The Daily Market Updates – 27th August 2015
DAX back in the green for the week as China posts its first positive close in 5 days. The majority of the 5.3% gained happened in the last 45 minutes of trading, this all following the Dow Jones 618 point move higher, the most since the 2008 financial crisis. There were similar reactions in all US indices which all posted significant gains.
China to cut treasury holdings
China is selling dollars and buying yuan to support its exchange rate. The yuan has risen 0.08 percent in recent days, cutting this month’s decline to 3.1 percent.
UK House prices
House prices rise at the slowest annual pace in more than 2 years, according to Nationwide. On a monthly basis, house prices rose 0.3%which was in line with analyst predictions but the year on year figure missed, coming in at 3.2% against the estimated 3.5%.
The dollar has pulled back against the euro and pound in recent days. There were hopes for a sustained euro revival but risk transferred to the stocks leaving the euro trading back within its wedge formation. Recent euro moves have been put down to investors searching for a safe haven but many analysts now believe it was down to traders over leveraged positions shorting the Euro.
The Daily Market Updates – 26th August 2015
Action in China
It was a nervy start to the European open. Chinese stocks did end the day higher, but there are still fears the recent rate cut is not bold enough. The FTSE has fallen below 6,000 in today’s session which could potentially see further moves south. All eyes remain firmly focussed on the market to see if bears can push lower, or has the recent volatility spike just been based on pessimistic hype.
Demand for both the Yen and Swiss franc fell as Asian stocks ended their longest losing streak in almost two years. Investors have moved from these safe haven assets to a more risk-on markets.
The Daily Market Updates – 25th August 2015
Dead Cat Bounce?
Equities across the globe have managed to reverse most of Black Mondays heavy losses despite the Shanghai Composite skidding another 7.63% over night to finish at a 8 month low. A total of £73.75bn was wiped off the FTSE 100 yesterday which left investors in a state of panic. The US stocks managed to claw back some of their losses but indices in general finished at an 18 month low. The move down has been attributed to the situation in China where regulators have made surprising currency interventions over the past few weeks, which have left many people anxious.
Unsurprising Rate Cut
China has cut its benchmark interest rate by 25bps and Reserve ratio by 50bps. The cut from the central bank, the second in two months, comes at a time when stocks are tumbling and investors despair at a lack of policy action. The German DAX reacted positively by breaking the 10,000 point mark.
The Daily Market Updates – 24th August 2015
Global Markets Capitulate
Overnight in Asia we saw a sharp fall in all indices with the Shanghai composite finishing down by 8.5%, the Hang Seng was off by 5.2%, the Nikkei 225 down by 4.6% and the ASX printing a loss of 4.1%. This hasput pressure on the European markets who are all experiencing heavy losses. China, the second largest economy in the world, is experiencing a slowdown in its economy which has the global markets panicking. The US pre-markets are all limit down with the Dow Jones signalling it will open up over 600 points in the red.
YEN and Euro Strength
Investors have rushed for safety by ploughing into the Euro and Yen. The Euro has broken out of a monthly wedge formation and the Yen has broken the ¥120 handle in what is seen as a spectacular sell off.
Brent Crude Continues Downwards
Brent has broken the lows seen in January 2015 and is desperately seeking bids. The previous low at $45.17 is firmly in the past, and with the expected China slowdown demand in oil is seen to be falling- weighing heavily on the price.
The Daily Market Updates – 21st August 2015
Sliding down a Wall of Worry
There was a substantial sell off across the major indices yesterday – which was a result of the release of the Federal Reserve Meeting Minutes late on Wednesday evening. The lack of clarity and complete indecisiveness as to when the often mentioned US interest rate hike will occur, is gradually eroding confidence. The statement has almost become standardised… hinting that “it may happen if conditions improve”. The troublesome words in this sentence are “may”, “if”, and “improve”.
It is clear to most market analysts that conditions have not improved, are not improving, and appear unlikely to improve anytime soon. However, the Fed has hung it’s hat on the “potential” rate increase as a way to tell the public that they are becoming more confident in the US economy. This “maybe next time” approach did work for the first few months, but it has become tiresome. Someone is crying wolf, and the markets think that they are beginning to hear it.
The DAX is Germany has dropped over 13% in the past 10 trading sessions… with 8% of that drop taking place since the Fed announcement. There is natural support at the 10,000 level. The markets are due some bounce to worry the bears and give the bulls some relief – whether or not that bounce will come today remains to be seen, but it’s already an incredible 220 points off the lows of the day.
The Daily Market Updates – 20th August 2015
UK Retail Sales
Disappoints expectation with a print of +0.1% for July vs estimates of +0.4%. This suggests that growth is slowing. Sterling showing signs of weakness against all major currencies.
Greece made a €3.4 billion loan repayment to the European central bank today after receiving funding from the European Stability Mechanism (ESM).
The FTSE 100 continued its losing streak after an 8th consecutive day in the red, its worst losing streak since 2011. The index is currently in correction territory after hitting 7 month lows.
The Daily Market Updates – 19th August 2015
Countdown to Another Excuse?
The FOMC Meeting Minutes will be released at 7pm (UK time) this evening. This statement will provide us with the internal discussions which took place prior to the most recent announcement in July. Most watchers will be interested if any signal is given as to whether an interest rate increase is likely for the next meeting on the 16th and 17th September. Traders would appear to believe that the likelihood is 50/50… this marks a significant change as it was only early summer when there was relative certainty that an increase would occur in September.
