Daily Market Reviews by UWCFX

[UWC Neeraj]

Market hopes stay with ECB

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

The US Federal Reserve stopped short of offering new monetary stimulus when it met yesterday. In a carefully worded statement, FED left the door open for further bond buying to help a struggling US-economy losing its momentum. Markets reacted mutely. The US exchanges ended flat after initially sending Dow and Nasdaq down on the FED’s inaction. Asia eased 0,2 percent in morning trade. While surprisingly, strong Australian retail and trade balances’ figures helped strengthen both stocks and the Aussie dollar. The Japanese Yen is falling to USD/JPY 78,51.

FED’s inability to offer new stimulus, left the burden of markets hopes on the shoulders of the European Central Bank, ECB. The USD reached a one-week high in Asia with EURO under new pressure. EURO/USD trades at 1.2247. The dollar index saw its highest level since July 26th, keeping the bar low for additional monetary easing when the FED meets in September. The spot light today on ECB President, Mario Draghi, who last week created strong expectations, stating to do whatever it takes to protect the Euro.

The most likely outcome of the ECB meeting today is new statement declaring ECB’s willingness to use all available tools if deemed necessary. This will stop short of any concrete action, and most probably mean that ECB will postpone any concerted actions to purchase sovereign debt from Spain and Italy until September. Such steps are deemed necessary to push down the borrowing costs for these two most exposed Euro zone economies. A new strongly worded statement will, however, not be regarded as satisfactory for markets being optimistic for concrete actions.

Such inaction also from the ECB, shall surely send stock markets down and put a striving Euro under renewed downward pressure. Oil prices have picked up a dollar a barrel since yesterday with Brent crude trading at 105,90. Precious metal traders are sending gold (1602) and silver (26,45) down disappointed by FED’s decision to postpone any concrete action to stimulate the economy.

Copyright: United World Capital

[UWC Neeraj]

Euro and shares fall on ECB inaction

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

The US and the European central banks had created strong market expectations prior to their meetings this week. Both failed to deliver. The Federal Reserve presented a vaguely formulated statement, which fell short of any clear indications of active monetary steps to stimulus to boost a stagnating US-economy. The European Central Bank, ECB, followed up with an equally dubious statement leaving to anybody guess, whether Europe has the will or intentions to come to grip with the sovereign debt crisis. Interest rates on Spanish and Italian bonds fell.

The markets reacted as expected by sending global stocks down and putting the Euro under new downward pressure. ECB President Mario Draghi’s powerful statement last Friday saved the Euro for one week. After ECB’s inaction, EURO/USD sniffed on the bottom level from last week, 1.2125, to trade at 1.2176 in opening hours in Asia. Draghi’s tactics to try force action from other ECB members had obviously failed. This week has again demonstrated that Germany is the European economic powerhouse. Germany is pulling the string regardless of policy statements.

After steep falls in Europe and US; Dow Jones fell 0,71 % and Nasdaq 0,36%, Asian stock exchanges were down for the third day in row. Reports on falling oil storages in US keeps Brent crude above USD 106 a barrel. Gold (1590) and silver (27,18) are as other commodities under renewed downward pressure after the one week mini “expectation’s” rally. Japanese yen is the winner in the currencies market. USD/JPY trading at 78,1955. British Pounds, GDP, is falling against USD. USD/GDP trades close to 1.55 after 3long being stabile around the 1,57 mark against the dollar.

Today’s trading in Europe and US shall give an indication on whether global markets shall continue to fall through August to build up new expectations for active FED and ECB economic stimulus after the holidays in September. The slow trend towards parity between USD and Euro is expected to continue.

Facebook’s share price came under new pressure yesterday and fell 4 % to USD 20 a share. This after doubts on the real FB number of subscribers. FB has a high number of duplicate accounts many clients registering cats, dogs, and pets.

Copyright: United World Capital

[UWC Neeraj]

Shares rally on US jobs

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Asian markets rallied in the morning hours today, following stronger than expected US jobs data and renewed optimism for European action on the debt crisis. The Euro touched a one-month high against USD reaching 1.2415, before falling back and trading on 1.2391. Oil prices also jumped on 63 000 new jobs added in US in July. Brent crude is trading at 108,48. Precious metals are stronger: Gold is at 1605.

