Daily Market Reviews by MAYZUS

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06 JUNE 2013: YEN JUMPS AS WALL STREET FALLS

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

The Yen rose sharply early Thursday. USD/JPY dropped to 99.00, up more than one percent since yesterday. Commodity currencies are under strong pressure with the Australian Dollar at a 19-month low. The currency volatility follows a steep fall in US stocks Wednesday extending the previous days sell-off. Dow Jones dipped under 15.000 due to concerns that the US Federal Reserve, FED, may scale down its bond-buying stimulus when the economy is still sluggish.

The sell-off on Wall Street was broadly based with four decliners to one advancing stock. The selling might suggest that the seven-month stock rally is coming to an end. The S&P 500 has fallen 3.6 percent since its peak on May the 21st, one day before Ben Bernanke indicated that FED might taper its stimulus if economic data shows traction. The jobless numbers and unemployment statistics to be presented tomorrow are therefore crucial.

Both Dow Jones and Nasdaq registered their biggest percentage drops in six weeks. Most Asian markets suffered similar falls and slipped to fresh lows. Economic data has recently been mixed. Investors fear that FED will reduce their monetary easing before the economy is back on track, in spite of clear FED statements that the stimulus will continue until unemployment is reduced to 6.5 %. A report yesterday showed that private employers created far less jobs in May than the 160,000 predicted. The figures are a strong argument against changes.

The long term bullish outlook on the USD/JPY remains. Analysts don’t predict steeper falls from here and still see 120 as likely in 6 – 12 months. EUR/USD is resilient, reaching 1.3118 yesterday before falling back to 1.3095. The stronger Euro comes ahead of ECBs policy meeting. ECB will probably consider whether it is necessary to take fresh action in order to secure the expected recovery of the euro zone in the second half of 2013.

Copyright: MAYZUS Investment Company Ltd

 

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07 JUNE 2013: DOLLAR PLUNGES IN BROAD SELL-OFF

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

The Dollar plunged against the Euro, Japanese Yen, and other currencies as investors reduced bets on the greenback on concerns that today’s US jobs report will disappoint. Euro/USD trades at 1.3262. American stocks fell in tandem with a weaker USD, but rebounded to end in positive territory. Dow Jones added 0.53 % to climb back above the 15.000 level. Nasdaq gained 0.66 % to 3 424. The changes seem to be technically driven by psychological factors.

A poll amongst economists expects 170 000 new jobs could've been added to the US economy in May with an unemployment rate of 7.5 %. Fear of a weaker than expected job report prompted, however, investors to unwind bets on a stronger Dollar that had been profitable for months. Gold prices, which have been under strong pressure for months, suddenly rose 1 percent to USD 1412 an ounce as investors sold long positions on the Dollar.

The Euro gained after the European Central Bank, ECB, left interest rates unchanged. ECB President, Mario Draghi, stated that further monetary support was unlikely in the near future. ECB has kept interest rates at a record low of 0,5 % waiting for a turnaround in the Euro zone. Bank of England have also chosen to leave their loose monetary policy unchanged. British Sterling, GBP, has jumped against the Dollar at 1,5612 and gained substantially during the last few days from low 1.51 levels.

Concerns that key US job data will disappoint sent the Japanese Nikkei into bear territory in Asia this morning. The Nikkei plunged 1.9 % to a two month low. Nikkei has lost 20 % from a five-and-half-year high, just two weeks ago. Other Asian stocks failed to capitalize on overnight gains in Wall Street. The Asian Pacific MSCI-index fell 0.6 % to its lowest level since November. The fall in equities seem to indicate a stronger appetite among investors for safe haven bonds. The yield on U.S, German and Japanese bonds have risen recently.

Oil prices are higher on the back of a weaker Dollar. Brent crude trades close to USD 104 a barrel, up from the USD 100 mark earlier in the week.

Copyright: MAYZUS Investment Company Ltd

 

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10 JUNE 2013: US JOB DATA CALMS EQUITIES

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

Global equities pushed higher and the dollar steadied with the release of the US employment report for May. The Dow Jones shot up more than 200 points scoring its best day since January 2, and the S&P 500 ended a two week losing streak on Friday after an extremely volatile week with big price fluctuations in currencies and equities. The job data was in line with expectations. 175,000 more jobs were added. The unemployment rate increased from 7,5 to 7,6 %.

Japanese shares rebounded strongly on Monday spawning worries about near-term tapering of US Federal Reserve, FED, stimulus and weak Chinese data. The job data didn’t suggest an imminent tapering, but coming US economic data shall be followed closely. Retail sales later this week will be a new indicator. The Asian Pacific MSCI-index which lost 1,1 % on Friday, was slightly up in early trading.

