of the year.  Decent earnings together monetary easing and low interests rates have helped the stock markets to new records. As long as the world’s leading central banks are providing markets with liquidity  the stock  rally is most likely going to continue at least in the short term.

Asia is today focusing on Australia where markets are waiting for the Central Bank of Australia’s decision on interest rate. Analysts are split on whether the interest rate would be lowered by a quarter point to a record low of 2,75 %. A jump in stock prices are then predicted. Australian stocks fall 0,4 % prior to the central bank’s verdict.  The Asian Pacific, MSCI-index, was as the Korean Kospi slightly down after big upward jumps on Monday.

In the currency market the Euro is on the defensive Euro/USD trading at 1.3077.  The head of the European Central Bank (ECB), Mario Draghi, stated yesterday that ECB is watching economic data and is ready to take further action if needed. The upcoming German elections in September make changes in the austerity policies unlikely in spite of Germany being under pressure from other EU-members.

While gold, USD 1465,  is losing ground on continued outflows in holdings at the world’s largest gold backed exchange traded funds, SPDR Gold Trust, crude and copper are steady.  Brent crude continues to trade above USD 105 a barrel.

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06 MAY 2013: US JOB REPORT EASES FEARS

The US stock markets reached new highs on Friday. The S&P 500 index smashed through the 1600 mark for the first time in history. All 30 companies on the Dow Jones Industrial Average rose as that benchmark crossed 15 000 for the first time after better than expected jobs reports. Non-farm payrolls increased with 165 000 jobs in April. Analysts forecast was 140 000. The unemployment rate fell to 7,5%, the lowest level since December 2008. Asian stocks spurred higher Monday morning on the US job data.

The better than expected jobs report eased fears about the health of the world’s largest economy which remains on a path of modest, but resilient growth. The Federal Reserve (FED) indicated last week that it is prepared to increase the USD 185 Billion –a-month pace of its third round of quantitative easing. The new figures mean there is little chance for such an increase. The job creation in April was heavily weighted towards the service sector. The production side with construction was shedding 6000 jobs. There is also a dip in average weekly hours from 34,6 to 34,4.

The US job data follow central banks meetings last week. While the US FED expressed readiness to increase monetary easing, the European Central Bank (ECB) informed that if necessary it would consider taking deposit rates negative. The mere fact that the key central banks aired such an opportunity was enough to sustain the rally in stocks, bonds and credit demonstrated by the new records on Wall Street and the positive sentiments in Asia this morning. Decreasing rates meaning that stocks are the most attractive alternative investment.

Oil prices have also been given a boost by the US jobs reports. New York crude (NYMEX) is for the first time in weeks trading above USD 96 a barrel. Brent crude is at 104,50. Copper is in the limelight after a 6,5% rally to USD 7 270 on Friday. Copper has fallen nearly 20 percent in the past three months on worries of a slowing world economy. Japanese yen is falling against the dollar trading at 99,08 yen to a dollar. Euro/USD is at 1.3122.
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03 MAY 2013: ECB RATE CUTS SUPPORT SHARES

EUR/USD lost more than 100 points after the European Central Bank (ECB) decided to cut interest rate with 0,25 % to a historical low of 0,50. The Euro fell immediately on the announcement and  trades at 1.3074. The decision received cheers from  stock markets which rallied in early Asian trade on Friday. In the US Wall street was helped by a sharp fall in last week’s jobless claims which fell to its lowest level in five years.

The smaller number of Americans seeking jobless benefits claims was seen as a sign of a healing job market in spite of the presentation a ray of weak economic data lately. US stocks were also helped by a narrowing trade gap in March.  The fact that both imports and exports fell,  indicate, however, weaker demand, and tells of weakening growth momentum both in the US and globally.

Initial claims for state unemployment benefits dropped with 18 000 last week to seasonally adjusted 324 000. The claims report runs counter to a number of signals of  economic activity softening in  March and April. The data has no direct bearing on the Labour Department’s monthly employment report which is expected later today. It suggests, however, that employers are feeling less pressure to lay off workers even if they have cut back on hiring.

Oil, copper and gold prices traded higher with Brent crude up 2 % to 102,65. The US stock rally was led by tech shares.  Facebook delivered better than expected and rose 5 %. The ECB decision to cut rates for the first time in 10 months helped market sentiment and bolstered the content of the Federal Reserve (FED) statement Wednesday. FED will continue to buy bonds to keep interest low and spur growth. If necessary FED kept the door open for stepping up the purchases. Also the ECB kept options for  further action to stimulate the economy.
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02 MAY 2013: ECB INTEREST CUT SEEMS LIKELY TODAY

Growing doubts over the health of global economies pushed Asian stocks lower on Thursday after disappointing US economic data pushed Wall street down. Dow Jones industrial fell 0,92 % adding to doubts over the strength of the world’s biggest economy. Slow Chinese demand puts new question marks on China’s economic recovery. The European Central Bank (ECB) is meeting later today. ECB is expected to cut interest rates down to a low of 0,5 % in an effort to take the Euro zone out of recession.

The Asian Pacific MSCI-index fell 0,5 percent with Australian shares leading the decline. Miners dragged the AXJO index down 0,8 % on fears of lesser Chinese appetite for commodities. The Chinese PMI (Purchasing Managers index)fell in April, but the upward trend continues. It is, however, fragile and has lost momentum due to signs of pausing in the US economy. Market sentiments are split between growth prospect worries and support for sustained monetary stimulus.