A huge amount of attention will be given to the actual wording of the statement… the inclusion of a single word or, more importantly, the exclusion of a specific word from a previous statement, can create a great deal of excitement amongst traders – and a great deal of volatility within the affected markets. Look to all USD related assets later this evening – for increased movement and potential opportunities.
The DJ30 has reached overhead resistance at the 17,500 – 17,600 area… and has sold off down towards the low 17,400’s since then. It is likely to remain range-bound throughout the day, with any significant move only occurring after the Meeting Minutes have been released.
The Daily Market Updates – 12th August 2015
For the second consecutive day China has intervened in its currency, forcing the Yuan down against the US dollar. It is currently trading at its lowest level since October 2012 and this move will likely be seen as a short term adaptation rather than an ongoing trend. The move has sparked volatility across various asset classes – bonds across the board are up, with European stocks trading much lower amid fears of contagion.
UK jobless total rose by 25,000 in period between April and June, as well as wage growth experiencing a unexpected slowdown. Sterling fell on release of the disappointing news, and the talk of an imminent interest rate hikes have cooled.
The rare Dow Jones “death cross”, seen traditionally as a bearish omen has appeared as the index reacted to China’s further intervention. The 50 day moving average crossed the 200 day moving average and seems to have grabbed the attention of many analysts and traders. Market participants will be looking at whether this short term pullback becomes a longer term down trend.
The Daily Market Updates – 11th August 2015
China enters the currency war
China leaves Wall Street stunned as they devalue their currency to its lowest rate in 5 years. No analysts were able to forecast such a historic move, and the markets reacted accordingly. There were mixed feelings among traders and news outlets who see the move as both good and bad – good in the sense that it will help the struggling export sector which has stalled recently,and bad because it may worry investors who tend to dump weaker currencies. The PBOC have labelled this as a one-time intervention to bring the Yuan more in line with the markets. The Australian dollar, seen as a ‘liquidity proxy’ reacted with a knee jerk move south.
More crude oil was pumped last month than in the last 3 years, according to OPEC. This has been down largely to Iran having their sanctions removed, allowing them to pump oil freely to the global economy. The increase came even as Saudi Arabia told OPEC it had cut production by the most in almost a year.
The Daily Market Updates – 10th August 2015
With no “Tier 1” data being released today, the markets brace themselves for economic releases later this week, specifically in the form of ZEW, the UK Unemployment Rate, the German CPI, the US Retail Sales and the German GDP.
Gold continues to flag – Gold is currently testing the upper resistance of a bearish flag. We have seen a huge sell-off over the last month, but it looks to have slowed recently.
The Daily Market Updates – 6th August 2015
UK manufacturing production rebound surprises slightly to the upside (0.2% vs est. 0.10% MoM) but industrial production disappoints (-0.40% vs est. 0.10% MoM).
#SuperThursday – Bank of England kept key interest rate at 0.5%, the MPC voted 8-1. The minutes releases at the same time as well as the inflation report showed that McCafferty was the only dissenter. Overall the vote was not as bullish as expected. The inflation report also stayed within a less bullish theme. It estimates that there is a chance inflation dips below zero more than once during Q4 2015. It also foresees the unemployment rate at 5% in two years. In relation to the bank rates, it mentioned that when interest rates do begin to rise, it is expected to do so more gradually, and to a lower level than before.
The Daily Market Updates – 5th August 2015
Federal Reserve Member Dennis Lockhart, a dovish member of the FOMC, has said that rate lift-off could be seen as appropriate in September. The Federal Reserve Bank of Atlanta President said that a move on rates is ‘close’.
UK services sector, the biggest part of the economy continued its expansion but not as high as expected. UK Jul services PMI came in at 57.4 vs exp. 58.0.
Super Thursday: Traders preparing themselves for a big release of economic data from the UK tomorrow, which is being dubbed ‘Super Thursday’. The BOE rate decision, minutes from the meeting, UK inflation report and a speech from the BOE Governor Mark Carney will all be released around midday.
The Daily Market Updates – 4th August 2015
Spanish Unemployment rate data is good, according to PM Rajoy. Unemployment change in July -74k vs -45.6k. Largest fall in unemployment total since 1998.
YouGov inflation survey – The British’s publics expectations for inflation in the next 12 months rose to their highest levels since November 2014.
Brent moves back above $50 – Brent has stabilised above $50 a barrel after a recent 5% drop.
Bund closing on major upside targets, looking to test 155.29 . Further resistance can be seen at 155.76 and 61.8% retracement at 155.91.
UK Construction eases – Growth in the UK construction industry has eased, the slowest growth in 2 years. 571 vs 58.6 exp.
Britain’s biggest privatisation – George Osbourne has begun selling the government’s stake in RBS, costing the UK taxpayer £1 billion.
Mixed news in Greece – Banks are down 30% but other shares have risen. Reports have surface that Greek banks need to recapitalise up to $27.5b
The Daily Market Updates – 3rd August 2015
Greece – Athens stock market falls by 23%
China – Central bank lends $47Bln to Banks in July
UK – Manufacturing PMI rises in July
Oil – Brent continues to tumble, could we be heading back to January 2015 lows?