USD extended its gains against JPY at 98,22 after briefly falling below 95 on Friday. The weaker Yen contributed to a doubling of Japan’s current account surplus in April, compared to 2012. Bank lending posted its biggest annual rise in three years. The third biggest economy grew 1,0 % in the first quarter of 2013, underscoring steady recovery driven by a pickup in global growth and the sweeping stimulus policies of Shinzo Abe’s government.

The Dollar index, DXY, added 0,2 % to 81.880 after plunging to a three- month low on Thursday. The Euro is also stronger against the Yen. Euro/USD dipped below 1.32 at 1.3193 after a strong performance on Friday, following heavy selling of long Dollar positions. The Australian Dollar slumped to USD 0.9411 after disappointing data from China, which is Australia’s biggest export market. The Chinese economy grew at its slowest pace for 13 years. Oil prices are steady with Brent above USD 104 a barrel. Gold is at USD 1385.

Copyright: MAYZUS Investment Company Ltd

 

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11 JUNE 2013: USD SLIPS AGAINST YEN AND EURO

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

The Bank of Japan (BOJ) did not intervene in the volatile bond market and kept monetary policy steady at yesterday’s meeting. The decision strengthened the Yen. USD/JPY trades at 98.42 EURO/USD, which started the week at 1.3193 and has climbed 80 points to 1.3272. The Dollar, which hit a 4-1/2-year peak against the Yen of 103.74 last month, has since fallen.

Asian stocks sagged to a fresh 2013 low due to the Chinese growth worries and continued uncertainty over US monetary easing and its bond buying program. The Nikkei N225 ended 0.7 % down, while USD/JPY declined 0.4 %. The South Pacific MSCI-index shed 0.9 % and fell for the fifth straight day in a row. In New York, Dow Jones ended slightly down at 15. 238. Nasdaq was in positive territory, 0.13 %, after a 1.71 % gain for Intel, which was the winner of the day.

The international rating agency, Standard & Poor’s, raised the US economic outlook to stable from negative, from the positive jobs data presented last Friday. The upgrade will contribute towards keeping the speculation about an eventual softening of FED’s strong commitment to quantitative easing alive. Both global equity and commodity markets have recently been jolted by FED stimulus concerns, slowing growth in China, contributing towards the continued recession in Europe and big turbulence in the Japanese stock and bond markets.

This volatility clearly demonstrates the weaknesses of monetary easing. It boosts liquidity and exacerbates moves in the financial markets without having a real impact on the real economy. Abenomics led to a strong stock rally and a steep fall in the Yen. Over the last two weeks Nikkei has lost 20 % and USD/JPY is up 5 % . Most analytics continue to be bullish on USD and stress that long-term capital flows are moving into US corporate bonds. This will strengthen the USD.

Copyright: MAYZUS Investment Company Ltd

 

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12 JUNE 2013: USD/JPY REBOUNDS AFTER STEEP FALL

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

The Dollar steadied against the Yen on Wednesday, suffering its biggest drop in three years yesterday. USD/JPY trades at 96.44, sinking as low as 95.60 in the previous session. The 2.7 % fall marked the biggest one-day drop in the USD/JPY currency since May 2010. The Dollar continued to slip against the Euro at 1.3307. The Dollar index DXY steadied after slumping to a four-month low of 81.034. The weakened Australian Dollar gained 0.4% and trades 0.9469 to a USD.

Bank of Japan (BOJ) disappointed investors hoping for an extension in the maximum duration of its fixed-rate loans, similar to the European Central Bank (ECB) long term financing operation. Such extension would have been aimed at quelling the volatility in the bond market. The market expected such a move. When that did not happen, the Yen sellers had to liquidate short positions. Yen buying was strengthened by exporters shrinking purchases of the Dollar.

The volatility and tumult in the Japanese bond market have raised worries that it could undercut the Abe government and BOJ’s efforts of monetary easing. USD/JPY had, until the recent turnaround, fallen continuously from 80 to 103.65 Yen to a Dollar. The weaker Yen gave Japanese export a welcomed boost, but most of this advantage has been eaten by the stronger Yen experienced in June.

The US and European stock markets tumbled yesterday on nervousness over FED’s monetary easing exit strategy. Dow Jones and Nasdaq fell from 0.76 to 1.06 %. At the General Assembly of Facebook, CEO, Mark Zuckerberg, faced a barrage of questions about the stock price. Facebook’s shares have fallen 37% since its introduction. In Japan, the Nikkei index fell below 13.000 as the strong Yen dragged exporters down.

Copyright: MAYZUS Investment Company Ltd

 

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13 JUNE 2013: ASIAN MARKET PLUNGES WITH STRONGER YEN

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

The Dollar plunged to its lowest level in ten weeks against JPY at 94.81, while the Asian stock markets experienced one of its worst one day down falls. All the Asian markets ended in red territory with the Japanese Nikkei 500 index falling as much as 5.3 %. Tumbling Japanese shares accelerated the fall of the Dollar as Nikkei- investors continued to unwind earlier hedges against a weaker Yen. The Dollar has lost 8.6 % since hitting a four year high of 103,74 on May 22.

