Daily Market Reviews by UWCFX

[UWC Neeraj]

UWC is proud to provide daily market reviews by the well-known financial expert – Mr. Arne Treholt, a former Political Secretary to the Minister of Shipping and Foreign Trade, then Deputy Minister of Law of the Sea of the Norwegian Royal Ministry of Foreign Affairs. He also held the position of Counselor for Economic Development and Social Affairs at the Ministry of Foreign Affairs, and was member of the Norwegian Mission to the United Nations, New York. At the moment Mr. Treholt is a Vice President and a Business Development Director of United World Capital.

[UWC Neeraj]

Stocks rally on stimulus optimism

Arne Treholt Vice-President of Business Development and Investments

Global stock markets saw its best rally in half a year on signs that Europe was dealing urgently with Spain’s banking crisis and optimism that the United States could embark on fresh monetary stimulus.

Stocks in Europe and the US jumped as talk of a rescue of Spain’s troubled banks and hopes for new Federal Reserve monetary injections.

Dow Jones and Nasdaq rose 2,40 % in its best trading day since last December. Asian markets continue the rally this morning. The broad South Pacific Index, MSCI is up 1,40 %. Oil and commodities continue up. Brent trading close to 101 pr. Barrel.

EURO is at 1.2565 vs. dollar bouncing back from the 1.23 levels seen last Friday. The upward trend in Euro might continue for the next days with the handling of Spain’s banking crisis and the upcoming Greek elections on June 17th as stumbling blocks.

Analysts see that a technical rebound in the Euro might reach 1.27 – 1.28 level. Fresh news from Greece tells that the government is likely to run out of money as soon as July.

The troika: representatives from IMF (International Monetary Fund), ECB (European Central Bank) and EU-Commission is holding back on One billion Euro in bailout funds earmarked for government financing, putting extra pressure on Greek voters prior to the elections.

Australia, which saw yesterday better than expected GDD quarterly results, presented this morning labor market statistics, which saw a clear improvement in job added numbers.

The Aussie dollar is up for the third day in row. USD/JPY is at 79,435. The G-7 finance ministers threat of a possible intervention to avoid a further strengthening of the Yen seem to have worked at least for now in a situation where investors were seeking to Yen as a “safe haven” along with investments in USD and German bonds.

Gold has this week been back as “safe haven” . Gold prices increased from a low on 1520 to reach 1640 during mid day yesterday; a jump on 7,5 %. Gold is consolidating at 152 in the morning. Silver also jumped one dollar yesterday, retreating, and trading at 29.25.

At present stock futures are up, but traders might expect volatility before FED head, Fred Bernanke, has given its verdict on further quantitative easing in his testimony to a Congressional committee later today.

Market analysts differ, but Bernanke will most likely for now keep the door open for a third round of monetary stimulus, and leave the final decision for later in the summer. Yesterday saw an especially high jumps in mining and more risky banking stocks. With Bank of America up more than 7 % in the United States.

Copyright: United World Capital

[UWC Neeraj]

CHINA CUTS INTERESTS FIRST TIME SINCE 2008

by Arne Treholt Vice-President of Business Development and Investments

China cuts interest rate to 3,25 % for the first time since 2008. The initiative comes prior to release of major Chinese economic data tomorrow. These results are feared to be weaker than expected. The interest cut is probably going to be followed by steps to ease access to credits. This gave the Chinese stock markets a boost.

Shanghai composite is up this morning. An easing of banking restrictions normally lead to stronger domestic demand and higher stock prices.

In his congressional testimony yesterday, Federal Reserve Chairman, Ben Bernanke kept the door open for monetary stimulus of a stagnating US economy, but did not specify when and in which form.

The Federal Reserve BOD meeting in August is now seen as the most likely date for an eventual announcement. The testimony disappointed those who had hoped for immediate action.

Dow Jones was up 0,37 %. Nasdaq fell 0,49 %, and the last days rally in Asia turned to red this morning.

The futures for Europe and US are negative following Bernanke’s comments and a downgrading of Spain to BBB status or the same level as Thailand and Mexico.

After a positive turn around in oil prices earlier in the week, both NYMEX (92) and Brent 98,69 gave up earlier week gains. The volatility and market nervousness were also illustrated by the jump in precious metals.

