Daily Market Reviews by UWCFX

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Israeli attack rumors have oil skyrocketing

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

Brent crude rose to a three month high above 116 yesterday on concerns over disruptions to supply from the Middle East. Oil storages in the United States, the world’s top consumer, fell also more than expected. Worries about a conflict over Iran’s disputed nuclear program have escalated with reports on plans for an imminent Israeli attack on Iranian nuclear reactors. Rumors telling that Israel would attack prior to the US elections, had oil prices to jump more than two dollars a barrel. There are also growing concerns that the Syrian situation shall seriously affect neighbor countries. Saudi Arabia yesterday ordered its citizens to leave Lebanon.

US stocks, the dollar and most commodities rose on Wednesday while the Euro and US Treasury bills fell the US industry output rose 0,6% in July. The report followed strong July retail sales and employment data released earlier. Although US economic data remain mixed, signs of stabilization and a slow upward trend continue to emerge. This development has scaled back expectations for new economic stimulus from the US Federal Reserve, FED, on its meeting in September.

Asian stocks were flat in today’s morning trading. The Chinese government indicated new stimulus measures. Prime Minister Wen Jiabao stated that slowing inflation had given China more room for economic growth stimulus measures. This lifted stocks and after new published figures had shown that foreign investments in China dropped with 8,7 % in July.

USD continued to raise against Japanese yen. JPY fell to 79,25 losing more than one percent to dollar over the first days of the week. Gold prices are stabile on 1605. EURO/USD is stabile at 1.2280 with continued downward pressure on Italian and Spanish bond’s interest rate levels.

Copyright: United World Capital

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Merkel boosts global markets

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

Wall Street rose to its highest level since April after German Chancellor, Angela Merkel, seemed to support the European Central Bank’s efforts to strengthen the Euro and fight the region’s debt crisis. The high technology index, NASDAQ, outperformed the market after Cisco shares jumped nearly 10% and Apple reached a new high. This came after the US indexes had moved sidelong for the last two weeks. Yesterday’s gains seem to indicate a continued upward market trend. The positive stock developments in US were followed up in Asia where both the South Asian MSCI- and Nikkei indexes rose in morning trade.

At press conference with the Canadian Prime Minister yesterday, Angela Merkel voiced strong support for the EURO, along ECB President Mario Draghi’s statement last month to do whatever it takes to save the euro. Merkel also stressed the need for Europe’s swift fiscal policy integration. Merkel’s statement was interpreted as Germany is inching closer to take active steps for economic stimulus. Germany has so far been reluctant to give up on its strict monetary and fiscal policies.

Merkels comments gave a boost both to stock markets in Western Europe and strengthened the Euro. Euro/USD rose from 1.2275 to a high on 1.2373, trading at 1.2350 in opening in Asia, well inside the established short term corridor where the EURO for the last two weeks has floated between 2050 and 1.2450. USD/JPY is stronger than in weeks, trading at 79,32. The dollar has weakened towards other currencies on increased risk appetite. This has boosted commodities which are trading higher. Gold bounced back from low 1600 to trade at 1615. Also silver (28.15) is higher. Brent crude is back on 114 level from Wednesday’s high on 116 while NYMEX crude saw USD 95 for the first time in several weeks.

While few observers doubt that ECB will take decisive action to tackle the ongoing debt and banking crisis in the Euro zone, the outlook is less clear for the US Federal Reserve’s future policy measures. US data continue to be firm. Two top Federal Reserve officials yesterday weighed in against further monetary policy easing. A third one stated that US interest rates needed to be raised earlier than the 2014 deadline set by the Federal Reserve.

Copyright: United World Capital

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Risk appetite still robust

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

Japan’s Nikkei share average continued to inch higher Monday morning as risk appetite remained robust. The Nikkei index reached a three month’s high on Friday helped by a weaker Japanese yen. USD is still up against JPY trading at 79,50. The weaker Yen has given Japanese exporters a welcome support. Thailand presented much stronger than expected GDP-figures this morning while Chinese stocks reached its lowest level in 3 years.

The increased risk appetite and optimism in Asia and other markets seems to be driven by sustained hopes for progress in European leaders tackling of Euro zone debt crisis. German Chancellor Angela Merkel went last week far in backing ECB President Mario Draghi in his unconditional support for the Euro. During a state visit to Canada Ms Merkel seemed to second Draghi’s statement, in that Germany will take all means necessary to support the EURO.

The strength of the content of these statement will be tested later this week when Greek Premier Antonis Samaras on Friday meets Merkel in Berlin to ask for a revised austerity schedule. So far, neither Germany nor the EU-commissions have demonstrated any willingness for compromise, and threatened not to pay out the September bail out tranche if Greece fails to meet its austerity obligations.