The latest developments demonstrate the gamble involved in Central Bank’s monetary easing. Investors have snapped up Japanese shares between mid-November and May, as a weaker Yen promised to fatten exporter’s overseas revenues. Now a stronger Yen threatens to do the opposite, leading to further sell-offs in the Nikkei. The tumults in Asia come on top of uncertainty about whether the US Federal Reserve (FED) will pare back its stimulus program buying bonds and treasury bills. Japanese bond selling is adding to the pressure on the currency.

The fall in Asian shares followed a weak session in New York. Dow Jones Industrial was down 0.84 % while the technology heavy Nasdaq lost 1.06. The Dollar lost 0.3 % against a basket of currencies, DXY, ending at 80.741 after falling below 80.651, a level not seen since February. The Dollar has lost 4 % since its three-year high on May 25th. Adjustments in overextended long USD positions rather than a changing perception of US growth and Fed outlook, seems to be behind the weaker Dollar.

Weakness in the Dollar saw the Euro climb to a near four-month high of 1.3370. Euro/USD trades now at 1.3356. It is difficult to explain the stronger Euro, the recession in the Euro zone taken into account. Recent polls show, however, that a majority of analysts believe that ECB will keep the interest rate at the present level. Optimists are also suggesting that the euro zone will return to modest growth later this year.

Copyright: MAYZUS Investment Company Ltd

 

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14 JUNE 2013: ROBUST US-DATA TURNS MARKETS UP

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

Robust US retail sales and a drop in the weekly jobless benefits claims had a positive impact on global stock markets yesterday and this morning. . Japan’s Nikkei jumped 1.9 % recovering some of the sharp losses the last two weeks. This followed a strong session in New York. Dow Jones passed the 15 000 mark again, adding 1.21 %. The technology heavy Nasdaq index gained 1.32 %. The Asian Pacific MSCI-index rose 1.4 %. Also Chinese shares recovered.

Volatility is still high in the currency markets. Better than expected economic data calmed global markets,after the last few days bruising sell off. Investors remained, however, nervous ahead of next week’s Federal Reserve, FED, policy meeting on June the 18th-19th. The Dollar lost at one point more than 1% from early gains against the Yen, and stands at a four-month low against a basket of major currencies, DXY. USD/JPY is hovering below 95 at 94.92 Yen to a Dollar. Euro/USD is at 1.3349.

The positive data yesterday appeared to have brought some temporary relief to markets rocked by speculation on whether FED is going to taper its monetary easing. The strong rally in global equity markets over the last half year, has been driven by FED’s bond buying scheme. There is an open question as to how the stock markets would be affected by a discontinuation in monetary easing, which other central banks have also copied. Currencies are most likely going to continue to be volatile until stability returns to equities.

Yen short and Dollar long positions have been built up to excessive levels over the last few weeks, and have contributed to the volatility in USD/JPY. Selling of the Yen was overdone and it seems that the latest market turbulence might have filtered out much of that excess. USD/JPY at 95 seems to be reasonable for now. The British Pound Sterling, GBP, is gaining ground against the USD, trading above 1.57. Oil prices are up on US- growth expectations triggered by the latest data. US crude futures stand at 96.70 and Brent trades at USD 104.73 a barrel.

Copyright: MAYZUS Investment Company Ltd

 

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17 JUNE 2013: DOLLAR LOSES MOMENTUM

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

The Japanese Yen held near a two-month high against the Dollar and the Euro in early Asian trade Monday, amid market hysteria and confusion over when and how the US Federal Reserve (FED) will begin to scale down its massive stimulus program. USD/JPY opened at the same level as it ended in New York on Friday, where the Dollar bought 94.23 Yen. Since the opening, Yen has weakened to 94.77. EUR/USD trades steady at 1.3322 as French President Holland’s Socialist party asks for a weaker Euro.

The Dollar lost momentum during volatile sessions last week, which saw sharp moves in the Yen and emerging market currencies. Stronger retail sales and lower weekly jobless claims released last Thursday, helped the green back rise from months of lows. Negative consumer confidence figures published on Friday effected, however, USD negatively. The Dollar index, weighed against a basket of currencies, are at a four month low. Both Euro and GBP are at their strongest level against the Dollar since February.

Oil prices rallied to a two month high after Washington’s announcement that it would provide arms to Syrian rebel groups. New York Crude, NYMEX, trades at USD 97.63 a barrel and Brent is above 105. The Syrian crisis going to be at the top of the agenda when the G-8 meets today. The Syrian civil war is threatening the stability in neighboring Countries such as Jordan, Iraq, Lebanon and Turkey, and challenges Israel’s security as well. The conflict threatens to develop into a regional Russia/US proxy war also directly involving Iran.