After reaching 1640 on Wednesday, gold fell dramatically during yesterday’s session now trading at 1570. Silver saw a similar development; 28,23 at present. Commodities are again following the falling trend of precious metals and oil.

The EURO/USD has fallen back from the high 1,25 levels yesterday to 1.2525. USD/JPY is 79,3175 after Japan released good growth in GDP.

Aussie dollar and New Zealand currency are under downward pressure after more promising GDP and jobless number from Australia earlier in the week.

The surprise move by the Chinese central bank has helped ease worries about faltering global demand, but stresses at the same time that the world’s fastest growing economy feels the pressure of faltering export due mainly to the problems in the Euro-zone. After concentrating in measures to cool down the economy, the Chinese leadership is for the first time in years looking to stimulus for growth, especially in the domestic economy.

Copyright: United World Capital

[UWC Neeraj]

WEEKLY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

After the onslaught in global markets in May, June is off to a better start. Stock prices jumped helped by technical over sell and built in optimism that Federal Reserve Chairman, Ben Bernanke, testimony to a congressional committee yesterday, should give markets the needed sugar energy. Bernanke has still a way to go before he reaches his predecessor, Allan Greenspan’s “guru” level, but Bernanke is listened and paid attention to. This time he did not live up market’s expectations for immediate action. Bernanke kept the door open for monetary stimulus. In which form and eventually when he did say.

For global markets waiting for certainty and clear directions, that was disappointing news.

China’s surprise cut in interest rate for the first time since 2008, is what markets long have demanded and waited for. When the announcement comes, Western economic analysts are quick to conclude that this is somewhat of a ploy meant to overshadow negative economic monthly and quarterly results to be published over the weekend. Might be, but nevertheless does the initiative underline Chinese willingness to encourage economic growth in a situation where Western leaders talk and don’t act as they see their economies sinking even deeper into recession.

Fitch rating agency has downgraded Spain to BBB and puts the fourth biggest economy in Western Europe on line with Mexico and Thailand. Last GDP numbers demonstrates that Greece is seeing its fifth year of recession with no signs in sight for a turn around. A practical effect of Greece’s membership in the Euro is that the country has been reduced from a promising developed economy to a struggling third world country. So much for belt tightening and austerities.

There are clear signs that European political and financial leaders slowly are starting to wake up from their conventional austerity dream ideas. As John Maynard Keynes stated 75 years ago; a boom economy, not the slump is the right time for austerity. This economic philosophy lifted the United States out of the 1930 depression. Similar bold initiatives are called for especially in the Euro zone today.

Spain has followed Greece as the odd country out. Spain’s problems are much more serious for the future of the EURO than smaller sized Greece. European leaders were this week scrambling for a solution to Spain’s banking crisis after the European Central Bank had no immediate aid to offer expect for supplying banks with unlimited short-term low interest rate loans.

In the meantime, the countdown for the Greek June 17th elections is ticking. It comes in an environment where the troika of IMF, ECB and EU are putting maximum pressure on the Greek government and electorate, withholding 1 billion Euro of the bailout funds earmarked for government financing. While Athens has problems in paying its bills, bailout payments are running on schedule for German, French banks and interestingly enough to the ECB, which bought Greek treasury bills at discount and now is rewarded with 10 % interest rate on their investment.

Economics today are full of paradoxes. Regardless of pains and strains an overwhelming majority of Greeks nevertheless want to be “Europeans” and stay in the Euro. The big question is whether this makes a difference. Even with a victory for the “austerity” parties, Greece’s days in the Euro might run to an end in an orderly retreat. Another question mark is what would be the cost and the consequences of an eventual Greek exit? In such a situation other countries in the periphery of Europe might also be start to wonder as former Italian premier Berlusconi did some days ago: is the EURO the right tool for the periphery of Europe.

The Greek elections might as Mr. Tsirapas and SYRIZA’s appearance on the European arena, accelerate this debate.

Copyright: United World Capital

[UWC Neeraj]

Markets rally on Spain’s bail out

Arne Treholt Vice-President of Business Development and Investments

Spain’s 125 Billion Euro bailout of banks sent Asian markets 2 % higher this morning. Yesterday’s news that Spain’s government had asked the European Ministers of finance for a 125 Billion Euro package for their struggling banks strengthen the Euro.

The Euro is trading 1,22 % higher vs. USD at 1.2632. The EU-funded rescue for the debt-stricken Spanish banks are seen as a preemptive effort to avoid a bank run if Greece’s debt crisis again flares. The respite for Madrid and the Euro might, however be, short lived.

