The Daily Market Updates – 30th September 2015
After a bumper July, German Retail Sales fell in August with the data coming in at -0.4% (exp. 0.2%). Economists remain optimistic in light of recent positive labour markets.
IMF have begun to flash their warning lights for the $18 trillion in emerging market corporate debt. Sectors such as construction, oil and gas have seen the most increase in debt level. The IMF have put this down to the record low interest rates in both Europe and the United States, which is forcing companies to seek better returns.
Stocks rebound at end of tough quarter
Asian stocks led overnight with markets higher and the Nikkei gained ground on stimulus hopes. Markets around the world have endured a bruising quarter as worries about a slowdown in China and uncertainty over the timing of the Federal Reserve’s plan to raise interest rates has rattled investors.
Senior analysts at JPMorgan are indicating that Japan is already in a technical recession. Recent data on industrial production, a big component of Gross Domestic Product, fell by 0.5%.
The GBP was slightly under pressure today as year on year growth was revised down to 2.4% from 2.6% in the final GDP release from the UK. The second quarter growth of 0.7% was in line with other readings, and there was a positive with households disposable income rising 2% on the previous quarter.
ADP employment, the tease before Fridays heavily scrutinised Non-Farm Payroll number, was released today and it was a fairly positive report. 200,000 jobs were created in the private sector, which was above the 190,000 which Wall Street was expecting.
The Daily Market Updates – 25th September 2015
Janet Yellen spoke last night and argued the case for raising short-term interest rates this year, a less dovish statement than expected. A muted reaction in equity markets but the US dollar did push against most major currencies, and drove down US treasuries.
After the Volkswagen saga over the past few days, automobile stocks are making a noticeable come back with BMW opening 4.5% higher today. VW is off its lows, but still down 27% since 17th September.
Consumer prices fell in Japan during August for the first time in two years. CPI measures the average change in prices paid by consumers. A positive figure shows the economy is growing andis a good gauge on future interest rate action. A negative print may add pressure to the Bank Of Japan to revitalise efforts to spark inflation.
Today’s economic highlights see the final US GDP release and it should be more in line with the second estimate of 3.7% which was revised up from the advanced number of 3.2%. University of Michigan Sentiment, a measure of consumer confidence, is also due out and will give a good indication of how positive consumers are about the US economy.
The Daily Market Updates – 24th September 2015
US Stocks bounced around yesterday but ended slightly lower, and this trend continued in Japan with shares falling. Auto makers were leading the decline as the potential fallout of a scandal at Volkswagen spreads concern amongst other firms.
The NZD rallied overnight as the giant dairy co-operative Fonterra lifted its milk pay out forecast.
German IFO Business Climate
The released data came in at 108.5 vs estimates of 107.9, and IFO expectations came in at 103.3 vs estimates of 101.4. The unexpected rise shows that the European export powerhouse is taking the slowing Chinese growth in its stride.
Norway cut rates to 0.75% from 1%, with a prediction that growth is to remain low for a long period. The rate cut was a reaction to low oil prices which has hit the economy of western Europe’s biggest petroleum producer harder than during the financial crisis.
Bounce back in Volkswagen shares, up 7%. Reports in Germany suggest BMW cars may have cheated emission tests as well. The recent rebound in VW shares comes as their CEO Martin Winterkorn stepped down.
The Daily Market Updates – 21st September 2015
USD – Fed Related Action
With the almost predicted announcement last Thursday that the US FOMC Committee would not indeed be raising interest rates anytime soon, the Euro received a very welcome bid from traders – pushing it, once again, over the hard resistance level of $1.1400. However, this initial strength has not lasted, and the EURUSD has once again traded solidly down since. Perhaps this is a sign of the “bad news = good news” scenario which was trotted out each time the US economy was deemed to be weakening? The theory is that the worse the news is, the more likely it is for the Federal Reserve to resume another quantitative easing programme, which would bolster the economy. This theory might be fine from an assumptive perspective, but everyone knows what happens to those who assume…
Regardless, the EURUSD remains in an ascending triangle formation. Support is now seen at the $1.1200 level, with resistance remaining intact at $1.1400. This is giving swing traders a nice 200 pip movement which they can take advantage of for the time being… but the might want to be careful when one or the other level breaks.