In a price analysis Barclay’s bank is forecasting crude oil prices to retrace to USD 111 a barrel, taking supply shortfalls as well as geopolitical tensions into consideration. The Bank estimates supply shortfalls from OPEC (Organization of Oil Producing Countries) to be 2 million barrels a day or equal to Germany’s oil imports. Libyan oil output has fallen below 1m barrels a day due to protests at oil fields and terminals. Nigeria’s output has fallen due to theft-related damage to pipelines.

Copyright: MAYZUS Investment Company Ltd

 

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18 JUNE 2013: ASIAN SHARES SLIDE BEFORE FED MEETING

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

After a strong session in New York on Monday where Dow Jones, S&P, and Nasdaq all gained, Asian shares slide, as investors are nervously waiting news from the US Federal Reserve meeting and Bernanke’s news conference on Wednesday. The Japanese Nikkei and the Asian Pacific MSCI-indexes fell as did Australian shares which lost 0.9 %. The currencies are relatively steady with the EUR/USD at 1.3354 and USD/JPY at 94.84.

Oil prices continue to trade higher due to tension in the Middle East. Brent crude stands at USD 105.57 a barrel. The G-8 meeting amongst the world’s strongest developed economies, started their meeting in Northern Ireland yesterday, seeing Russia increasingly isolated in their support to the Assad-regime in Syria. US and European leaders simultaneously launched talks on the world’s most ambitious free trade agreements.

Markets are looking for the FED to clarify its outlook on its massive stimulus program when the US central bank concludes its two-day policy meeting on Wednesday. FEDs aggressive bond-buying program, along with other central banks accommodating monetary policies to promote growth, have provided liquidity which have been invested into higher risk assets as shares. Even modest tapering in monetary policies might, therefore, have had direct and unforeseen impact on the stock rally seen the last half-year.

Uncertainty over FEDs thinking has recently weighed in on the Dollar which has plunged to a four-month low towards a basket of currencies. The Dollar’s fall against the Yen has primarily been linked to speculators and investors cutting down on their Yen short positions after the Bank of Japan last week did nothing to quell a highly volatile domestic bond market. The fall in the Yen was sparked by a sell-off in Nikkei shares which have fallen 20 % from their peak at the end of May.

It is expected that FED, after its Wednesday meeting, will stress its commitment to continued stimulus and that any tapering will not signal lightening liquidity. At the G-8 meeting the Euro zone came under pressure to press on with a banking union. Japan was urged to follow up on central bank stimulus with structural reforms to tackle its budget deficits.

Copyright: MAYZUS Investment Company Ltd

 

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19 JUNE 2013: MARKETS WAIT FOR BERNANKE

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

Stocks led by General Electric grew higher on Wall Street yesterday, as markets eagerly wait for US Federal Reserve’s , FED, policy statement to be published later today. Both Dow Jones Industrial and the technology heavy Nasdaq added 0.91 and 0.87 % respectively on expectations that FED, for now, will maintain its aggressive bond buying program, which over the last half year has boosted stocks. Markets are gambling on continued monetary easing in spite of recent data pointing to an improvement in the US-economy.

FED Chairman Ben Bernanke recently stated that the bond buying would be wound down when the economy has proven stronger. FED has put a 6.5 % unemployment rate and an inflation rate below 2.5 % as benchmark targets. An improving US economy seems, at present, capable of growing without monetary easing, but FED has not yet decided on the final exit strategy. It is expected that a tapering of the bond buying will begin in September/October.

Japanese stocks followed the positive lead from New York, outperforming the rest of Asia. Nikkei rose 1.1 %, helped by a softer Yen. USD/JPY traded at 95.28 down from the 94.50 level seen over the last couple of days. The Asian Pacific MSCI-index eased 0.3 % led by a 1.3 % fall in mainland Chinese stocks. Hong Kong and South Koreas were also lower. The MSCI index has lost 8 % since May 22nd, when Bernanke indicated to Congress that a decision to wind down bond buying would come in the next few meetings.

The question for many investors is whether Bernanke will succeed in convincing markets that any tapering is conditional on incoming data opposed to the foregone conclusion: tapering is going to come regardless. The uncertainty has convinced most currency and equity investors to retreat to the sidelines. The Dollar has moved marginally over the last day. EUR/USD trades at 1.3390 after reaching close to a four-month peak at 1.3416 yesterday. Commodities, oil and gold are trading at steady levels.

Copyright: MAYZUS Investment Company Ltd

 

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20 JUNE 2013: FED STRENGTHENS USD WHILE STOCKS PLUNGE

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

The US Federal Reserve (FED) will start to taper its monetary easing program in the second half of 2013 ,and terminate the bond buying completely in the first half of 2014. That was Chairman Ben Bernanke’s message after FED’s meeting yesterday. A termination depends, however, on continued growth, controlled inflation and achievement of FED’s 6.5 % unemployment target. The US economy is moderately growing, but FED see increased downturn risks due to budget cuts, which have weakened growth. The low interest rate policies will continue.