The bailout is coming after the Rajoy-government for weeks have insisted that no outside assistance was needed to capitalize lenders crippled by bad debts from the burst real estate bubble.

European officials involved in the negotiations say informally that Prime Minister Mariano Rajoy was pushed into requesting the aid package. Rajoy has tried to put a positive spin on the bailout package for the banks. It was done at Spain’s request and unlike the situation in Greece, Ireland and Portugal it is a banking, not a sovereign bailout. Totally, an approximate 350 billion Euro have been raised inside the Euro area for the different bailouts.

But the Euro-zone’s last lifeline could easily be swept away as early as next Sunday when angry Greek voters are casting their votes, possibly rekindling market turmoil. That would in the first place hit Spain and Italy, but also a country like Cyprus might be strongly affected.

In the following up of the French presidential elections, voters gave Francoise Holland a vote of confidence in the first round of the Parliamentarian elections. The French socialists seem to have secured an absolute majority in Parliament supported by the socialist left and green parties.

The bailout package for Spain is also seen as an effort to stem further capital flight and reestablish confidence in the banking system. . Spain’s banks had a net outflow of 66 billion Euros only in March.

Greece and other countries in the European periphery have seen similar capital flights. The risk appetite seems stronger this morning.

Oil prices are jumping with Brent trading above 101, copper, gold (1599) and silver (28,95) are also up. Australian and New Zealand dollars HIT highest levels in four weeks.

USD is falling against most currencies. USD/Yen is slightly changed at 79,63. Futures for the European and Asian markets are up.

Copyright: United World Capital

[UWC Neeraj]

Market euphoria turns into sellout

Arne Treholt Vice-President of Business Development and Investments

After some few hours’ euphoria over the bailout of Spain’s bank turned around. A morning relief rally in Europe quickly transformed into a sellout when Investors struggled to come to grip with the content of bank bailout.

While Spain’ Prime Minister Rioja, tried to sell the “bailout” as en extended credit line for the banks, he was quickly corrected European officials stressing the necessity for cuts and austerity measures.

Investors came to the same conclusion. European stock exchanges changed from optimistic blue into red.

Dow Jones fell, and Nasdaq plunged 1,70 %. Banks as Bank of America and J.P.Morgan along with Hewlett-Packard, Alcoa and Microsoft being the big losers.

The downtrend continues in Asia. All Asian stock exchanges trade down.

Oil prices, which got a boost from an optimistic interpretation of news from Spain, are trading at the lowest level for the year.

Brent at 97. Copper falls as Gold (1591) and silver (28,35).

The Euro came under renewed pressure. After trading above 1.26 in the morning it fell back to 1.2499. The fundamental questions surrounding the survival of the Euro persists.

Euphoria over temporary measures as the bailout of USD 125 billion of Spain’s banks on Sunday, is quickly substituted by a vicious circle of negative growth and growing debt burdens. The markets experienced a similar spark when Greece first bailout package was presented in 2010.

The markets rallied 1,3 %. This time it was even shorter lived.

US stocks fell into negative territory within an hour after Monday’s opening and continued down.

Even the most bearish analysts were taken aback by the negative way markets reacted in rejecting the bailout.

The prior bailouts; Greece and Ireland in 2010, Portugal (2011) and Greece in 2012, also led to rallies. The Euro’s rallies then faded within a month with mixed stock markets.

Japanese Yen is the winner after the last 24 hours turmoil. USD/JPY is slightly higher at 79,456.

The Australian and New Zealand dollars are losing towards the YEN as the Euro.

Copyright: United World Capital

[UWC Neeraj]

US stocks raise on stimulus expectation Moody’s downgrade Cypriot banks

Arne Treholt Vice-President of Business Development and Investments

US stocks staged a comeback rally to end up more than one percentage on expectations that the Federal Reserve (FED) would have to undertake stimulus measures. Also European stock markets rose for the first time in three days. This as Spanish ten years bonds reached a record high.

Euro/USD is trading at 1.2490 slightly down from yesterday. Oil price still under downward pressure. Brent is trading at year’s low 97.01.

Trading in stocks have been choppy this week as markets struggle for clarity after the USD 125 B bailout of Spain’s banks. Investors are asking whether the agreed bailout will be effective. More than 10 Spanish banks have been downgraded, and bond yields are more and more seen as thermometer for risk aversion.