EURO/USD is in early trading Monday morning at the same level as Friday 1.2331. Further short term development will depend on how ECB and EU-institutions handle Greece and higher Spanish and Italian bond prices. Rumors say that ECB is considering a ceiling for bond prices to avoid further speculation. Oil prices are higher as the US proposal to use oil strategic reserves to dampen prices, have met with skepticism. Brent is at 114,50 and NYMEX crude reached above 96. Gold (1617) and Silver (28,15) are also trading higher.

Copyright: United World Capital

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Apple most valuable company in history

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

Apple shares reached a new high becoming the most valuable public listed company of all time yesterday. Shares rose to USD 665 up 2,6 % from last week. The combined value of Apple shares exceed the previous record set by Microsoft. Stocks were otherwise flat in New York on Monday experiencing signs of fatigue after six-week of gains and uncertainty regarding the handling of the debt crisis in Europe. The South Pacific Asian stock index, MSCI, is as the Japanese Nikkei up in early trading in Asia.

EURO/USD is trading up, 1.2357, on expectations to the top level meetings in Europe in the second half of the week.Greek Premier Antonis Samaras is likely to ask for a two years postponement of the execution of austerity measures when he meets with German Chancellor, Angela Merkel, in Berlin on Friday. Germany seems adamant. Finance Minister Schaubel stated yesterday that he sees no point in throwing more money into a bottomless Greek hole. The Foreign Minister of Finland stated that a possible Greek exit from the Euro is on the agenda. The Minister added that the Greeks know what it takes to stay in the Euro. It is up to Greece to decide whether they are willing to undertake the necessary obligations and measures to stay as a EURO- member.

While there is little room for compromise and new postponements for Greece, Germany seems to have moved closer to other Euro-countries and the European Central Bank, ECB, regarding possible purchase of bonds from struggling Euro-economies as Italy and Spain. A ceiling or threshold for the interest rate on these bonds have been discussed as a measure to avoid speculation.

As long as such solutions are aired, the Euro is probably going to inch upwards for the rest of the week till we see a more clear picture. Long term odds point against the Euro and in support of USD and precious metals. Gold prices have reached 1621 and silver is also stronger (28,85). Oil prices are stable: NYMEX at 96 and Brent 114.

Copyright: United World Capital

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Asia slips back on Japan export

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

Asian stocks slipped back after Japan’s export fell an annual 8,1 percent in July. Collapsing shipments to Europe and a steep fall in sales to China caused the deepest drop in export in six months. The Japanese yen strengthened against the dollar trading at 79,28. The South Asian Pacifix index, MSCI fell 0,7 percent. The US-markets rallied during the first part of the session, but fell back from record highs. Standard and Poor’s 500 index rose to a four year high before slipping back into red.

The Euro/USD jumped back to a high on 1.2488 on expectations that the European Central Bank, ECB, will act to rein in surging borrowing costs. The interest rate on both Spanish and Italian bonds fell sharply in yesterday’s trade. Crude oil prices are steady. Brent close to 115 and NYMEX above 96. Gold (1640) and silver (29,25) are bullish, and some experts claim that we are turing into a bullish commodity and precious metals market.

The Euro broke through the short term technical resistance level in its recent two week corridor where the common currency has seen movements between 1.2042 and 1.2444 on the upside. The rally we recently have seen in stocks is, however, has been built not on fundamentals, but on expectations that ECB shall convince resistant Germans to buy bonds to cap the yield of troubled euro zone sovereign states.

German Chancellor Angela Merkel voiced last week principle support for ECB’s crisis-fighting strategy. This boosted the short term both the Euro and global market sentiment. 1.2488 is the highest level seen on the Euro since early July. Euro zone top level meetings at the end of this week will give a more clear indication as to the future direction of the common currency. ECB bond buying and whether European leaders are willing to give necessary promises to keep Greece in the Euro, are on the top of the agenda.

Copyright: United World Capital

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FED minutes lift EURO and gold

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

Three weeks old minutes from the US Federal Reserve’s meeting August 1st have lifted global stock markets and given ERO/USD a welcomed boost over the last 12 hours. The Euro touched a seven week high at 1.2553 on Thursday as Premier Antonis Samaras started his European charm offensive to keep Greece in the Euro. The South Asian Pacific stock index, MSCI, rose one percent on expectations that the minutes indicate FED willingness for economic stimulus, and early losses in the New York were nearly trimmed off. Crude prices, gold and silver are strongly up.

FED wrote minutes reflects end of July’s rather pessimistic outlook on US economy. Since then data on better employment, retail and to a certain degree housing figures, have turned market sentiment around, and convinced that the US economy is back on the right track. The open question and decisive for eventual FED action is whether employment figures for August will confirm latest data. Market expectations are in favor of further quantitative easing and buying of treasury bills and bonds. This weakened the dollar towards most currencies yesterday.