The US jobs data gave US and European stocks a strong boost Friday after disappointing news from US Federal Reserve and the European Central bank, ECB, earlier in the week.
The overwhelming positive reaction on the US jobs data underscores global markets nervousness and volatility. A deeper look into Friday’s figures show that after job’s losing months, July’s employment kept track with jobs lost. The unemployment increased from 8,1 to 8,2 percent, and gives no reason for long standing jubilation in a market hungry for any news which can be interpreted as positive.

The jobs data has given the market a relief and bigger risk appetite for now with expectations once more building up for possible FED and ECB actions in September. However, caution shall likely remain until concrete measures are taken. The ECB statement last week demonstrated that Germany and the German Central Bank still are firmly in control, allowing no experiments from neither Francoise Holland nor Mario Draghi. Italian Prime Minister, Mario Monti, with his background as former EU-commissioner, expressed his frustration with the present development. In an interview with German Der Spiegel, Monti stated that the infighting between member countries has a devastating impact on the feeling of European unity.

The focus in global markets would probably this week be more on Asia than US and a holiday month Europe. China is fine-tuning its monetary policies, and trade, bank loans, and investment figures would give an indication on whether China has reached the bottom and is back on the path to economic growth. Australian dollar continue to be strong. The dollar is weaker against most currencies, and USD/Yen is trading at 78,4622.

Copyright: United World Capital

[UWC Neeraj]

EURO hits month high

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

The Euro/USD hits its highest level in one month reaching 1.2444 during yesterday’s trade. The currency kept steady at 1.24 in Asian trading this morning. The Euro is supported by hopes that the European Central Bank, ECB, soon will take action to lower borrowing costs for Spain and Italy. Interest rate on both Spain and Italian bond fell yesterday on expectations that ECB may again start to buy government bonds. USD is as on Monday falling against most currencies on bigger risk appetite. USD/JPY trades at 78,256.

Oil prices rose for a second straight session closing at its highest level in 11 weeks. Brent crude is trading close to USD 109 a barrel as US stock markets extended its strong Friday rally on supportive US jobs data calmed concerns about a slowing economy, and hopes that Europe will be able to effectively address its debt crisis. Violence in Syria and Iran’s dispute with Western countries over Tehran’s nuclear program continued to worry investors about the potential threat to the oil supplies from the region.

Shares in Asia were again up on expectations that Europe will take actions to tackle the debt crisis and further hopes that China and the United States will adopt stimulus measures to boost economic growth. The Australian dollar continues to trade up. Major Chinese data are expected on Thursday, giving investors a better idea to judge whether the world’s second-largest economy is back on the strong growth path after a lackluster first half year. The South Asian Pacific index, MSCI, inched marginally up in trading Tuesday morning.

Copyright: United World Capital

[UWC Neeraj]

Markets rally; stabile currencies

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Stock markets in Europe, United States continued to rally through yesterday and in Asia this morning as investors bet on policymakers willingness to act decisively on the euro zone debt crisis and undertake measures to boost economic growth.
Oil prices rose, and reached a 12-week high. Brent crude jumped two dollar to 111. Copper, a growth barometer, is up while the Euro stabilized around 1.24 against the USD. Safe haven bonds suffered from weakening demands. Gold (1610) and Silver (28,05) are trading higher.

The more optimistic market sentiments gave equities a boost globally. The US S&P rose to its highest level since early May and was close to breaking through the technical resistance on 1400. A convincing break through 1400 will signal further buying.
The Asian MICS-index is up for its fourth day in row. The Australian dollar, strongly influenced by commodity prices and economic growth reached a four-month high yesterday. USD has weakened on greater risk appetite as investors again gamble on smaller currencies. The Japanese yen seen as a safe haven is also weaker.

Last week US regulators accused HSBC, the Hong Kong Shanghai banking giant, for money laundering presumably accepting funds from Mexican drug cartels to be white washed. Yesterday New York banking regulators directed a blistering attack on the British Standard Chartered Bank. According to the regulators, the bank had allegedly money laundered over USD 250 Billion in transactions tied to Iran in violation of US sanctions.

These new accusations have raised eyebrows. The initiative against Standard Charter was according to informed sources, taken by an over-zealous freshman. The regulator did neither consult the US Treasury department nor the Federal Reserve before the decision was taken. This has created irritations and also questions whether the action might be politically motivated.
Standard Charter is the third bank after Berkley and HSBC, which US regulators have lashed out against in the last month. This has created questions whether this may be regarded as a witch-hunt against foreign banks competing in the US market.

