Daily Market Reviews by UWCFX

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10 JANUARY 2013: CHINA BEATS FORECASTS AND RISES EXPECTATIONS

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

China’s export grew 14,1 percent compared with December2011 and hit a seven month peak, fresh data revealed. Market expectations were for a 4 percent rise. Import grew 6 % boosting the country’s trade surplus to USD 31,6 billion sharply up from November’s 19,6 and analysts forecasts.

The much stronger than expected trade data magnified the positive momentum created by Alcoa’s strong fourth quarterly results Tuesday which boosted Wall Street yesterday. Both Dow Jones and Nasdaq rose with 0,45 % led by Boeing and Hewlett Packard. Asian stocks rise with the Asian Pacific MSCI-index up 0,6 % keeping alive hopes for a recovery in the world’s second largest economy. The export figures also gave a boost to Chinese largest trading partner, Australia. Both the Australian stock index, AXJO, and the Australian dollar was up 0,3 percent.

The USD continues to rise against Japanese yen. USD/JPY is trading at 88,10 close to the peak reached last Friday. The dollar/JPY has risen 12 % over the last two months. With determined Japanese quantitative easing this trend is most likely to continue. Massive fiscal spending is set to weaken the yen and create conditions for lifting Japan out of a decade long deflation. Also the Euro/JPY has gained ground and is up 0,1 percent to 114,93 yen. Euro/USD is steady on 1.3146 ahead of today meeting in the European Central Bank (ECB).

The Japanese benchmark Nikkei stock exchange extended gains to 0,8 % after a couple of days pause as the yen continued to fall. Copper was up 0,2 %. NYMEX, US crude futures, rose to USD 93,38 a barrel as Chinese data raised hopes for firmer demand for commodities. Brent crude is trading in the interval USD 111 – 112 a barrel. Precious metals, Gold and silver, are trading just below USD 1060 an ounce and USD 30,35 respectively.

Copyright: United World Capital

 

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VIDEO MARKET REVIEWS

10 January 2013: Daily Market Reviews from Mr. Arne Treholt (Vice-President of Business Development and Investments UWCFX)

[video=youtube;ggc5KbCwUg0][/video]

 

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11 JANUARY 2013: DRAGHI BOOSTS EURO STRENGTH

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

As expected the European Central Bank (ECB) kept interest rate unchanged at 0,75 % in its board meeting yesterday. In a following up press conference its president, Mario Draghi, offered a carefully worded optimistic view, indicating a turnaround in the euro zone at the end of 2013. His cautious remarks had the EURO to jump 150 basis points against the dollar reaching a one week high at 1.3280. The dollar lost ground against most currencies, but on announcement of Japan’s economic stimulus policies, USD/JPY jumped to 89,35, the highest level seen since June 2010.

Asian shares eased back on profit taking this morning on news on higher inflation in China. The annual consumer inflation rate accelerated in December to a seven-month high on higher food prices. The growth in Chinese export and a strengthened balance of trade numbers helped the US indexes towards new highs. Nasdaq and Dow Jones rose 0,45 % with the S&P at its highest level in 5 years. The Asian stock indexes are falling back on Chinese inflation fears.

Prime Minister Shinzo Abe announced today that the Japanese government is going to pump USD 150 billion into roads, schools and increased safety for its nuclear plants. These economic stimulus might lead to an increase of 2 % in Gross Domestic Product (GDP) and get Japan out of the vicious deflation spiral. His intended policies have had a very positive impact on Japan’s benchmark Nikkei stock average which climbed a new 1,7 % to a 23 month high. His Keynesian spending measures have, however, been met with criticism from finance traditionalists.

The Chinese export numbers and Draghi’s cautious optimism had a positive impact on oil and commodities. Brent crude jumped to USD 112,50 a barrel, but has eased back below 112 on the inflation fears. Spain first bond auction in 2013 raised more money than expected on lower borrowing costs. 10-year Spanish government bond yields fell to a 10-month low at 4,90 %. The result of the auction gave also a boost to the Euro. Gold and silver rose to USD 1672 and 30,85 an ounce respectively.

