UWC Currency - page 17
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28.10.2011
Strong relief rally
continues in Asia
Global markets skyrocketed in Europe and US yesterday and continued in Asia during the night with all exchanges
in positive territory. Yen is record strong against the USD which is falling against all major currencies. Dow Jones jumped 2,86 % while the technology exchange, Nasdaq added 3,2 % and made October the best stock exchange month in US this year.
Better GDP figures from the US contributed ton the market relief after the EU presented its its package for Greece Wednesday night. The package involves a 50 % “haircut” of 50 % for banks having invested in Greek bonds
preconditioned that Greece follows up with continued tough austerity measures.
The exposed banks are asked to recapitalize, and need to present their plans for such recapitalization by December 25th. The EU emergency fund (EFSF) for sovereign debts and bankruptcy threatened banks are increased
to one trillion Euros. Negotiations have started with countries as China and Norway to contribute to the fund which represents the double value of the present Norwegian sovereign oil fund.
The latest turn of events have most observers to think that the worst in the stock markets are over for now and that the low index numbers from early October represented the bottom of the market. As a consequence of the latest developments USD has fallen against most currencies; oil and commodities are recovering. Euro/USD i s at 1.4181.USD/Yen trading at 75,88. Brent reached 112,50 and is at present 111,85. Gold has climbed to 1745 and Silver has made a strong recovery reaching 35,50 up more than 5 %.
31.10.2011
Asian stock markets basically
showed "the bear" dynamics
The September gain of consumer incomes in the USA has appeared a little below forecasts, expenses of the American consumers, on the contrary, have a little exceeded market expectations. On this background the American stock markets on Fridays basically showed positive dynamics.
On Saturday the European Fund of Stability EFSF has declared that all three leading world rating agencies, Standard & Poor’s, Moody’s and Fitch, have confirmed its rating at level "ААА".
Nevertheless, this morning the Asian stock markets basically showed "the bear" dynamics, the prices for oil and metals have gone down. Behavior of investors’ affects intensity in the market, remaining on the threshold of a number of important events - as appointed for Wednesday and Thursday meetings of European Central Bank and Federal Reserve.
02.11.2011
Expectation of FR meeting in the USA
and summit G20 can support the markets
Yesterday we saw downfall on all the markets. Collapse on Tuesday has provoked desire of Greece to hold a national referendum, meaning that risks for financial stability and the existence of a euro zone have increased again. Another announcement about the bankruptcy of large American broker MF Global brought even more pessimism to the markets.
The European markets have fallen off yesterday on 2-7 %, thus have most worse proved to be French CAC-40 (-5,38 %) and German DAX (-5 %), Greek General Share has fallen on 6,92 %. The American stock markets have lost yesterday 2,5-2,9 %.
Today influence on the markets can have two factors: first, a lot of stocks are oversold, and secondly, expectations of a fundamental positive. Summit G20 in Cannes which begins today where, of course, the cores will be Greek questions. Leaders of Germany and France have already expressed the hope of performance of the arrangements reached at the summit of EU last week. Now the basic risk is the consent to carrying out of a referendum from the Greek government as in the country the most part of the population doesn't support the given program in this connection reached arrangements can be not executed.
Also from events of day it is necessary to allocate the data on employment in the USA: according to the forecast the data from ADP will support the share "bulls" who have remained in minority lately. Results of FR meeting which will be announced today - shall not bring any surprises and will not change market picture.
Oil prices are increasing. The future for oil of mark Brent has reacted to the data on stocks API: stocks of crude oil were unexpectedly reduced to 0,156 million barrels, gasoline stocks - on 1,129 million barrels, stocks of distillates were reduced to 3,435 million barrels. NYMEX is trading on 92,409 and Brent 109.632. Gold is up at 1726.45.
03.11.2011
FR has refrained from
changes in a policy
This morning the external background looks mixed enough. The American indexes were closed in plus, having added on the average 1,2 %-1,6 %. The encouraging rhetoric of head of FR has supported transatlantic players. Though it has been noticed that the forecast of development of economy of the USA has worsened: growth of gross national product of the country in 2012 will make not 3,7 %, but only 3,3 %. Interest rate FR of the USA has left at former level.