The Euro saw its highest level since early July and burst through the upside in the short term technical corridor between 1.2040 and 1,2450 where it has moved the last weeks. If Samaras succeeds in convincing that Greece is sincere in its austerity intensions and wish to stay in the EURO, his European partners might agree to give him the t two years postponement chance he his bidding for. Such a nod to recession fighting Greece, would eventually in the short term lead to a further strengthening of the Euro as will a European central Bank decision to buy sovereignSpanish and Italian bonds.

The prospects for monetary easing and economic stimulus will weaken the dollar and give a boost to commodity driven currencies as Canadian and Australian dollar, Norwegian krones and indirectly Swedish krones, a trend clearly seen over the last days. Commodities quoted in USD will be given a further boost. Oil, copper, gold and silver rallied yesterday and reached their highest levels in weeks. Even HSBC’s report yesterday that China’s manufacturing purchasing Manager index, PMI, for August, fell to its lowest level since last November, did not spoil the commodity and precious metal party. This is probably going to be gthe case as long as investors continue to cultivate expectations that monetary easing and economic stimulus are just around the corner.

Copyright: United World Capital

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No Samsung copy of iPhone

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

SAMSUNG did not copy Apple’s iPhone. Even if Samsung Electronic flagship Galaxy smartphone looks very similar to Apple’s iPhone, Samsung did not violate the iPhone design, a South Korean court ruled on Friday. Simultaneously nine jurors started deliberations in California in one of many disputes between the two giants fighting for supremacy in a market the two companies control more than half the world’s smartphone sales. The companies have infringed on each other copy rights. The judge therefore ordered Samsung to immediately stop selling 10 products including Galaxy S 11 and also banned sales of four Apple products. Both the rivals were ordered to pay each other relatively small compensation damages. Samsung stocks fell 3 % prior to the court’s decision, and recovered substantially – up 2,5 % from the bottom – when the verdict was published.

Angela Merkel and French President Francois Hollande agreed that Greece have to stick to its debt obligations prior to Antonis Samaras separate meetings in Berlin and Paris today. The firm German-French stand is most likely to be regarded as part of a negotiating strategy; and as an initial reaction to the Greek premier’s bid for a two years leniency period before austerities are carried through. Compared with Spain and Italy relatively small funds are needed to keep Greece afloat. A Greek Euro exit will primarily have an important symbolic value and be regarded as a beginning of a breakup of the Euro. European leaders might, therefore, be willing to pay the price and give Greece a grace period.

EURO/USD have stabilized after strong gains earlier in the week, trading at 1.2554. The interpretation of the outcome of Samara’s meetings today would have a bearing on the short term direction on the value of the Euro. The British pound against USD has also increased substantially over the last days. Oil prices are dropping from its high levels on Thursday, Brent crude is at 114 and NYMEX back to 96. Gold prices continue to climb, and reached 1667 in early trading in Asia. Silver is at 38,50. Both precious metals are seen as a hedge in a volatile currency market.

What might be seen as overblown expectations for monetary easing in US and the Euro zone front collided with fundamentals in early Asian trading. The outlook for growth is dim in spite of all expectations. The South Asian Pacific Index, MSCI, fell 2 % after a similar reality test saw European and Asian markets falling on Thursday. The general feeling is that expectations and market fundamentals are, too, far apart and that equity markets are in for a correction.

Copyright: United World Capital

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Tropical storm raises oil prices

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

Brent and NYMEX crude rose more than a dollar Monday morning on supply worries as tropical storm Isaac threatens to interrupt most US offshore oil production in the Gulf of Mexico. Brent which fell below 114 on Friday, reached 115 in early Asian trading. An explosion in the biggest oil refinery in Venezuela has claimed 39 lives and cut supplies of refined oil products. War mongering over Syria likewise keep up the tension in the Middle East.

Investors’ concentration will this week be back on the US Federal Reserve and its annual meeting of central bankers and economists in Jackson Hole August 31st. Fed Chairman Ben Bernanke’s speech will probably give clues whether the FED is ready for a third round of quantitative easing. Time for FED-action is, however, running out with the Presidential elections approaching. Republicans have been highly critical to the first rounds of monetary stimulus, and a new round of easing shall be interpreted as a boost to Obama.

Whatever statement shall have an important impact on where the markets are going to move for the next weeks and on the strength of the USD. The steam seems to be running out of last week’s Euro rally which saw the common currency jump to 1.2575. Euro-USD is now trading at 1.2505 in Asia with volatile stock markets without direction.