President Barack Obama yesterday appointed his chief of staff, Jack Lew, to succeed Tim Geithner as US secretary of finance. Lew a former Citibank manager and budget expert has also served under President Clinton. The appointment stresses that the focus in US financial and economic policies in the near future will be on the budget and how to tackle the difficult budgetary negotiations between Democrats and Republicans in the US Congress.

Copyright: United World Capital

 

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VIDEO MARKET REVIEWS

11 January 2013: Daily Market Reviews from Mr. Arne Treholt (Vice-President of Business Development and Investments UWCFX)

[video=youtube;Yk4x3YtecLY][/video]

 

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14 JANUARY 2013: YEN PLUNGES – EURO JUMPS

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

EURO/USD started the week in Asia with impressing gains trading at 1.3368 while Japanese Yen continues to plunge. USD/JPY plunged to its lowest level in two-and-a-half-year at 89,58 with focus on the Central Bank of Japan’s (BOJ)promise to deliver bold stimulus. Prime Minister Shinzo Abe said Sunday that BOJ must set a 2 percent inflation target and show markets it was determined to pursue tough monetary easing to end decades of deflation. A public poll shows that Abe has strong support for his efforts to encourage economic growth.

The Euro reached a four month high against the dollar at 1.3404 in early Asian trade. The Euro continues to outperform greenback after European Central Bank (ECB) president, Mario Draghi, last Thursday gave no indication that the ECB would ease monetary policy. Federal Reserve (FED) Chairman Ben Bernanke is due to speak today, and investors are looking for clues on how long FED bond purchasing program will last. Individual FED board members indications last week that the program is coming to a halt immediately strengthened the dollar.

It is, however, assumed that Bernanke is in no rush to turn off the liquidity tap. The US economy is demonstrating steady, but fragile and by no means exceptional progress. New housing data is presented this week along with Chinese GDP numbers. These data are expected to give clear indications as to further momentum. Better data will support riskier assets. The picture is, however, mixed. Some currencies that usually are highly correlated with global economic prospects fell at the end of last week on news of higher than expected Chinese inflation. If Bernanke demonstrates that FED is no hurry to end quantitative easing, it would probably weaken the dollar and strengthen higher-yield currencies as Australian dollar.

Global equity markets continued to soar last week when billions were pumped into global equities. In the week from January 9 investors injected USD 22,2 Billion into global stocks, the highest level seen since 2007. Most of the funds were pumped into global stocks and actively managed funds. It is, however, some skepticism how long this rotation from bonds and more secure assets into securities will continue. Potential disappointing company earnings over the next weeks might constitute a possible set back as will Washington’s wrangling on a debt ceiling and spending cuts.

The Asian stock markets looking for more clear directions, ended flat this morning after impressing late gains. Oil and metals are slightly up as are gold and silver.

Copyright: United World Capital

 

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15 JANUARY 2013: NIKKEI SOARS ON YEN WEAKNESS

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

Japanese stocks surged to multi-year highs on when Asia opened this morning. Monday the Yen hit a 2-half-year low against the dollar on expectations that the Bank of Japan (BOJ) will undertake bold monetary easing measures. USD/JPY reached 89,67, but has retracted somewhat on the Japanese Minister of Finance comments warning against the consequences of Yen Weakness. The Euro which gained substantially against the green back at the start of the week has stabilized. Euro/USD trades around 1.3350 after reaching 1.3402 early Monday.

The USD/JPY also failed to extend recent gains and test the big number of 90 yen as FED chief Ben Bernanke in a speech Monday night said that US recovery was still fragile and warned that economy was at deadlock over the deficit. In a press conference Monday President Barack Obama as well warned that a refusal from Congress to raise the US debt ceiling would have disastrous consequences on US and global economies and trigger economic chaos.

Spurred by the weak Yen the Japanese Nikkei climbed 1,3 percent, the highest level seen since April 2010, while other Asian stock exchanges were struggling to keep early January gains. The Asian Pacific, MSCI-index, eased 0,2%, after a 0,7% decline in South Korean stocks. Investors in Seoul took profit on earlier gains in the technology sector after reports that Apple had slashed orders of screens and other component on weaker-than expected demand.

