Daily Market Reviews By Uwcfx |
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Replies(1 - 9)
UWC Neeraj |
Jun 8 2012, 04:40 PM
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Stocks rally on stimulus optimism
Arne Treholt Vice-President of Business Development and Investments
Global stock markets saw its best rally in half a year on signs that Europe was dealing urgently with Spain�s banking crisis and optimism that the United States could embark on fresh monetary stimulus.
Stocks in Europe and the US jumped as talk of a rescue of Spain�s troubled banks and hopes for new Federal Reserve monetary injections. Dow Jones and Nasdaq rose 2,40 % in its best trading day since last December. Asian markets continue the rally this morning. The broad South Pacific Index, MSCI is up 1,40 %. Oil and commodities continue up. Brent trading close to 101 pr. Barrel. EURO is at 1.2565 vs. dollar bouncing back from the 1.23 levels seen last Friday. The upward trend in Euro might continue for the next days with the handling of Spain�s banking crisis and the upcoming Greek elections on June 17th as stumbling blocks.
Analysts see that a technical rebound in the Euro might reach 1.27 � 1.28 level. Fresh news from Greece tells that the government is likely to run out of money as soon as July.
The troika: representatives from IMF (International Monetary Fund), ECB (European Central Bank) and EU-Commission is holding back on One billion Euro in bailout funds earmarked for government financing, putting extra pressure on Greek voters prior to the elections. Australia, which saw yesterday better than expected GDD quarterly results, presented this morning labor market statistics, which saw a clear improvement in job added numbers.
The Aussie dollar is up for the third day in row. USD/JPY is at 79,435. The G-7 finance ministers threat of a possible intervention to avoid a further strengthening of the Yen seem to have worked at least for now in a situation where investors were seeking to Yen as a �safe haven� along with investments in USD and German bonds.
Gold has this week been back as �safe haven� . Gold prices increased from a low on 1520 to reach 1640 during mid day yesterday; a jump on 7,5 %. Gold is consolidating at 152 in the morning. Silver also jumped one dollar yesterday, retreating, and trading at 29.25.
At present stock futures are up, but traders might expect volatility before FED head, Fred Bernanke, has given its verdict on further quantitative easing in his testimony to a Congressional committee later today. Market analysts differ, but Bernanke will most likely for now keep the door open for a third round of monetary stimulus, and leave the final decision for later in the summer. Yesterday saw an especially high jumps in mining and more risky banking stocks. With Bank of America up more than 7 % in the United States.
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This post has been edited by UWC Neeraj: Jun 8 2012, 04:41 PM
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UWC Neeraj |
Jun 11 2012, 01:15 AM
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CHINA CUTS INTERESTS FIRST TIME SINCE 2008
by Arne Treholt Vice-President of Business Development and Investments
China cuts interest rate to 3,25 % for the first time since 2008. The initiative comes prior to release of major Chinese economic data tomorrow. These results are feared to be weaker than expected. The interest cut is probably going to be followed by steps to ease access to credits. This gave the Chinese stock markets a boost. Shanghai composite is up this morning. An easing of banking restrictions normally lead to stronger domestic demand and higher stock prices.
In his congressional testimony yesterday, Federal Reserve Chairman, Ben Bernanke kept the door open for monetary stimulus of a stagnating US economy, but did not specify when and in which form. The Federal Reserve BOD meeting in August is now seen as the most likely date for an eventual announcement. The testimony disappointed those who had hoped for immediate action. Dow Jones was up 0,37 %. Nasdaq fell 0,49 %, and the last days rally in Asia turned to red this morning. The futures for Europe and US are negative following Bernanke�s comments and a downgrading of Spain to BBB status or the same level as Thailand and Mexico.
After a positive turn around in oil prices earlier in the week, both NYMEX (92) and Brent 98,69 gave up earlier week gains. The volatility and market nervousness were also illustrated by the jump in precious metals. After reaching 1640 on Wednesday, gold fell dramatically during yesterday�s session now trading at 1570. Silver saw a similar development; 28,23 at present. Commodities are again following the falling trend of precious metals and oil.
The EURO/USD has fallen back from the high 1,25 levels yesterday to 1.2525. USD/JPY is 79,3175 after Japan released good growth in GDP. Aussie dollar and New Zealand currency are under downward pressure after more promising GDP and jobless number from Australia earlier in the week.
The surprise move by the Chinese central bank has helped ease worries about faltering global demand, but stresses at the same time that the world�s fastest growing economy feels the pressure of faltering export due mainly to the problems in the Euro-zone. After concentrating in measures to cool down the economy, the Chinese leadership is for the first time in years looking to stimulus for growth, especially in the domestic economy.