Sectors, which have been sold off recently, posted the biggest gains in yesterday US rally with Boeing climbing 3 % as the winner. This seems to indicate that investors see value in beaten down shares.

In Greece the Left wing coalition Syriza has rejected to enter into a coalition with PASOK, the former government party, which supported the Memorandum and austerity measures. Syriza is together with the center right New Democracy in head in the opinion polls prior to Sunday’s election.

The outcome of the Greek election might be decisive for whether Greece might have to exit the Euro. The Greek elections are therefore followed with great interest by global market and other Euro-countries.

Moody’s investor Service on Tuesday cut the credit ratings on two Cypriot banks, Bank of Cyprus (BOC) saw its rating cut by one notch to B2. Hellenic Bank got its credit deposits and credit assessments ratings lowered to B2.

The Cypriot banks are heavy exposed to Greek treasury bills and Greek private lenders.

Cyprus Popular Bank, the country’s second biggest lender has till 30th June to find 1,8 billion Euro in fresh capital to meet European regulators conditions. In a statement, the Cypriot Minister of Finance did not rule out an EU bailout to prop up its Greece exposed banks. Cyprus is going to take over the half-yearly chairmanship of the EU from July 1st.

Copyright: United World Capital

[UWC Neeraj]

Despite cuts shares falling

DAILY MARKET REVIEWS

Arne Treholt Vice-President of Business Development and Investments

Both the European (ECB) and the Chinese Central Banks yesterday cut their interest rates to encourage economic growth, but to no avail. Both European and American markets reacted by sending stocks down. Asian stocks also slipped despite the new stimulus steps taken by the central banks. The Bank of England kept its interest rate at the low 0,25 % as an indication that there are limited tools left in the central banks arsenal for further monetary actions.

The Chinese interest cut is the second in one month, increasing investors fear that the Chinese economy is sinking faster than earlier expected. The non-farm payrolls numbers that the US Labor Department is expected to release today, is neither giving raise to market optimism. US employers have most likely hired more labor last month, but not enough to allay worries that Europe’s debt crisis is shifting the global economy into low gear.

ECB’s decision to cut interest rate with 25 basis points to 0,75 immediately led to new pressure on the Euro, which is trading at 1.2384. The American dollar is strengthened against many currencies. A decision from the Swedish Central Bank to keep the interest rate at the same level, led to a rally in Swedish krones at the expense of the EURO.

While commodities and precious metals are trading down; gold is at 1605, Brent crude is continuing to trade above the critical 100-dollar level pr. Barrel. In addition to implementation of EU sanctions on oil import from Iran, the US has increased its military presence in the straits of Hormuz, which Iran has threatened to mine to block oil transports from the Middle East, if further sanctions were executed.

Copyright: United World Capital

[UWC Neeraj]

Cyprus tries to play hard ball (06/07/2012)

WEEKLY MARKET REVIEWS

Arne Treholt Vice-President of Business Development and Investments

As the fifth country inside the euro zone, Cyprus, which this month also took over the chairmanship of the European Union, has asked for a bail out for its debt stricken banks.

At a press conference together with the Head of the European Commission, Jose Manuel Barroso on Friday, the island’s president Demetris Christofias, again plaid the Russian card and stressed that Russia is still a candidate for stepping in and bail out his country.

With the “mother land” Greece’s misery in fresh memory, Christofias, don’t want “Greek austerities” to be impressed upon Cyprus. He has continuously stressed that Cyprus is facing a banking and not a sovereign crisis. Therefore, Cyprus feels free to ask whatever country for help. And then why not Russia which generously have helped out before; as they did two years ago. Then the loan was on 2,1 Billion Euro. This time the price tag has increased to 6,1 Billion Euro to save Cypriot banks which have acted irresponsible.

Christofias is playing hard ball logic, but that does not stand up to European orthodoxy. Cyprus is member of the European family, and EU-countries inside the Euro zone are treated equally with regards to bail-outs. Why should Cyprus be given better loan terms and conditions by going outside the zone and ask a third country for help? Barosso then gave Christofias a frosty answer. That Christofias is the only communist leader in the European Union does not help either.