Markets reacted by sending stocks down. Dow Jones Industrial fell 1.35 %. Nasdaq lost 1.12 %. The Asian indexes plunged on the news. The bond buying program has been the main driver behind this year’s stock rally. A termination invites uncertainty. The Asian-Pacific MSCI-index fell more than 3 %. The Japanese Nikkei was equally hard hit as were Australia, New Zealand and other Asian markets. The downturn in equity markets is most probably going to continue in Europe today.

FED’s conclusion and Bernanke’s comments don’t come as a big surprise. Over the last few weeks there has been continuous speculation as to when tapering would start. FED seems to be convinced that the US economy is on the right track, but keeps the door open for continued stimulus policies in the worst case scenario. This “exit” from monetary easing shall hardly calm nervous markets which usually overreact to news regarded as negative.

FED’s decision has strengthened the Dollar in relation to all currencies. EUR/USD has fallen from the 1.34 level to 1.326. Yen has also lost ground and trades at 96.28 Yen to a Dollar. USD/GDP, which lately has traded at around 1.57, plunged to 1.5448. The USD/AUD continues to fall, 0.9250, on new data confirming a slower Chinese growth. Oil prices are down. Brent crude trades at USD 104.69 a barrel, down one-and-a-half Dollars. Gold and commodity prices continue to lose ground.

Copyright: MAYZUS Investment Company Ltd

 

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21 JUNE 2013: MARKET COLLAPSE FOLLOWING FED STATEMENT

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

The collapse in global equity markets continue. FED’s statement on Wednesday to scale down economic stimulus and terminate the bond-buying program in 2014, has created panic and fear. The fear index reached the peak for the year. In New York the stock exchanges tumbled. The last two months profits were wiped out in two sessions. Dow Jones fell 2.34 % to 14.758 after the European markets were hard hit earlier in the day. In Asia, markets continue to fall dramatically.

Precious metals and developing countries’ currencies were especially hard hit. Gold prices fell more than 100 Dollars and reached levels unseen in years. Silver was even harder hit and fell 10% in two days trading below USD 20 an ounce. Oil prices quoted in USD fell 2.7 % partly as a result of a stronger Dollar. Brent crude has fallen four Dollars and trades at USD 102 a barrel. Other commodities such as copper, drive further down. Market sentiment is confused and bewildered in the wake of FED’s conditional statement.

FED’s program of bond-buying has fueled stock market gains since last autumn and created a strong rally taking indexes to new all-time highs. Investors have,for months, been buying on market dips, and limited stocks decline. It is a big question whether this pattern will continue. The money now leaving the equity market seems to be convinced that the past months rally has been artificially created mainly by FED, and consider whether the collapse represents a buying opportunity or a continued trend.

China’s higher funding Inter bank costs are adding to market’s nervousness in a situation where the Chinese economy is slowing. Chinese stocks dropped 2.8 %. An eventual end to the super-easy US monetary policy have raised concerns that a higher US interest rate will prompt a mass migration out of emerging markets. The Dollar has weakened somewhat against a basket of currencies after its big gains on Thursday. EUR/USD trades at 1.3229 and USD/JPY at 97.66.

Copyright: MAYZUS Investment Company Ltd

 

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24 JUNE 2013: FED HAS INVESTORS RUNNING FOR COVER

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

Equities and government bonds came under fresh pressure at the end of last week .This development continues this morning where Asian shares fell to a 9-and-a-half month low, as investors worried about China's economic and financial stability simultaneously try to adjust to the prospect of diminishing Federal Reserve support. The Asian Pacific MSCI-index slipped to its lowest level since last September, posting a drop of 4.5 % only last week. US indexes suffered its biggest weekly decline in one year.

Global markets are fragile with dramatic falls for securities with emerging markets hit especially hard. The US Federal Reserve’s (FED) statement on Wednesday of last week, highlights what little tolerance there is to a shift in policy. In addition to the steep fall in equities, US government bond prices suffered. Yield on 10-year Treasury rose 8 basis points to 2.5 %, the highest level seen since 2011. German Bond yield rose on Friday to 1.73 % after FED Chairman Ben Bernanke stated that FED was preparing for a scale back – or “taper” – its monthly asset buying of USD 85 billion a month and terminate this program in the first half of 2014.

The latest rise in treasury yields added impetus to the Dollar which was the big winner last week. EUR/USD continues to fall and trades at 1.3109 in early Asian trade with USD/JPY at 97.66. In China, money mark rates remained volatile keeping investors in a jittery state about Chinese authorities intentions. The recent spike in market rates compounds fears of a sharper than expected slowdown in the Chinese economy. Chinese shares led by the banks continue their downward spiral.