In Asia we can observe different dynamics: KOSPI decreases on 1,4 %, Hang Seng falls on 0,98 %, Shanghai Composite in plus on 0,85 %. Japan doesn't trade today in connection with a national holiday.
The prices for oil are again trying to correct a little. The yesterday's data from the USA has shown that oil stocks, according to EIA, have risen for the past week on 1,826 million barrels while growth on 1,070 million barrels was expected. Nevertheless, the price for "oil" still is at high enough level: the barrel of mark Brent bargains today at level of $108,73, Light is estimated in $91,59.
Today statistical data from the euro zone and the USA can have affect on the dynamics of the day. Data on number of primary references for unemployment benefits in the USA, also data on labor productivity out of agricultural sector, and index of business activity in non-productive sector will be published today. Markets still do not have any concrete directions and volatility increases.
"It is a question whether we
want to remain in European
Zone"- G. Papaandreou.
04.11.2011
Greek instability keeps
grip on global markets
After initially declaring a referendum on the EU crisis package, Premier Papandreou turned around and gave up the idea
after tough pressure both from EU and his own government. Markets don’t like unpredictability and shivered. Cancelling the referendum, however, created a relief rally in Asia with major exchanges increasing more than 3 %.
The G-20 summit of the biggest industrialized countries in the world,meeting in Cannes have watched events intently without being able to contribute to a solution to the nightmare riding the Euro-zone. Greece is constituting 3 % of total EU-economy. The real worry is contagion and Italy and Spain being next in line, being, too, important countries to default.
The Euro has recovered from lower levels earlier in the week Euro/USD trading at 1.3815. Central Bank interventions in Japan buying dollar to weaken the Yen have worked for now; USD/JPY at 78.1028. Oil prices has recovered; NYMEX at 94,25 and Brent 110,75. Gold rallied to 1775 yesterday and is at 1762 in today’s morning trading.
The Greek Parliament is having a confidence vote during the evening probably resulting in a positive outcome after the last days
maneuvers. Rumors from Athens says that Georg Papandreou has agreed to resign, preparing the ground for a broad national unity government.
07.11.2011
Coalition government
stabilizes Greece for now
The Greek government won the confidence vote I Parliament last Friday. This opens for a coalition between PASOK and the conservative opposition probably with former Vice President in ECB, Lukas Papademos as new Premier in an interim period before new elections scheduled for early 2-012.
This has led to a temporary relief after Premier Papandreou’s proposal on a referendum on the austerity measures, created havoc in global markets at the end of last week. The referendum was seen as a major threat to the EURO, and the markets reacted accordingly.
The Euopean Central Bank (ECB) simultaneously lowered the interest rate with 0,25 %. Pressure on Italy continues with bond rates increasing. EURO/USD is trading at 1.3703 and USD/JPY at 78.075. Oil prices stabilize with Brent at 111.96. Gold saw an increase in morning’s trade in Asia, but is now at 1765. Asian markets were mainly flat. European exchanges have opened down with Frankfurt falling 1.95 and Paris exchange with 1,41.
The market volatility is expected to continue during the week. Unemployment figures in the US were slightly down without creating any impact on the US indices. Futures for the US-markets indicate a flat to downward trend. Some analysts, however, predicting stabilization in the nearest weeks with opportunities for a Christmas rally.
08.11.2011
Gold at seven
week high
Gold reached a seven week high at 1799 yesterday and is at 1791 in morning trade. Oil prices are at highest
levels seen in 4 weeks with NYMEX at 94,75 and Brent reaching 114,44. Asian exchanges are down following
the scandal with Olympus which for years have manipulated books and sales figures.
A new crisis is brewing inside the EURO-area with the Italian government next in line after Greece for a
confidence test in Parliament today. Premier Berlusconi seems increasingly isolated, and even within his own ranks
questions are asked whether he is the man to handle Italy’s debt challenges.