There are also worries that a weaker US economic growth may prompt profit taking in Asian equities.  Asia has strongly outperformed earlier this year,  USD/JPY is trading steady at 97,24 unable to break through the psychological important 100 level.  Some analysts expect that yen is going to continue to depreciate after a short breathier.  A US trading at 110 yen towards a dollar is perceived.

The dollar has recovered from lows against a basket of six major currencies, DXY, but stayed at lowest levels since late February. The dollar weakness lifted the euro to a two month high of USD 1,3243 on Wednesday. It trades steady around 1.3178 in the opening sessions in Asia. Weak credit demand in the euro zone shall most likely lead to further contraction in the region. This points along with disappointing German PMI in April towards an interest rate cut when ERCB meets later today.

Growing unemployment in the Southern European periphery of Europe and slower growth in Germany, have led to a renewed debate on the austerity measures carried through by The ECB and EU-commission with Germany as the driving national engine. A leading critics of the austerity measures, the economic Nobel laureate, Paul Krugman, says  in a recent article that the austerities is far from any sound economics and purely dictated by leading bankers and politicians political prejudices. The results are catastrophic for the economy as well as human beings.  

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30 APRIL 2013: S&P500 INDEX AGAIN APPROACHED ABSOLUTE MAXIMA

In the first day of the week the index of the wide market S&P500 closely approached recently established historical maxima and now has chance to continue an ascension on new heights. Following the results of the yesterday’s trading session the S&P500 index increased by 0,72%. Quotations stopped at the level of 1593,61 points. To an absolute record there was not enough one point only. As the closest level of resistance which can be reached within an ascending trend, we will allocate a level of 1610.

Bulls also were positive in the light of coming meetings of key central banks – on the 1st of May will be finished the next meeting of FRS, and on May 2 the decision on an interest rate will be made by European Central Bank. From FRS the investment community expects comments on recent deterioration of macroeconomic statistics and, respectively, promises of extension of QE at least until the end of the year; from the European central bank wait fall of an interest rate which ripened owing to lack of any signs of revival of economy of the region. Speculative expectations of cheap money as usual maintain appetite to risk, and Monday didn't become an exception.

The trading session at Asian stock markets takes place today with mainly positive dynamics, continuing yesterday's growth over the ocean, but the Japanese market which has come back from days off, looks worse than the colleagues. One of the reasons is dynamics in the currency market where USD/JPY pair continues movement under level 98, after it was once again rolled away from a level of 100 last week.

Also a big block of macro statistics has been issued today in Japan, mainly positive, however this factor is mainly ignored by Japanese investors. In particular unemployment rate decreased in March to 4,1%, expenses of households grew by 5,2% in annual calculation, the production PMI index raised to 51,1, and retails of the largest networks grew by 2,4%. Only an industrial production was worse than expectations and grew for March only by 0,2% at forecasts of growth for 0,4%.

In Australia, meanwhile, continues growth of the banking sector, and yesterday's leaders of growth - National Australia Bank and Australia and New Zealand Banking Group add today another 2,5% and 4,5% respectively.

Prices of oil and precious metals are weaker this morning. Brent is on a level 103.55$ per barrel – loosing 0.25%. Gold and silver are on a levels 1460.93 and 23.98 respectively.

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29 APRIL 2013: GERMANY'S DAX ADDED 4.8% FOR THE LAST WEEK

Leading stock indexes of Europe and the USA on Friday generally decreased - the British FTSE-100 decreased for -0,26%, the German DAX lost -0,23%, the French CAC lost -0,79%, the American Dow Jones added just +0,08%, S&P500 decreased for -0,20%, Nasdaq Composite lost -0,33%. Accordingly to the published statistics on Friday, growth rates of gross domestic product of the USA in the first quarter of the current year were accelerated, but were slightly worse than market expectations. At the same time the index of consumer confidence in the USA, counted by Michigan University, decreased, but at a size smaller, than was predicted. 

As a whole for the past week the American share indexes added 1,1-1,9%, and European rose by 2,2%-4,8%. The German DAX which has added 4,8%, against improvement by the authorities of Germany of forecasts on growth rates of economy became the favorite of week within the European platforms. Bundesbank (the Central Bank of Germany) in the April’s review predicted growth restoration in economy of Germany in the second quarter against situation improvement on a labor market.

Trading session in Asian stock exchanges started without any uniform dynamics, Chinese and Japanese stock exchanges are closed today in connection with national holidays "Labor Day" and "Showa Day" respectively.

At the same time, Australian ASX where the raw materials companies are the major part of the index, remains to be in a green zone, despite the fact that on Friday evening there was quite sharp depreciation of metals. Mainly support is given by the banking sector. In particular the extracting companies Newcrest Mining and BHP Billiton lose around 0,5% of the capitalization while National Australia Bank and Australia and New Zealand Banking Group banks add 1,3% and 0,8% respectively. Significantly worse than the market looks the Kingsgate Consolidated gold mining company, which is losing -14,5%, because of the statement of intention to decrease expenses in connection with a collapse of prices on precious metals.

Today the statement concerning prospects of development of economy of the Asian-Pacific Region was made by representatives of IMF, having reported about fall in forecast on gross domestic product growth from 5,9% to 5,7%. Also experts noted remaining probability of slowdown of the Chinese economy.

Prices of precious metals continue its positive correction after steep falls we have seen not so long time ago, gold is increasing for 1,07% and is traded on a level of 1469,16. Silver is up for 1,88% on a level of 24,20. 

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