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UWC Neeraj |
Jun 11 2012, 04:25 PM
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WEEKLY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments After the onslaught in global markets in May, June is off to a better start. Stock prices jumped helped by technical over sell and built in optimism that Federal Reserve Chairman, Ben Bernanke, testimony to a congressional committee yesterday, should give markets the needed sugar energy. Bernanke has still a way to go before he reaches his predecessor, Allan Greenspan�s �guru� level, but Bernanke is listened and paid attention to. This time he did not live up market�s expectations for immediate action. Bernanke kept the door open for monetary stimulus. In which form and eventually when he did say.
For global markets waiting for certainty and clear directions, that was disappointing news.
China�s surprise cut in interest rate for the first time since 2008, is what markets long have demanded and waited for. When the announcement comes, Western economic analysts are quick to conclude that this is somewhat of a ploy meant to overshadow negative economic monthly and quarterly results to be published over the weekend. Might be, but nevertheless does the initiative underline Chinese willingness to encourage economic growth in a situation where Western leaders talk and don�t act as they see their economies sinking even deeper into recession.
Fitch rating agency has downgraded Spain to BBB and puts the fourth biggest economy in Western Europe on line with Mexico and Thailand. Last GDP numbers demonstrates that Greece is seeing its fifth year of recession with no signs in sight for a turn around. A practical effect of Greece�s membership in the Euro is that the country has been reduced from a promising developed economy to a struggling third world country. So much for belt tightening and austerities.
There are clear signs that European political and financial leaders slowly are starting to wake up from their conventional austerity dream ideas. As John Maynard Keynes stated 75 years ago; a boom economy, not the slump is the right time for austerity. This economic philosophy lifted the United States out of the 1930 depression. Similar bold initiatives are called for especially in the Euro zone today.
Spain has followed Greece as the odd country out. Spain�s problems are much more serious for the future of the EURO than smaller sized Greece. European leaders were this week scrambling for a solution to Spain�s banking crisis after the European Central Bank had no immediate aid to offer expect for supplying banks with unlimited short-term low interest rate loans.
In the meantime, the countdown for the Greek June 17th elections is ticking. It comes in an environment where the troika of IMF, ECB and EU are putting maximum pressure on the Greek government and electorate, withholding 1 billion Euro of the bailout funds earmarked for government financing. While Athens has problems in paying its bills, bailout payments are running on schedule for German, French banks and interestingly enough to the ECB, which bought Greek treasury bills at discount and now is rewarded with 10 % interest rate on their investment.
Economics today are full of paradoxes. Regardless of pains and strains an overwhelming majority of Greeks nevertheless want to be �Europeans� and stay in the Euro. The big question is whether this makes a difference. Even with a victory for the �austerity� parties, Greece�s days in the Euro might run to an end in an orderly retreat. Another question mark is what would be the cost and the consequences of an eventual Greek exit? In such a situation other countries in the periphery of Europe might also be start to wonder as former Italian premier Berlusconi did some days ago: is the EURO the right tool for the periphery of Europe.
The Greek elections might as Mr. Tsirapas and SYRIZA�s appearance on the European arena, accelerate this debate.
Copyright: United World Capital
Markets rally on Spain�s bail out
Arne Treholt Vice-President of Business Development and Investments
Spain�s 125 Billion Euro bailout of banks sent Asian markets 2 % higher this morning. Yesterday�s news that Spain�s government had asked the European Ministers of finance for a 125 Billion Euro package for their struggling banks strengthen the Euro.
The Euro is trading 1,22 % higher vs. USD at 1.2632. The EU-funded rescue for the debt-stricken Spanish banks are seen as a preemptive effort to avoid a bank run if Greece�s debt crisis again flares. The respite for Madrid and the Euro might, however be, short lived.
The bailout is coming after the Rajoy-government for weeks have insisted that no outside assistance was needed to capitalize lenders crippled by bad debts from the burst real estate bubble.
European officials involved in the negotiations say informally that Prime Minister Mariano Rajoy was pushed into requesting the aid package. Rajoy has tried to put a positive spin on the bailout package for the banks. It was done at Spain�s request and unlike the situation in Greece, Ireland and Portugal it is a banking, not a sovereign bailout. Totally, an approximate 350 billion Euro have been raised inside the Euro area for the different bailouts.
But the Euro-zone�s last lifeline could easily be swept away as early as next Sunday when angry Greek voters are casting their votes, possibly rekindling market turmoil. That would in the first place hit Spain and Italy, but also a country like Cyprus might be strongly affected.