Commodities, with precious metals in particular, were hardest hit by the market volatility. Gold returned to 2010 levels after dropping below USD 1300, trading at 1285. Gold is now more than 30 % below the nominal all-time high of USD 1921. Silver prices fell 8.5 % below USD 20 an ounce. The Euro lost 1.7 % in relation to dollar last week. Euro short positions were, however, aggressively cut, suggesting that traders expect a quick correction. The steep fall seen in the Australian Dollar, which, since March, has lost 17 % against the common currency, might also indicate a rebound.

Copyright: MAYZUS Investment Company Ltd

 

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25 JUNE 2013: DOLLAR STRENGTHENS WITH SHARES FALLING

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

Global stocks continued to fall steeply on Monday after the trading week started with new lack luster sessions in Asia. Shares declined heavily in Europe and Dow Jones Industrial lost 0.94% adding to the 2% fall last week. Materials, industrials and financial stocks led by Bank of America ended in deep red, negative territory.

The technology heavy Nasdaq declined 1.04%. Equity markets regained some ground in the last half of the session, but the onslaught on stocks seems to be by no way over. Most of the gains after the last half years stock rally have been wiped out after the US Federal Reserve, FED, last Wednesday announced an end to the FED bond buying program of USD 85 billion monthly.

This monetary easing program has given stock markets added liquidity and taken them to new record highs. Capital has been pumped into the more risky emerging markets, which also have seen successful bond issues by in weak economies as Rwanda and Honduras. FED’s announcement has created panic like reactions and led to a flow of capital out of emerging markets and big declines in their currencies.

The last four days developments have grossly strengthened the USD. The DXY-index, a basket of currencies weighed against the Dollar, is at its highest level since June last year. A more optimistic business outlook from Germany has kept EUR/USD steady above 1.31. A decline below 1.3072 will, however, imply a strong bearish signal.

USD/JPY has also kept steady over the last 24 hours trading just below 98 Yen to a Dollar. The Australian Dollar has recovered 0.5% from the 33 month low following the bad financial news from China yesterday morning. The Aussie Dollar is extremely volatile to any changes in China. Precious metals continue to be under strong pressure set for new lows. The same goes for oil in spite of the tense situation in the Middle East.

Copyright: MAYZUS Investment Company Ltd

 

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26 JUNE 2013: US DATA LIFTS STOCKS

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

Strong manufacturing and housing data lifted the US equity markets after several losing sessions following the meeting in the Federal Reserve (FED) and Chairman Ben Bernanke’s statement last Wednesday. Global markets have since been in turmoil on the prospect of a tapering in the USD 85 billion monthly bond buying program, which have fed stocks with liquidity and created what many see as an artificial rally. Uncertainty as to whether monetary easing will continue, has in two weeks wiped out most of these gains.

The economic data presented yesterday gave strong arguments to those arguing that the US economy is back on the right track and the 6.5% unemployment target set by FED, is within reach. Realizing the heavy waves last week’s statement has created, FED representatives were, on Wednesday, eagerly playing down the likelihood for a quick end to monetary easing, stressing the many uncertainties and FED’s conditions for a termination.

These efforts were, to a certain degree, undermined by better than seven years housing figures. Greater demands for capital goods such as cars and aircrafts point in the same direction. The positive numbers had Dow Jones turn sharply up after four dismal losing sessions. Dow ended 0.65 % up at 14 754, still far from the benchmark 15 000. Nasdaq also gained ground and added 0.5 %. The European markets ended in positive territory after big losses since last week.

The Dollar is the big winner of the FED statement. It gained new ground after the housing data was published, but fell somewhat back. EUR/USD which started on a good note on 1.3235 dipped at a point below the resistance level on 1.3172 which represents the last 200 days moving average. A fall below that level will indicate that the EURO is in bullish territory. EURO fell as deep as 1.3162, but has since recovered well above 1301,72 to 1.3091.

The USD/JPY followed a similar trading pattern and stands 97.90. Australian Dollar rebounded strongly while the Chinese Central Bank’s tighter credit conditions towards private lenders conducting a freewheeling policy, sent new shivers through the Chinese stock markets. The losses were, at one point, 5.5 %, but turned back to a relatively modest 0,2 %. While the US economy seems to improve fundamentally, there are big question marks around the world’s second biggest economy . Oil and commodity prices have risen on the back of the new positive data in US.

Copyright: MAYZUS Investment Company Ltd

 

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27 JUNE 2013: WEAKER US- GDP LEADS TO STOCK RALLY

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

The stock rally in the US continued for a second day yesterday with all the three indexes in positive territory. Dow Jones Industrial jumped 1.02% and Nasdaq added 0.85% after GDP numbers for first quarter results were revised strongly down. Real GDP growth was 2.6 % and not the 3.4 % originally announced. The biggest revision was in consumption figures which had created strong turnaround expectations. When the market realized that these negative figures might lead to prolonged monetary easing, bad news suddenly turned into good.