Copyright: United World Capital

[UWC Neeraj]

Standard hits back on a “lonely” cowboy

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Standard hits back on a “lonely” cowboy

Standard Charter bank accused of laundering of Iran-funds in violation of US sanctions, hit back on New York banking regulator, Benjamin Lawsky yesterday. Critics claimed Lawsky had acted as “ a lonely cowboy” revealing information from an ongoing investigation. The Bank was supported by Mervin King of the British Central Bank, who accused Lawsky to march to his own tune, out of step with federal Washington regulators.

The stock prices of Standard Charter tumbled, but recovered when Standard Charter countered the allegations finding them “wholly disproportionate”. This is the third attack by US regulators on major British and international banks within a short period. This has raised eyebrows and led to double standard suspicions that US authorities are treating their own banks differently than their competitors. Back in 2006 a Standard Bank executive director according to leaked information, lashed out at the US and told: “who are you tell us and the rest of the world how to deal with the Iranians”.

The banking rhetoric somewhat overshadowed yesterdays market news. Equity markets in Europe and US were flat, while Asia was up for the fourth day in row helped by strong jobs data and reduced unemployment in Australia. The Japanese Central Bank stated willingness to undertake growth measures. The MSCI Asia Pacific Index is up 3,5 % in three trading days hitting its highest level in three months. Stimulus expectations are driving the upturn.

The Euro slipped back against the USD yesterday trading down from the 1.24 level to 1.2350. EURO/USD is at present at 1.2379. USD/JPY is at 78,4625 marginally up from Tuesday. Oil prices are high with Brent crude trading at 112. Gold and silver are as copper up.

Copyright: United World Capital

[UWC Neeraj]

Chinese trade data disappoints markets

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

The European debt crisis and global fear for sluggish economic growth in China are back in the headlines. The Euro came yesterday under renewed pressure. EURO/USD lost more than 100 points from its 1.24 level; to recover in Asia trading at 1.2295. A four day stocks rally in Asia came to an abrupt halt as China’s export and import data for July fell short of expectations. The same did trade figures from other Asian countries influenced by the negative growth and recession in Europe.

China’s export in July were up only one percent from previous year, while markets had expected a 8,6 % increase. Imports were marginally lower than the forecast of 7,4 % growth and posted 7,2 percent. The data had a negative impact on commodities, the China reliant Australian dollar and equities. Brent crude is down, but still trading at 112,95 after reaching 113 on Wednesday. Gold lost some dollars and fell to 1612 an ounce. Jobless claims in the US came in better than expected. 361 000 filed claims against the expected 370 000. The US trade balances were also marginally better than forecasts.

The recent data shall raise expectations for concerted economic stimulus measures after the summer holidays in May. After creating a short August rally more based on hopes and wishful thinking than realities and fundamentals, markets are this morning back in a sober mood. Analysts are expressing serious doubts on whether new European summits would be able to get Europe out of its present impasse. The new Greek government seems unable to come to grip with its debt situation.

In spite of the fact that ECB President, Mario Monti, for a short time was able to talk interest rates on Italian and Spanish bonds down, the Euro zone has not even inched closer to solving its sovereign debt and banking crisis. The upward pressure on interest rates levels on the exposed southern European countries shall probably be back in the headlines within soon.

The technical resistance level on Euro/USD is around 1.18 which it reached during the 2008 – 2009 financial crisis, is going to come under new pressure. As long as words are not substituted by concrete measures the downward trend on EURO/USD is most likely going to continue. Don’t be surprised to see 1.10 during the next months; inching towards parity in 2013.

Copyright: United World Capital

[UWC Neeraj]

Oil hits USD 114 on Israeli comments

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Oil prices hit a 3-month high in early Asian trading. Brent crude rose above USD 114 a barrel on worries of supply disruption from the Middle East. Israeli Prime Minister, Benjamin Netanyahu, stated yesterday that Israel’s security was threatened by the prospect of Iran obtaining nuclear weaponry. His comments are seen as a direct threat for a possible Israeli strike against Iran’s installations to stop it’s disputed nuclear program. The prospect of an imminent Israeli strike keeps oil markets at bay.

In spite of forecasts of a further slowdown in oil demand due to weaker economic growth in the United States, Europe and China, Brent reached a three month peak of USD 114,28 in early Asian trading to retreat to the 114 mark. Precious metals as Gold and Silver are also trading higher, and the Euro/USD inched marginally up, helped by expectations of monetary easing from the European (ECB) and the US (FED) central banks.