Apple lost 3,6 percent in Monday’s trading ending at 501 dollar, 150 dollar down from last September. Apple’s losses had a heavy impact on Nasdaq and the S&P 100 when investors braced for fourth quarter earnings disappointments. The Apple news were somewhat countered by Dell that jumped 13 percent. The result came after reports that the number 3 personal computer maker is in talks with private equity firms to go private. Dell’s gains offset some tech-sector weakness.

The news and a growing sentiment that Apple is slowing down after being a product everybody wanted to have, is adding to investors unease when fourth –quarter earnings kick into high gear during this week. Dow Jones was flat and Nasdaq lost 0,26 percent. The European markets were down for a third straight day. Oil prices are picking up. Brent crude trades at 112 USD a barrel. Gold and Silver are stabile hanging on to gains from Monday.

Copyright: United World Capital

 

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VIDEO MARKET REVIEWS

15 January 2013: Daily Market Reviews from Mr. Arne Treholt (Vice-President of Business Development and Investments UWCFX)

[video=youtube;GUN1lPuhYDs][/video]

 

[UWC Neeraj]

16 JANUARY 2013: NIKKEI FALLS AS YEN INCHES UP

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

Asian stocks were weaker this morning as the Japanese Nikkei erased earlier gains. The Yen rose for a second day in row on warnings on excessive weakness from its Finance Minister expressing worries for overheating and a, too, quick fall in the currency. USD/JPY trades at 88,33 yen a dollar after hitting a a two-and-a-half-year peak on 89,67 on Monday. The Euro also slipped after a top EU official complained about its recent gains.

Many market players see the latest rebound in the Yen as a small correction in a long-term downtrend which started at the end of last year on expectations that the Bank of Japan (BOJ) will be forced to take bold action to reflate a sluggish economy. The New Prime Minister Shinzo Abe has in January taken active steps to encourage growth and called for BOJ to set a two percent inflation target. BOJ is expected to follow this call up at their meeting on January 21-22.

The dollar fell as low as 88.06 yen breaking through a technical support level on 88,20. The Euro slipped 0,6 percent to 117,28 yen as the Euro also lost momentum against the dollar. Euro/USD trade below 1.33 after the chairman of euro zone finance ministers, Jean-Claude Juncker had warned against “dangerously high” Euro. Euro/USD reached a peak on 1.3404 on Monday.

Junker’s comments were by investors seen as an excuse to cash in on recent gains. His statement did not necessarily represent a reversal in upward trend seeing the Euro rallying 3 percent in the past few sessions. With traders concentrating on the yen there has been small changes in other currencies. Swiss Franc lost ground against the Euro on Wednesday. The Euro hit a 13 month high of 1,2413 francs on Tuesday, but has fallen back to 1.2365 this morning. The Scandinavian currencies have lost one percent against the dollar over the last 24 hours.

Equity markets in the US were flat yesterday on uncertainty on companies’ fourth quarter earnings. Retail figures for December came in much stronger than expected indicating consumer optimism that augurs well for quarterly earnings. Manufacturing data for the state of New York for December fell back underlying the somewhat mixed picture of where the US economy is heading. These contradictions were also stressed in FED head Ben Bernanke’s speech on Monday being used as an argument for continued monetary easing.

Copyright: United World Capital

 

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17 JANUARY 2013: CAUTIOUSNESS BEFORE CHINESE GDP-DATA

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

Asian shares consolidated posted modest gains after better than expected US company earnings. Investors’ sentiment was, however, cautious ahead on Chinese GDP (Gross Domestic Product) data to-morrow. Dollar and Euro regained against yen after two days of profit taking on the sharp fall of the Japanese currency since November. USD/JPY trades a 88,24. The benchmark Nikkei index inched up after tumbling 2,6 % on Wednesday. World stock markets were flat.

The serious earnings season in US were off to a good start yesterday led by major banks as JP Morgan/Chase, Goldman Sachs and Bank of America. Goldman Sachs nearly tripled and JP Morgan fourth-quarter net income jumped 53%. Earnings for 2012 set a new record illustrating that banks, “too, big to fail”, with strong support and injections of government funds, have recovered from the 2008 break down in the financial markets. The rest of the economy is, however, still lagging behind, fighting to get out of recession.