The European stock market also demonstrated strength with all major indexes gaining ground with Paris the winner, jumping 2.09 % followed by Germany’s 1.66. Stocks in England and Scandinavia were among other winners. The Chairman of the European Central Bank, ECB, Mario Draghi’s, contributed to the good sentiment. In a statement he stressed that ECB will continue with its accommodating monetary policies. This was interpreted as ECB will continue to buy bonds in weaker EURO zone countries if needed.

Global markets saw precious metals fall to their lowest levels in 3 years. Gold plunged a new USD 43 to USD 1230 an ounce. Gold analysts predict that the 12000 mark set on the downside is, too, optimistic. A fall to USD 1000 seems more likely now. Silver is following the same pattern and fell yesterday from 19.80 to USD 18.65 an ounce. Oil prices are staying up relatively well with Brent crude trading above USD 101 a barrel.

The American Dollar has also been the winner during the last 24 hours trading. The DXY, a basket of currencies weighed against the Dollar, reached its highest level in 3 weeks. EUR/USD is under renewed pressure struggling to stay above the 130 level; after plunging through the critical 120 day moving average of 1.3062. The Euro shows all signs to have fallen in a bearish territory. USD/JPY trades steady at 97.80 after the fear for a banking crisis in China seems to be over for now.

Copyright: MAYZUS Investment Company Ltd

 

[MAYZUS.Neeraj]

28 JUNE 2013: STOCK RALLY CONTINUES ON LUKEWARM GROWTH

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

Lower than expected consumer spending; only 9000 fewer unemployed applicants for benefits last week, point together to a more lukewarm growth in the United States. The numbers published today confirm the impression created by the downgrading yesterday, when US growth was from 3.4 % and adjusted to 2.6 % in the first quarter. Major banks as Berkley, Goldman Sachs and Morgan Stanley lowered onThurday their growth prognosis for 2013 substantially down to between 1.4 – 1.7 %. Optimistic forecasts have been as high as 3 %.

The weaker growth has given strong ammunition to those who don’t want to set any deadline for monetary easing, as suggested by Federal Reserve and Chairman Ben Bernanke two weeks ago. Their statements led to steep falls in global stock markets and eradicated earlier profit. The influential Chairman of the NewYork stock exchange, William Dudley, said on Thursday that attention should be paid to effects of monetary easing and not on artificial deadlines.

The weaker data, and Dudley’s statement, gave the stock market a strong injection. The rally seen over the last two days continued. Dow Jones again reached the psychological important 15 000 level and traded up 0.89 %. Nasdag equally added 0.94 %. European bourses had another good day after EU finance ministers urged to fight youth unemployment, and took new important steps towards a European bank union. The ministers simultaneously took criticism on the handling of the Cyprus bank crisis and haircutting of private accounts.

These developments had an immediate impact on the currency market, which is deemed to continue to be volatile. EUR/USD recovered from 1.2999 and traded at 1.3032. It needs a clear and more thorough brake to avoid being stuck in bearish territory. The belief in continued easing also hit the other safe haven currency, JPY. British Pound Sterling, GBP, fell dramatically to 1.52. This is the lowest level seen in 3 weeks. The weaker pound came as a reaction to an adjustment of British economic growth in the first quarter. Growth is much lower than expected.

Copyright: MAYZUS Investment Company Ltd

 

[MAYZUS.Neeraj]

30 JUNE 2013: NEW VOLATILITY EXPECTS MARKETS

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

The fears for an early termination of Federal Reserve’s (FED) stimulus might be gone for now after the US down revision of growth, and disappointing data on jobless claims at the end of last week. This does not help global markets which are entering July, nervous for new volatility. Hopefully the panic selling of equities witnessed in June has come to an end, but a poll demonstrates that managers have taken substantial capital out of their funds, sitting on the fence with cash waiting for a new development.

The US stock markets ended in red on Friday with Dow Jones Industrial again dipping below the critical 15 000 benchmark. Global stock markets lost ground in June giving away 1.3 % of the gains in 2013, triggered mainly by several central banks economic stimulus. Hardest hit are the markets in Asia. Japan’s “Abenomics” turned for a short while the Japanese Nikkei seemed to be a success story. The Nikkei, however, suffered serious losses with the strengthening of the YEN on FED’s indication for a possible deadline for their bond buying program.

It has been a lackluster month for commodities and precious metals. Gold, which for the last fifteen years has been regarded as a strong hedge, has fallen 23% only the last quarter. It recovered nicely on Friday, but this “recovery” might rather be seen as a technical correction after the earlier steep falls. Commodities with copper was also up 1% last week after losing 10% the last quarter. Oil prices have been keeping relatively steady. Brent has been able to stay above the critical USD 100 a barrel.