In the following up of the French presidential elections, voters gave Francoise Holland a vote of confidence in the first round of the Parliamentarian elections. The French socialists seem to have secured an absolute majority in Parliament supported by the socialist left and green parties.
The bailout package for Spain is also seen as an effort to stem further capital flight and reestablish confidence in the banking system. . Spain�s banks had a net outflow of 66 billion Euros only in March.
Greece and other countries in the European periphery have seen similar capital flights. The risk appetite seems stronger this morning. Oil prices are jumping with Brent trading above 101, copper, gold (1599) and silver (28,95) are also up. Australian and New Zealand dollars HIT highest levels in four weeks.
USD is falling against most currencies. USD/Yen is slightly changed at 79,63. Futures for the European and Asian markets are up.
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UWC Neeraj |
Jun 12 2012, 08:12 AM
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Market euphoria turns into sellout
Arne Treholt Vice-President of Business Development and Investments
After some few hours� euphoria over the bailout of Spain�s bank turned around. A morning relief rally in Europe quickly transformed into a sellout when Investors struggled to come to grip with the content of bank bailout. While Spain� Prime Minister Rioja, tried to sell the �bailout� as en extended credit line for the banks, he was quickly corrected European officials stressing the necessity for cuts and austerity measures. Investors came to the same conclusion. European stock exchanges changed from optimistic blue into red. Dow Jones fell, and Nasdaq plunged 1,70 %. Banks as Bank of America and J.P.Morgan along with Hewlett-Packard, Alcoa and Microsoft being the big losers. The downtrend continues in Asia. All Asian stock exchanges trade down. Oil prices, which got a boost from an optimistic interpretation of news from Spain, are trading at the lowest level for the year. Brent at 97. Copper falls as Gold (1591) and silver (28,35). The Euro came under renewed pressure. After trading above 1.26 in the morning it fell back to 1.2499. The fundamental questions surrounding the survival of the Euro persists. Euphoria over temporary measures as the bailout of USD 125 billion of Spain�s banks on Sunday, is quickly substituted by a vicious circle of negative growth and growing debt burdens. The markets experienced a similar spark when Greece first bailout package was presented in 2010. The markets rallied 1,3 %. This time it was even shorter lived. US stocks fell into negative territory within an hour after Monday�s opening and continued down. Even the most bearish analysts were taken aback by the negative way markets reacted in rejecting the bailout. The prior bailouts; Greece and Ireland in 2010, Portugal (2011) and Greece in 2012, also led to rallies. The Euro�s rallies then faded within a month with mixed stock markets. Japanese Yen is the winner after the last 24 hours turmoil. USD/JPY is slightly higher at 79,456. The Australian and New Zealand dollars are losing towards the YEN as the Euro.
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UWC Neeraj |
Jun 13 2012, 01:31 PM
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US stocks raise on stimulus expectation Moody�s downgrade Cypriot banks
Arne Treholt Vice-President of Business Development and Investments
US stocks staged a comeback rally to end up more than one percentage on expectations that the Federal Reserve (FED) would have to undertake stimulus measures. Also European stock markets rose for the first time in three days. This as Spanish ten years bonds reached a record high. Euro/USD is trading at 1.2490 slightly down from yesterday. Oil price still under downward pressure. Brent is trading at year�s low 97.01.
Trading in stocks have been choppy this week as markets struggle for clarity after the USD 125 B bailout of Spain�s banks. Investors are asking whether the agreed bailout will be effective. More than 10 Spanish banks have been downgraded, and bond yields are more and more seen as thermometer for risk aversion.
Sectors, which have been sold off recently, posted the biggest gains in yesterday US rally with Boeing climbing 3 % as the winner. This seems to indicate that investors see value in beaten down shares. In Greece the Left wing coalition Syriza has rejected to enter into a coalition with PASOK, the former government party, which supported the Memorandum and austerity measures. Syriza is together with the center right New Democracy in head in the opinion polls prior to Sunday�s election.
The outcome of the Greek election might be decisive for whether Greece might have to exit the Euro. The Greek elections are therefore followed with great interest by global market and other Euro-countries. Moody�s investor Service on Tuesday cut the credit ratings on two Cypriot banks, Bank of Cyprus (BOC) saw its rating cut by one notch to B2. Hellenic Bank got its credit deposits and credit assessments ratings lowered to B2.
The Cypriot banks are heavy exposed to Greek treasury bills and Greek private lenders. Cyprus Popular Bank, the country�s second biggest lender has till 30th June to find 1,8 billion Euro in fresh capital to meet European regulators conditions. In a statement, the Cypriot Minister of Finance did not rule out an EU bailout to prop up its Greece exposed banks. Cyprus is going to take over the half-yearly chairmanship of the EU from July 1st.