Investors’ eyes at the end of the week are on China’s release of fourth-quarter GDP, December industrial output, retail sales and house prices. The data will offer clues to the health of the world’s second biggest economy. Individual numbers have given rise to cautious optimism that the downtrend in Chinese economy has come to a halt. Certain Western circles have seeded doubts on these numbers, stressing that China is manipulating statistics and not to be trusted.

Australia, very much dependent of the Chinese market, presented surprisingly bad employment figures yesterday. Unemployment rose with 5 500 in December bolstering odds for another interest rate cut. This prospect boosted shares and sent the Australian dollar down before the presentation of Chinese data. In In recession-stricken Europe car sales fell to a 17-year low in 2012. The challenges facing the global economy were outlined in the World Bank’s outlook for 2013. Citing slow recovery in developed nations the bank sharply cut its growth forecast to 2,4% economic growth down from 3 percent.

In an independent analysis, one of the world’s leading bank, HSBC, predicts that reduced concerns over the euro zone debt problems, last year’s more solid economic fundamentals and Chinese recovery will present buying opportunities in cyclical shares and boost commodities. The recent 3 months rally in platinum regaining its premium over gold is seen as an indication that investors start to be more proactive and take risks. There were small changes in the commodities yesterday. Brent crude dips below USD 110 a barrel, while NYNMEX is up on lower than expected US oil storages. Precious metals hang on to earlier gains.

Copyright: United World Capital

 

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18 JANUARY 2013: CHINA GREW 7,9% IN 2012

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

The Chinese economy grew 7,9 percent in the fourth quarter of 2012 rebounding after seven straight slowdown quarters. An uncertain global outlook reflected in the World Bank’s forecast for 2013 reducing global growth from 3 to 2,4 percent, might, however, mean that Chinese authorities would have to undertake strong stimulus in 2013. 7,9% is up from 7,4% in the third quarter, the lowest since the financial crisis started in the end of 2008. 2012 is the weakest year in Chinese economy since 1999. The presented numbers are slightly stronger than market expectations.

Analysts were pleased with the numbers. The momentum at the end of 2012 is fairly strong, but the rebound in Chinese economy is not astonishing, BNP Paribas stated. Data for industrial output in December saw a growth of 10,3% while 10, 1% was expected. Retail sales in December rose 15,2% demonstrating a strong growth in domestic consumption. This indicates that the Chinese government is succeeding in turning the economy from export to domestic consumption. China’s target for annual growth was 7,5% in 2012. That is lower than the 8% goal set for the previous eight years. The GDP growth target will be 7,5% in 2013. To encourage growth China has increased infrastructure investments and encouraged energy-saving measures for consumers.

Asian stocks rose on the Chinese data cementing positive market sentiment after presentation of strong US labor and housing mark reports yesterday. Dow Jones increased 0,63% and Nasdaq jumped 0,59. Intel, Home Depot and Walt Disney were among the winners. The Asian Pacific index, MSCI, rose 0,5%. Shares also rose in Hong Kong and Shanghai. The better market sentiment strengthened riskier assets and currencies. Euro/USD has gained 100 basis points since yesterday morning trading at 1.3382 close to the 1.2404 peak seen a week ago.

Euro and USD posted new highs against the Japanese Yen which after two days rebound earlier in the week continues down. Yen passed the critical 90 yen level in relation to USD. Expectation of monetary easing has put the yen under strong pressure over the last two months. Bank of Japan (BOJ) will probably next week announce removal of the 0,1% floor on short-term interest rates and commit itself to open-ended asset buying with a 2% inflation target as demanded by the new Prime Minister Abe.

The Chinese and better than expected US jobless claims and housing data have strengthened commodities and the appetite for risk. New York crude, NYMEX, rose stronger than Brent crude yesterday. Brent futures have recovered and trade again with the interval between USD 111 and 112 a barrel. Precious metals like Gold and silver jumped yesterday.

Copyright: United World Capital