For European bureaucrats principles are more important than practical realities. The medicines ordained for Greece, Spain, Ireland and Portugal have to be the same for Cyprus. To ask for better terms and conditions in Russia, represent a serious break with the EU code of conduct and their “solidarity”.

Barosso was tiff lipped. Neither did it make any impression when Minister of Finance, Vassos Shiarly, stressed that Cyprus had been forced to take extremely big losses on the Euro zone’s haircuts for Greece. Cyprus creditors had a 80 % loss equal to 4,2 Billion Euro, a quarter of Cyprus’ GDP. Cyprus demonstrated disproportionate European solidarity then so why not a little generosity now?

But this kind of logic does simply not work in relation to a striving periphery in Southern Europe. Striving member countries in the outskirts start to awaken to the harsh reality that the EU and the EURO are something quite different from the European dream they had before entry.

Copyright: United World Capital

[UWC Neeraj]

EURO LOWEST IN TWO YEARS

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Growth worries after sluggish US job data, took the Euro/USD to its lowest level in two years. The Euro dropped to 1.2225 in early Asiantrade to recover somewhat. It is now trading at 1.2292. Asian shares fall. The MCXI index is down 1,50 %. Cooling inflation numbers from China deepened worries about slower economic growth. The Euro fell as deep as to 1,2225 in early trade in Asia. The US dollar vexes muscles and is gaining towards all currencies. Oil prices are relatively strong with Brent trading at 98,89.

Commodity linked currencies as the Australian and New Zealand dollars, which is a good barometer on the risk appetite in the market, hit one-week lows. The British pound, GBP, is trading below 1,55 towards the USD. Commodity prices continue to fall as do precious metals. Gold is at 1580. Silver just above 27.

Euro zone finance ministers are meeting in Brussels today in an effort to follow up the EU summit decisions a week ago. On the top of the agenda is a rescue plan for Europe’s struggling banks. Bailout requests from Spain and Cyprus shall be considered. The new Greek government has signaled renegotiations in an effort to obtain better terms and conditions to sugar its austerity measures towards a critical public.

The earnings season in the US start with quarterly report cards from blue chip stocks as Alcoa and J. P. Morgan next week. There is no big optimism. Europe’s crisis continues to draw much attention, but with little clarity as to how the euro zone’s debt and banking problems will be fixed. That in spite of numerous meetings as the Finance ministers coming up today.

Copyright: United World Capital

[UWC Neeraj]

Euro 30 billion for Spanish bail-out

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The Euro zone ministers of finance yesterday night decided to transfer Euro 30 Billion as a bail out of the striving Spanish banks. The first tranche shall be released in August. By injecting the bail-out funds directly into the banks, this is a banking and not a sovereign state bail out as is the case with Greece. The ministers simultaneously are considering a similar bail-out of Euro 6,1 Billion to the striving Cypriot banks. This is eventually going to be executed in September.

The bail-out of the Spanish banks are a direct following up of decisions taken by the EU-summit ten days ago. It came after the interest rate on Spanish bonds yesterday again went through the critical 7 % level. The initiative of the finance ministers helped to stabilize the Euro, which during early trading on Monday hit its lowest level in 2 years. Euro/USD is trading at 1.2300. The USD has weakened marginally over the last 24 hours. The Japanese Yen has strengthened. USD/JPY is at 79,495. Oil prices have fallen. Brent is at 98,65. Gold and silver stabile with an upward trend.

Stock exchanges in Europe, US and Asia continues to fall. The giant alloy producer, Alcoa, started the quarterly season by reporting better than expected results due to new orders from the car and airplane industry. Chinese numbers for import and export in June show weaker domestic demand, which seems to indicate that the GDP shall fall below 8 % when figures are released in a week. Import figures rose with 6 % much below experts forecasts. Export rose 11 %, higher than forecasts, but lower than May’s 14 %. China has once again a record surplus on its trading balance.

The Finance ministers’ decision has calmed markets somewhat, but there are increasing signs that Europe’s economic and monetary union may be fragmenting faster than policy makers can repair. Spanish, Greek and Italian banks have seen a deposit flight gaining pace. Whether a euro zone agreement to lend Madrid Euro 30 of the 100 Billion requested, will reverse these flows, is still an open question. It is expected that national bond rates and the Euro shall come under renewed pressure during the week.