The Japanese Yen is keeping strong, USD/JPY at 78,25. Weak Japanese GDP figures had no negative impact on the Yen. Japan’s economy expanded just 0,3% in second quarter of 2012 as a rebound in consumer spending lose momentum and Europe’s debt crisis weighs on global demand. China, US and Japan have reported weaker growth in the April – June quarter compared with previous quarter figures.

Global stock markets have been rallying in August on raising expectations in financial markets that policymakers will take actions to lift their economies. However, hopes remain dark. The situation is especially troublesome in Europe. As one commentator stated: “Each time I am looking at Europe, the picture is more gloomy. Neither the sovereign and banking crisis, nor the problems facing the EURO, disappear by strong words. As a dark omen news tell that new Greek government again has failed to deliver on its austerity measures, and that German patience – once again - is running out”.

Copyright: United World Capital

[UWC Neeraj]

Euro/USD gains on speculation

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

EURO/USD rose 50 points to 1.2343 from yesterday as investors hunted for bargains and waited for new economic figures from Europe and the US. Traders halted their bets for a further drop in the Euro. They were also influenced by a lack of fresh news. Recent data have shown that the Euro zone’s debt crisis is eroding global activity. Asian shares rose in morning trade in Asia with the MSCI South Asian Pacific index marginally up 0,3%. Gold is falling on faltering hopes for central bank monetary easing. Brent crude stays above USD 113 a barrel.

New economic figures released this morning show that also German economy is stagnating strongly impacted by the Euro zone crisis. GDP, Gross Domestic Production, figures for Greece show a 6,2 % contraction in the last quarter. It is telling that these serious recessionary figures are hailed for being better than expected! Shares in Europe and the United States were down yesterday on deteriorating global growth prospects. Market volumes are weak. Expectations for further central bank growth stimulus seem for the moment to be the only real factor that supports investor’s sentiment and keep up the stock markets.

Soaring grain prices caused by the worst US drought in more than 50 years and poor crops from the breadbasket in the Black Sea area are simultaneously creating global worries for a serious food crisis. The G-20 (the group of the twenty leading industrialized countries) is planning for an emergency meeting in the end of the month. The global society is eager to avoid a repetition of the pike in food prices, which triggered riots in poor countries in 2008.

The G-20 has, however, no sanction means at its disposal. The G-20 can to try convincing member countries like the US to halt its ethanol production, and urge upon Russia not to impose an export ban on corn as it did two years ago. There is nevertheless little hope for concerted actions. The group is severely split big consumers and producers interests.

Copyright: United World Capital

[UWC Neeraj]

Dollar higher on upbeat retail data

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

The dollar traded near a one-month high against the Japanese yen on Wednesday spurred by surprisingly strong US retail sales. Together with the better employment numbers presented in the beginning of August, the new data have at least for now dampened talk of more monetary stimulus from the US Federal Reserve, FED. The reduced likelihood for monetary easing had an immediate impact on the Asian markets, which fall in morning trades. The Chinese markets were especially hard hit. The Hang Sheng Stock index fall more than 1%. USD/JP trades at 78.75 after reaching 78.93.

The broad based expansion in retail sales helped bolster the view that the slowdown seen in US economic growth during the second quarter of 2012, was only temporary. The retail data led to a jump in a US Treasury yields. If the US consumer inflation and industrial data presented later today, are positive, the dollar is likely to continue up against yen and other currencies.

The Euro was little affected by the newest US-data. Euro/USD is trading at 1.2325. The Euro has been supported by expectations that the European Central Bank, ECB, will take measures to reduce the crippling borrowing costs for Spain and Italy. Short term technical charts look favorable to the Euro, trading in an upward channel between the 1.2042 low reached in the end of July and the 1.2444 high reached last week.

There are, however, no changes in the longer term Euro picture. Capital continues to flow out from Greece. The New Greek government has neither been able to carry through promised austerities. Many observers therefore see a Greek Euro-exit as a foregone conclusion which European policy makers already are relating to. The big test for the Euro is Spain, and how the country shall handle their debt. In the medium perspective the Euro is heading by year’s end heading towards 1.15 against the dollar. The trend towards parity is equally clear in a year’s time.

Copyright: United World Capital