The charm offensive of Antonis Samaras ended in Paris Saturday with the Greek Premier asking for time and not more money. Back in Greece he stressed the message that Greece belongs to Europe and wants to stay in the Euro. Angela Merkel echoed Samaras’s concern when Sunday encouraged party followers eager to see Greece leave the Euro, to watch their words The French President solely repeated that Europe is waiting for results from Greece and the last “troika” report on austerities.

After an evenhanded sentence from a South Korean court last Friday morning in the patent conflict between Samsung and Apple, A Californian court issued Friday afternoon a pro-Apple verdict which considerably block’s Samsung’s opportunities in the US-market. The court orders Samsung to pay USD 1 billion in damage compensation for infringing on Apple’s propriety rights. Samsung’s share fell 7 % in South Korean trade in the morning.

Copyright: United World Capital

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Apple reaches all-time high

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

Shares of Apple climbed to another record on Monday reaching 680 dollar a share the day after the iPad maker won a USD 1 billion judgment in a patent lawsuit against South Korean Samsung Electronics. Samsung shares plunged 7 % Monday, but recovered and was up two percent in Asian trading this morning. Apple has claimed a ban on 8 Samsung phones in the US. The Korean company is going to contest the verdict after a Korean court last Friday morning presented a much more even handed decision blaming companies for stealing patents from each other. Other competitors are heavily influenced by the recent verdict. NOKIA shares rose 9 % yesterday.

Both US and Asian stock exchanges saw the lowest trading volume of the year kept alive only by the increased trading in mobile smart phones. Investors are sitting on the fence looking ahead to a key speech by Federal Reserve Chairman Ben Bernanke on Friday. The markets are also waiting news on whether the European Central Bank, ECB, shall start to buy sovereign bonds of the most pressured Euro-states, Italy and Spain. Merkel seems to have given up her former strong opposition to ECB bond intervention. The German Central Bank is, however, staying the course and likened bond buying to a drug injection in the markets.
The Euro/USD dips to 1.2488 is coming under renewed pressure after last week’s short term high on 1.2575. USD/JPY is down 0,2 % at 78,515 with Japanese export trading figures weaker as result of the European debt crisis and the Chinese slowdown combined with a strong yen. The Euro is pressed by continued uncertainty as to which measures to take to handle the debt crisis. The German business sentiment index fell for a four month in row to its lowest level since March 2010.

Oil prices tumbled yesterday after the Isaac storm forecast proved less serious than firstly reported. Brent crude fell from 115 to 112. NYMEX, New York, crude trades below USD 96 a barrel. Also copper and precious metals fell. Gold trades at 1661 with Silver at 30,65. Markets are expected to be volatile during this week waiting for the Federal Reserve and top economists meeting in Jackson Hole over the weekend. Ben Bernanke is giving his speech on Friday followed by ECBs Mario Draghi on Saturday.

Copyright: United World Capital

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ECB-optimism boosts EURO

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

EURO/USD jumped 100 points to 1.2570 yesterday on optimism that European leaders will take positive steps to tackle the debt crisis. The Euro is at 1.2557 in early Asian morning trade, close to a seven week high towards the dollar. Rumors that the European Central Bank, ECB, is on the verge of starting to buy bonds from Italy and Spain, gained strength when ECB president Mario Draghi unexpectedly cancelled his visit to Jackson Hole during the weekend where FED Chairman Ben Bernancke on Friday is going to address world central bankers.

Global investors have for the last weeks had their eyes locked on Jackson Hole and, Wyoming, and an upcoming ECB meeting next week; for any signs of monetary easing from Europe and the United States. Bernanke’s speech precedes the Federal Reserve’s September 12 – 13 policy meeting. Bernanke has for the last two years used this meeting with central bankers to signal FEDs policy intentions. Better US housing and employment data pointing to a modest recovery have, however, dampened the optimism for economic stimulus.

Equity markets in the United States were flat yesterday on very low volumes. Asian markets are mixed. Latest economic news from China tell that the stock markets are under pressure. Chinese stocks have fallen dramatically and their companies are in contradiction to their US counterparts delivering weak quarterly results. Some analysts state that China is in for a hard landing and that the growth in GDP which was 7,6 % in the second quarter, shall be far lower In the two remaining quarters of 2012.

Except for the jump in the Euro, there are small changes in the currencies and commodities. USD/JPY is 78,575. The dollar gains somewhat versus the more commodity driven currencies. Oil prices are unchanged. Brent crude at 112 and NYMEX trades at 96 with hurricane Isaac having a major impact. Gold is steady at 1665, at a 4 month high, on expectations that Bernancke would give hints of further stimulus measures. Gold reached 1676 on Monday. Silver, which often tracks gold, trades at 30,86 close to Monday’s three months high. Gold and silver are likely to stay at these levels till Bernancke makes his speech on Friday.

Copyright: United World Capital