The Dollar gained ground against both the Yen and the Euro on Friday. EUR/USD dipped again below 1.30 after breaking through the strong technical resistance represented by the 200 days moving average on 1.3062 earlier in the week. The President of the ECB, Mario Draghi, suggested that it might be necessary to undertake stronger ECB-stimulus to get the Euro zone out of the deep recession as European finance ministers are becoming increasingly worried of the social and economic consequences of an unemployment figure above 25 % in many member countries

The unemployment among youth is reaching alarming proportions and stands above 50% in most southern European countries. On Friday, Croatia became the last country to join the EU, but the prospects of privatizations leading to more unemployment do not create great enthusiasm. If the EU, based on recession realities, have to take talk on stimulus seriously, that shall immediately have a negative effect on the strength of the Euro. Volatility seems therefore to be the order of the day in July.

Copyright: MAYZUS Investment Company Ltd

 

[MAYZUS.Neeraj]

02 JULY 2013: EUR/USD AND GOLD GAIN ON MANUFACTURING

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

Stronger than expected manufacturing data from Europe and Japan yesterday lifted the EUR/USD to 1.3052 up from last week’s low of 1.2983. DXY, the USD index against a basket of currencies, fell 0.2 % while the USD/JPY again sniffed on 100 Yen/Dollar level. For the first time in months there was positive manufacturing data from the Euro zone and England. This created a better market sentiment with increased appetite for risk. Stock exchanges in Europe and the US ended higher.

The Dow Jones traded close to 15 000 at 14 974 up 0.5 %. The technology heavy Nasdaq added 0.85 %. After falling as low as USD 1180 an ounce Friday, gold gained both yesterday and is up 2.1 % today at 1250. Other commodities such as copper, also recovered. Oil prices got a welcomed boost by the stronger manufacturing. New York crude, NYMEX, jumped above USD 98 a barrel and Brent crude reached USD 103 after trading close to 100 at the end of last week.

The increased gold prices represent the most interesting development during this week.Triggered by the comments from the Federal Reserve, FED, gold started its slide in earnest in April when FED Chairman, Ben Bernanke, set out a framework for the first time for the US central bank to exit its “quantitative easing”.

Gold peaked at USD 1250 yesterday. The open question now is whether USD 1180 represents a bottom, and this week’s turn around is a technical correction after the 29.5 % tumble since the 1st of January. Investors shift away from Gold has been dramatic. Fund managers have been selling one fifth of their Gold holding, and the interest for Gold futures and options are the weakest since 2005.

Some analysts see investor’s positioning so extreme that Gold, in the short term, is unlikely to fall much lower. A sidelong trade is expected. Impacting Gold negatively is weak Asian interest presently. Asians have been the strongest supporters with Gold declining, but this time there is no appetite for buying. The concentration has instead been on the high cost of Gold producing.

Copyright: MAYZUS Investment Company Ltd

 

[MAYZUS.Neeraj]

03 JULY 2013: US-STOCKS DIP IN VOLATILE SESSION

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

Stocks in the US dipped Tuesday afternoon on weak trade volumes. The session started in positive territory, with technology and industrial shares gaining after one of the big car manufactures, Ford, presented good sales numbers pointing towards the economic turnaround, witnessed as well by data earlier in the week. In spite of strong car sales in June, markets turned down. Dow ended down well below the 15 00 mark. Continued unrest in Egypt with a military ultimatum to president Mursi, led oil prices higher and boosted the energy sector.

The low volumes in the equity market were partly due to the forthcoming US Independence day on Thursday.The markets are also closed for trading the second half of Wednesday. Jobless claims are going to be presented on Friday. The number of jobless might be a new important indicator on when the Federal Reserve (FED) is going to start tapering and set a final date for terminating its economic stimulus and ending its bond buying program. Better jobless claims will be seen as an improvement of the US economy, which might lead to an early termination of economic stimulus.

The US Dollar raised to its highest level against the Japanese Yen since the recent volatility seen in the stock and currency markets, which started with FED’s indication of setting a date for terminating monetary easing two weeks ago. USD/JPY jumped again over the 100 Yen a Dollar mark and reached 100,72. The Dollar index, DXY, where the Dollar is weighed against a basket of currencies, reached the highest level seen in four weeks. The weaker Japanese Yen caused the Nikkei to jump 1.7 %.

EUR/USD fell 0.7 % at 1.2962, nearly 100 points down from Monday’s high. Copper and other commodity prices were up. Brent crude rose for the third day in a row reaching above USD 104 a barrel. NYMEX, New York crude, traded close to 100 a barrel. Gold prices, which have jumped over the last two days, fell back to 1242, 10 Dollar down from Monday’s high. The other important precious metal, Silver, fell back as well. Portuguese bonds sank to their lowest level in weeks, when three ministers left the government in protest against the austerity measures.

Copyright: MAYZUS Investment Company Ltd