The Daily Market Updates – 17th September 2015
Disappointing GDP data from New Zealand saw the Kiwi dollar lag in the FX markets overnight. The economy accelerated at 0.4% from the first quarter which was less than the Central Bank and economists had forecasted. Falling export prices are discouraging investment and hampering demand, according to the Central Bank.
Nikkei is up 1.43%, but the Hang Seng and the Chinese composite both finish down at the end of the Asian session. Stocks were up in Japan for a third straight day, shaking of the recent downgrade from S&P.
The Governor of the Bank of Japan commented overnight on its Quantitative Easing policy, saying that it is having the intended effects and that the Central Bank will adjust policy when appropriate.
Swiss National Bank
The SNB left rates unchanged today in their monthly rate setting meeting. It did state that the Swiss Franc is highly valued, in line with recent statements and, if necessary, they will remain active in the FX markets.
UK retail sales
The UK retail sales inched up in August, having dipped last month. However it was not a significant rise and adds fuel to the fire that the UK growth has hit a sluggish patch. The month on month figure came in at 0.2%, in line with expectations.
Tonight sees the much anticipated FOMC rate decision, being announce around 19:00BST/14:00ET. The announcement will include potential changes to the main rate as well as an updated Summary of Economic Projections (SEPs). Chair Janet Yellen will host a press conference from 19:30BST/14:30ET. The market is pricing in a chance of a rate hike at 28%, according to the Fed FundsFutures, but analysts are split 50/50.
The Daily Market Updates – 16th September 2015
China follows Wall Street
Asian markets largely given a lift in a continuation of gains seen on Wall Street, the Shanghai composite posted a gain of around 4.7%, Hang Seng climbed 2.9% and the Nikkei rose 0.8%. Gains came in the last hour of trading in a pattern which both traders and analysts are associating with state or central bank intervention.
Unemployment rate falls to 5.5%, and wages up 2.9% – which is the biggest rise since 2009
The Eurozone continues its battle against low inflation as the recently released August figure showed subdued growth. This is a sign that the ECB bond purchasing program failed to combat plunging energy prices. Consumer prices grew only 0.1% against an estimate of 0.2% growth.
ECB Vice President Vitor Constancio said that the ECB has more scope to increase QE when necessary when compared to the FED, the BOE, and the BOJ, as the European scheme is small in comparison. The asset purchasing programme was introduced in March in order to help lift the Eurozone bloc out of deflation.
S&P’s credit rating arm has cut Japans sovereign credit rating to A+ from AA-. The move shows that there are doubts whether the government will revive economic growth and end deflation in the next two to three years. The cut had little impact on the markets.
The Daily Market Updates – 15th September 2015
Bank of Japan (BoJ) held its regular rate setting meeting yesterday and the Reserve Bank of Australia (RBA) released the minutes to their previous encounter. The BOJ stuck to the current easing program, leaving their monetary base unchanged at 80 trillion Yen, the comments released were less dovish. There was no indication of further stimulus, which caused the Nikkei to fall back from a 2% gain, and finish the day only 0.3% higher. The RBA dampened the economic outlook for Australia and this has weighed on the ASX200.
Chinese stocks once again lead most Asian markets lower overnight – ending down 3.5%, which adding to the 2.7% loss seen on Monday. These losses may attract further intervention from the Chinese government after a recent spout of poor data from China has attracted selling.
The UK’s annual inflation rate, the consumer price index (CPI), has fallen back to zero. The Office for National Statistics (ONS) reported that the cost of living has been pulled down by lower oil prices. The core inflation, which strips out volatile factors such as oil and food, was down to 1% from 1.2% – indicating a real drop in inflation.
Economic optimism in the European powerhouse of Germany dropped sharply in September according to the latest index from the country’s ZEW Institute. The latest survey of financial forecasted showed expectations dropping from 25 in august to the recent print of just 12.1. The president of the ZEW has attributed this drop to the worsening outlook in the developing world. ZEW current conditions was a lot more positive bouncing from 65.7 in August to 67.5 in September.
The Daily Market Updates – 11th September 2015
A relatively quiet overnight session, which felt a little odd considering how volatile the Asian markets have been. Stocks finished mixed with small subdued moves amid light economic releases. With an FOMC meeting next week, traders will most likely look to restrict themselves from getting heavily involved.