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UWC Neeraj |
Jun 14 2012, 08:58 AM
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Moodys downgrades Spain and Cyprus
Arne Treholt Vice-President of Business Development and Investments
Moody�s has downgraded Spain and Cyprus after the international rating agency yesterday also downgraded Bank of Cyprus and Hellenic Bank. Spain has been given rating, Baa3 down from A3, the closest to junk status highlighting the seriousness of the Euro-zone debt crisis. Moody�s stressed simultaneously that the approved Euro-zone plan to help Spain�s banks will increase the country�s debt burden. A concrete result of the downgrading is that like Greece, Spain and Cyprus shall have very limited access to international debt markets, and likely further weakness of their national economies. In following the situation, Moody�s stated that the rating agency shall look carefully into the development in the wider Euro-zone including the result of the upcoming Greek elections, before taking eventual further downgrading steps. In accompanying news interest rate for German Bonds, which recently have been seen as one of few �safe havens� for investors, unexpectedly rose with 0,1 % following the same upward trend as interest rate on Spanish and Italian bonds. The turnaround in German�s bond rates is seen as Investors fears that Germany under pressure from France, Italy and other Euro members might give in on their resistance to introduce German supported Euro-bond to ease the debt crisis. US and European markets ended in red yesterday while the Asian composite MSCI index is slightly down. Brent crude is trading at 97,66 before the end session of OPEC the Oil producing countries, in Vienna. While Saudi Arabia wants to increase oil production. Iran wants cut production to keep oil stabile on at least 100 USD/barrel. The opposing views shall most likely end up in a compromise where the conflicting parties agree to disagree, with no increases or cuts in production. The firmer Euro trend towards USD is continuing. After dipping below 1.25, Euro � USD is trading at 1.2582 in the morning. USD/JPY is at 79,4458. During congressional hearings JP Morgan Chase Chief Executive apologized for the bank�s multibillion�dollar trading loss. Dimon revealed few new details about the trading losses: struck a contrite tone when needed and punched back when provoked.
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UWC Neeraj |
Jun 15 2012, 12:34 PM
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Global markets cling to stimulus
Arne Treholt Vice-President of Business Development and Investments
American and Asian stock markets traded up yesterday and this morning on central bankers statements that the time might be ripe in for injecting stimulus to a global economy fighting on the defensive. Dow Jones added 1,24 %. The Asian Pacific climbs 0,7 % after its best week since December.
Commodities are stabilizing with Brent crude up 1 dollar to 97,03 after the Oil producing countries, OPEC, left the production quota ceilings unchanged. The dollar weakens against most currencies. EURO-USD is trading at 1.2645 before Sunday�s crucial Greek elections. The yen is stronger; USD/JPY at 78.8875 . Australian and New Zealand dollar post record gains against USD for the week. Dollar is falling on the assumption that Fed shall make a new round of quantitative easing.
Central Bankers representing major economies have in different statements over the last days, declared their willingness to stabilize financial markets by providing liquidity and prevent a credit squeeze in case Sunday�s Greek elections cause panic trading. A US official, however, cautioned that the Greek elections will not provide the definitive signal on what would happen next in the Euro-zone crisis.
Markets are also following crucial elections in France and Egypt over the weekend. The situation in Egypt is complicated, and central bankers stand ready to ensure that enough cash is throwing through the financial system in case of any disruptive turmoil.
Interest rates on European bonds continued to raise. Spanish 10 year bonds ended yesterday on 6,95 %, just below the critical 7 % threshold which the beginning of the real problems for Greece, a couple of years ago.
Central bankers indication that Central Banks are preparing for coordinated action to provide liquidity, lifted the US and Asian markets. Global markets seem to gamble on the hope that central bankers are ready to inject funds into weak under capitalized banks and take steps to stimulate the economy. This was the message also coming out from yesterday�s meeting with England�s Minister of Finance and Bank Head, Mervin King.
Futures for Europe and US are pointing up. Dollar is under pressure and Gold is trading at 1625, close to 10 dollars higher than at the opening in Europe yesterday.
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UWC Neeraj |
Jun 17 2012, 10:45 PM
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WEEKLY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments
Greeks are proud to state that their country is the cradle of democracy. Greeks are going to vote on Sunday for the second time in one month. International eyes are on Greece. Never before in their history there has been such an interest for the outcome of a Greek election.