Greece is still struggling to agree on a new Premier and composition of a national unity government. Spain is
facing national elections. Japan has agreed to buy 10 % of the treasury bills the European Emergency Fund yesterday
presented for sales amounting to 300 Billion Euros. Russia has indicated a similar willingness based on less
amounts.
The US exchanges ended in blue last night after a nervous and volatile sessions. Futures point to
similar volatility in European exchanges today. Euro and Yen keep stabile towards the US. Israeli threats
to attack Iran was met by a strong warning by Russia stating that such move shall seriously jeopardize
the stability of the whole region.
09.11.2011
Berlusconi’s retreat
make markets rally
Volatile stock exchanges reacted with relief and sent markets up when disputed Italian Premier Berlusconi yesterday announced his retreatment. Dow Jones rose 0,84 % and Nasdaq 1.20 %. Asian markets followed suit also inspired by news on lower Chinese inflation. Oil prices continued to raise; NYMEX at 79 and Brent 115,50. The EURO got a boost on the news from Italy and reached 1.3850 falling back this morning to 1.3802. The Yen is stronger against USD 77,6635. This might trigger new Central Bank intervention.
Interest rates on Italian bonds are under pressure, but still trading below the critical 7 % mark. Rumors tell that France is under similar pressure indicating that the last round of Euro-zone problems don’t stop with Greece and Italy. The new IMF president, Christine Lagard, stated yesterday that the sovereign debt problems in Europe threatened to make this decade a lost one.
There is generally a more positive sentiment in today’s markets. China’s lower inflation figures indicate opportunities for more economic growth orientated policies. Copper prices, a good indicator on market sentiments, are at its highest for one week.
The Berlusconi effect is probably going to have a positive on European stock exchanges today.
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10.11.2011
Italian debt makes
global markets shiver
Berlusconi had barely announced his departure as Premier followed by a relief rally, before global markets crashed back to realities as a stark reminder of fundamental realities. Interest rates on Italian bonds smashed through the critical 7 % level which has been seen as pain threshold earlier in relation to debt stricken Greece, Portugal and Ireland, and raised new serious questions as to the sovereign debt crisis in Europe and the future of the Euro. Short term Italian debt which has to be refinanced next year is especially bothersome.
Markets saw steep falls in Europe and in the United States where Dow fall 3,20 and Nasdaq 3,88 % followed by a blood red numbers from Asia where exchanges experienced one of their worst days in a long time with Hong Kong leading the pack with a fall of 4,5 %. The Asia Pacific Index is down 3,2 %.
USD again seems to regarded as somewhat of a safe haven. EURO/USD is down to 1.3533, and USD is strengthened against most currencies except Yen; USD/JPY trading at 77.72. Gold and precious metals which were back in favor among investors at the beginning of the week trades at 1757. Oil prices are down. Brent at 114,50 yesterday morning, is two dollar down and stands at 112,28.
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15.11.2011
European debt fears
sink Asian markets
Global markets have awoken to new fear of spreading debt contagion in Europe. After a dumpy session in New York, Asian markets were gripped with fear that the sovereign crisis shall hit more European countries. After a couple of days relief, old aged bankers turned Premiers and politicians in Greece and Italy, proved to have no magic to offer except for continued austerity and clinging to a Euro which more and more observers see as unfit to get Europe out of its deep crisis.
Markets seem therefore slowly to realize that there is no quick fixes to fundamental flaws in the global economic system. Fear is therefore most likely going to dominate markets , except for short moments of optimism when some good figures are reported. We are in for a continued period of volatility both in currencies and stock exchanges.
Most focus is still on Europe where Germany and Angela Merkel along with the European Commission are pushing for closer integration as the best medicine to save the Euro and get out of the crisis. Premier Cameron in England has refused this path. Along with other Euro skeptics he is stressing that the Euro is a major cause for the present imbalances
In Italy Monti is striving to compose a government in an environment of renewed high bond interests. Euro is falling against the USD trading at 1.3593. Oil and gold prices are down while YEN is gaining ground. USD/JPY is at 76,99.
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