The International Energy Agency (IEA) released its closely watched monthly report today, and predicted that the latest oil price tumble will hit production levels outside the Organization of the Petroleum Exporting Countries (OPEC) by half a million barrels a day. This would see the biggest decline since the fall of the Soviet Union, and production is likely to shift from modest growth to large declines. Goldman Sachs have forecasted a 2016 price for West Texas Intermediate (WTI) around $45 a barrel but could go as low as $20 to clear current high stocks caused by oversupply.
The Daily Market Updates – 10th September 2015
The Nikkei could not keep up the momentum from yesterday’s session as it finished down by 2.5%. This has in turn brought down most Bourses across the globe, along with Brent Oil falling by 3.9% in line with weaker Asian markets.
China’s Offshore Rate
The ‘Renminbi’, when traded outside of China, rallied more than 1% versus the USD this morning, which is particularly small compared to most FX moves, but it is the biggest move on record for this particular pair since Beijing introduced the offshore exchange rate.
Sterling gained ground today as the Bank Of England policy meeting revealed that the time for a rate increase is approaching. Although the meeting yielded no policy action, the minutes did reveal that the UK economy’s prospects remain positive, and recent market turmoil related to China’s slowdown hasn’t changed their view that rate changes are on the horizon.
The global super brand Apple have revealed their latest product installments. They have introduced the new iPhone 6s, iPad pro and a new version of the Apple TV. Apple shares finished down by 1.9%, the biggest one day drop on the day of an iPhone announcement.
The Reserve Bank Of New Zealand cut rates last night and gave a dovish outlook, a move that was expected by analysts. It appears that further easing may be on the horizon, so the AUDNZD reacted by moving up to test trend resistance on the news. This was also boosted by the better than expected employment data from Australia, with the employment change coming at +17.4k vs estimates at only a +5k increase.
The Daily Market Updates – 9th September 2015
The Nikkei saw its biggest gain since 2008, printing an impressive 7.71% in the green at market close. The Shanghai Shenzhen CSI 300 also finished up 1.96% as this “out of blue” bullish move caught many traders by surprise. There are many reasons attributed to the move, but analysts are relating the move to recent Japanese Prime Minster’s pledge to lower corporate tax rate by 3.2%. Although a significant move, this cut has been on the cards for some while. The move is also likely down to the Chinese Ministry of Finance announcing that they plan to carry out ‘stronger proactive fiscal policy’, and also the World Bank warning the US fed not to raise rates and not cut back on stimulus.
Billionaire Warren Buffett, has declared he is bullish on China. In an interview with Bloomberg, the Chairman and CEO of Berkshire Hathaway said that a “big slowdown in China is unlikely”. He was less enthusiastic on Crude Oil prices, saying that we should be cautious in our expectations.
The UK released their Industrial and Manufacturing Production Date today, and they both disappointed. Industrial Production came at negative 0.4% month over month, versus the estimated positive 0.1%. With Manufacturing also in the negative, down by 0.8% vs the estimated positive 0.2%, the GBP sold of sharply on the news.
JPY and Euro Down
The recent sentiment in the equity markets have had a knock on effect in the FX markets. Currently the Yen and Euro are down, with USDJPY crossing the important Y120.00 level.
The Daily Market Updates – 8th September 2015
China’s trade balance came in today at $57.7bln vs estimates of $48.00bln, a huge contraction which traders did not expect. However imports slid 14.3% in August which has raised concerns about China’s domestically generated growth. Stock markets in China finished up around 2.57%, and with European bourses initially feeding off this positivity, the recent ‘sell strength’ trend does not look like it’s going away as bears have since appeared to push the indices back down.
Although China enjoyed a move up in their stocks it was not the same news in Japan where the Nikkei 225 closed lower by 2.4% and is now flat on the year, erasing it’s earlier promising 17% gain. Japan’s GDP came in at negative 1.2% for the 2nd quarter and, although this beat estimates, traders and analysts remain unimpressed with this contraction.
Some good news, the Eurozone’s GDP rose by 0.4% vs estimates of a rise of 0.3% in the second quarter, which was partly down to strong growth from Italy. This latest growth report comes after the ECB downgraded growth projections at their latest policy meeting and it may calm worries about potential contagion in regards to China growth concerns.
German Trade Balance
Germany posted its highest trade balance surplus on record today, a sign that the Eurozone growth is becoming increasingly dependent on foreign demand. The surplus come in at €22.8bln in July, higher then analyst forecasts at €22.3bln.
The Daily Market Updates – 7th September 2015
US Labor day
Markets will appear subdued today as the US markets shut down for Labor Day.