For the first time since Andreas Papandreou dominated the Greek political scene and challenged the power centers in Europe and US with his charismatic, oratory flame, a 37 year former street protester and engineer, Alexis Tsipras, and his Syriza party, makes claim to his position. Tsipras has flatly rejected the austerity measures of IMF (International Monetary Fund), ECB (European Central Bank) and EU (European Union), which the established political parties hesitatingly accepted. This rejection sent shockwaves through international capitals.
SYRIZA�s dilemma is, however, to reconcile a rejection of the troika Memorandum with Greece�s continued EURO membership. Tsipras is well aware of the fact that 75 % of Greeks don�t want to return to the drachma. Greeks see themselves as� Europeans�, and the EURO is the very symbol of being a European. Whether that is in their real national interests, is at present not at the agenda.
During the last week, Tsipras has been all over the place. Yesterday he issued a strong warning to speculators: Don�t gamble on the assumption that a Syriza victory is equal with a Greek exit from the Euro! This message was taken from the violent atmosphere of Athens protesting streets to new forums as Bloomberg News and Financial Times. Syriza claims to renegotiate the austerity measures. That does mean that Syriza shall claim a Greek exit from the Euro.
His message has been received with shrug of shoulders and open mouths in European power centers. They have given their signals to the Greek voters; stay with the austerities and the parties which swallowed them; or else �
The upper hand is, nevertheless, neither with the Greek voters or Tsipras. It rests in Germany. Germany is at the final stage of deciding the fate of Greece�s fate inside or outside the Euro. That depends primarily not on Alexis Tsipras. But give Tsipras the credit. He has managed the piece of art of having the power corridors of Europe to listen: even if it is with open mouths.
Greece confronts Germany with its own history. Greeks have terrible war time memories of Hitler Germany. The rationale for the establishment of the European Union was to avoid the horrors of the past. In Germany�s case the hyperinflation of 1923 and the death of democracy in 1933 which lead to a destructive war.
It seems, however, that Angela Merkel as the key decisive figure is more occupied with the memories from 1923 than the ones from 1932. Today it is not inflation, but depression and mass unemployment that threatens the stability of Europe, and Germany�s recent prosperity is closely connected with the EURO establishment.
Germany is the big winner of the Euro introduction. The Euro gave German exporters a competitive exchange rate to the old Deutschmark. 42 % of German exports go to the Euro-zone. It is hardly in Germany�s interest to plunge the southern periphery of Europe counts for 25 % of their export into Depression. Angela Merkel obviously realizes this, when she the last weeks has stressed the necessity for a closer European fiscal and political union. Germany and the political and financial elites of Europe might be ready and wish a closer integration.
The big question is whether the streets in Athens and Madrid, which are further and further alienated from the European power centers, think likewise.
That also count for Europe and Greece, which take pride of being the birthplace of democracy.
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This post has been edited by UWC Neeraj: Jun 17 2012, 10:46 PM
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UWC Neeraj |
Jun 18 2012, 11:54 AM
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EURO jumps after pro bail-out victory
Arne Treholt Vice-President of Business Development and Investments
The EURO jumped to a one month high trading at 1.2702 vs. USD, after the political parties supporting Greece international bail-out won the elections on Sunday. The center-right New Democracy party came first with 29,8 %, and will together with center-left PASOK which also supports the terms and conditions laid down in the Memorandum negotiated with the troika of IMF(the international monetary fund), ECB (European Central Bank) and EU, probably succeed to form a majority government. A small pro-bail out party on the left might also join the coalition.
PASOK and New Democracy have together 161 of the 300 places in Parliament. The anti bail-out leftwing coalition, SYRIZA, which came in second with 26,8 % has rejected to participate in a national salvation government headed by ND�s Antonis Samaras. Before the elections Western European heavy weights as Angela Merkel and Italia�s Mario Monti along with the EU-Commission had warned strongly against the consequences of a victory for the leftwing Syriza.
The outcome of the much anticipated elections had markets to soar. The pro bail-out parties victory is increasing the chances for the debt-laden Greece to stay in the Euro, and came as a relief to global markets ahead of G-20 meeting in Mexico. The Euro recovered strongly. Asian markets led by the big exporters jumped up to 2 %, and oil prices are at its highest levels in one week. Brent trading at 98.90. Gold and precious metals are trading flat. Gold at 1622. Japanese Yen is gaining versus USD at 79,1245.
Although the elections are seen as a victory for the pro bail-out camp, SYRIZA and other rejectionist parties also came in strongly. Greece is in deep recession and experiencing its 5th year with negative growth. Unemployment running at 25 %. The elections have given some clarity, but the fundamental challenges facing both the EURO and Western European economies shall soon be back on the agenda.
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