China returned from a 4 day weekend with the Shanghai Composite printing 2.55% into red territory. The index flip-flopped all day and remarks from government officials over the weekend trying to calm the jitters have failed to stabilise the market.
Glencore has boosted the FTSE 100 today by posting gains as high as 13% in its share value after announcing that they are to raise $2.5 billion in a new share issue, as well as suspending dividends.
The Daily Market Updates – 4th September 2015
Asia finishes a tough week
Despite a positive close seen in Wall Street yesterday, the Asian session traded lower ahead of today’s US employment report. The Japanese Nikkei 225 fell to its lowest level in nearly seven months, recording a 7% drop on the week.
No September Hike
A panel of ex fed officials do not foresee a rate hike at the upcoming September meeting. The panel agreed that the global outlook has declined since the last FOMC meeting in July, which means that chances of a rate hike have significantly reduced.
The G20 have reaffirmed their previous commitment to continue with their exchange rate commitments and not resort to protectionism to boost domestic growth. This comes despite China recently devaluing their currency on numerous occasions.
The Daily Market Updates – 3rd September 2015
Today we have seen strong services data from Germany, reaching a 5 month high. The gauge came in at 54.9, versus an expectation of 53.6. This reading is at a 10-month high, which suggests that services industry is expanding. Similar news from Italy – an actual figure of 54.6 versus 53.0 expected. Even more impressively, these readings are the highest since May 2011, a time when the EURUSD was trading $1.45, and it shows that the recovery is gathering speed. The UK appears to be the only laggard is this instance, with PMI services expecting to come in at 57.6, but the print only showed 55.6 – a 27-month low.
The European Central Bank will be back in the spotlight today and the main issues which traders will be focusing on during the rate announcement and subsequent press conference, will be changes to interest rates possible hints on a potential future quantitative easing programme, along with how the ECB feels about the Euro being seen as a potential safe haven during the China crisis, and how the recent deterioration in China might affect the Eurozone.
With the first Friday of the month tomorrow we will see the release of the August Non Farms Payrolls figure – always a market moving event. Today we have the weekly Initial Jobless Claims followed by Trade Balance and ISM Non-Manufacturing Composite. Tier one data is being watched closely for signs that the FED may raise rates in the upcoming FOMC meeting.
With markets currently closed in China we have seen a small rise overnight in Asian equities, especially in the Nikkei which outperformed against other indices .
Obama has secured the votes for the Iran deal in Congress. The deal will allow Iran to peacefully run a nuclear program as long as it adheres to stringent criteria, and in return all sanctions and embargos will be eased down until none remain. Iran will also be able to reach full production in an already saturated oil market.
“Bond King” Bill Gross, has come out and said that the FED missed its opportunity to raise rates. Gross, a long term activist for rates hikes, has said that any instability caused from the FED hesitance is “self-inflicted”.
The Daily Market Updates – 2nd September 2015
Crude oil prices take another nose dive to $45 after hitting highs of around $54 on the 31st August. The pull-back, breaking the psychological $50 a barrel, comes just after oil plummeted below to $42 a barrel a week earlier… the first time since 2009. The rebound coincides with weak Chinese factory report whilst other analysts are putting it down to short covering, with the long term trend resuming. The falling in oil prices has reduced the oil sector to 7% of the global market cap, which compares to 13% in 2008 and over 20% in 1980.
The Australian dollar falls below US$0.70 for the first time in more than 6 years due to the China slowdown. Recent Australian GDP reports showed that the economy grew at a Q/Q pace of 0.2% in the 2nd quarter, with the consensus coming in at 0.4% from analysts. This could fuel concerns that Australia are heading for their first recession after 24 years of growth.
The Chinese market will close for holiday today for the remainder of the week. This is most likely welcomed news by investors due to the recent market volatility which has sent shudders around the world. Goldman Sachs are sticking to their bullish view on Chinese stocks in Hong Kong, expressing valuations are inexpensive and improved data will spur a rebound.
Tug of war developed throughout the Asian session, with the Shanghai composite closing down 0.4%… after falling as much as 4.6%. The surge up, which did briefly enter positive territory is being attributed to the Chinese government ploughing cash into the market as Beijing closes the markets for Thursday and Friday.
Index futures climbed after the world’s biggest equity market capped its latest fall. This is pointing to possible gains in the cash open as equities across the globe look to recover from heavy losses.