Copyright: United World Capital

[UWC Neeraj]

Grim sentiments impact markets

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Asian and Australian stocks dropped for the fifth day in row Wednesday as concerns over Italy’s debt, profit warnings and US corporate earnings damaged regional sentiment. Dow Jones Industrial average closed down 0,78 % on fear that the global economic slowdown will erode corporate earnings.

The EURO/USD fall yesterday, but has recovered trading at 1.2257 in Asia. The Japanese yen continues to strengthen: USD/JPY at 79,3227. The strong yen put pressure on Japanese exports and the Nikkei. Gold dropped from 1600 yesterday, trading at 1573. Oil prices are slightly down. Brent at 98,35. There are no major changes in the overall currencies picture.

Europe returned to the forefront of investors concerns when Italian Prime Minister, Mario Monti, indicated that he will ask European governments to permit that the bailout fund to buy Italian bonds. Monti insisted, however, that Italy do not need a bailout in the scale of Greece. His comments come, however, just weeks after claims that Italy would not ask its European partners to buy Italian debts.

US experienced a new broker scandal when the Iowa-based PFGBest was the latest future broker to collapse. Regulators accused PFG and its owner for over the last two years misappropriating customer funds. In England, new aspects of The Barclays scandal are revealed, portraying a banking culture of greed and mutual accusations.

Copyright: United World Capital

[UWC Neeraj]

Oil prices increase on stimulus expectations

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Oil prices jumped 2 % yesterday on hopes for stimulus measures and falling US storages. Brent rose above the 100 dollar mark pr. Barrel, and NYMEX traded at 85,50. Euro/USD is continuing its downward trend at 1.224. Higher unemployment figures from Australia put the Aussie dollar under pressure. The South Korean Central bank has written down interest rate in an effort to encourage growth.

While the direction of future Federal Reserve initiatives remains unclear, investors seem to expect that China shall undertake new measures to boost its economy. China is expected to release new GDP numbers on Friday. Preliminary figures indicate that GDP expansion would be the weakest in 3 years. China has reduced interest rate twice during the last month, and new stimulus measures are expected.

Minutes from Federal Reserve’s meeting in June suggest that the US economy has to worsen before FED is going to consider a third round of bond buying. Such a step would weaken the dollar and re-energize the appetite for risk and dollar nominated commodities. The European debt crisis and the grim outlook for the world economy have dramatically decreased the demand for most commodities.

Oil has been hit hard falling 25 – 30 % from its high in the beginning of the tear. The positive movement in oil prices over the last days help by shrinking US-storages, a Norwegian oil strike and Iranian worries, might indicate a turnaround in other commodities. US quantitative easing would surely contribute to such a rebound.

The euro zone crisis starts to take new tolls. The CEO of Bank of Cyprus, the biggest bank in the island, resigned yesterday amidst increasing criticism for his bank’s strong exposure to Greece. It is simultaneously announced that state coffers are running out of funds. There is no money left to pay civil servants salaries for August.

Copyright: United World Capital

Edited July 12, 2012 by UWC Neeraj

[UWC Neeraj]

Short relief after China’s 3Q GDP

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Chinese last GDP figures fall to its lowest level in three years. After a long period of double digit growth, China had in last quarter a GDP growth on 7,6 %. The numbers came in slightly better than analyst expectations, and created a short-lived relief rally on Asian stock exchanges, which turned up after six days of losses. The GDP numbers also gave a boost to the Australian dollar.

A weaker real estate market and slowing exports had a negative impact on the GDP numbers. Investments are, however, positive and rose expectations for stronger growth in the last half year of 2012. The government policies change to pro growth and stronger emphasize on the domestic market, has led investors to believe that China shall continue to stimulate growth.

The Euro zone received a new blow yesterday when the international rating agency Moodys downgraded Italy to the same level as Kazakhstan and Bulgaria. The downgrading put the EURO under renewed pressure. Euro/USD falls below 1.22. It has recovered and trades at present at 1.2207. EURO hit 1.2166 during Thursday’s trading. The Yen is again up against the dollar, USD/JPY trading at 79,28. American and European stock markets were down yesterday.

Oil prices are demonstrating some strength. Brent reached 101 yesterday and is presently trading at 100,77. US crude, NYMEX, is trading at 85,88 a barrel. Gold is 1571 after hitting a low on 1555 yesterday. Silver is up trading at 27,20 after falling to 26,55 yesterday.

Copyright: United World Capital

[UWC Neeraj]

Asian shares extend rally

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Asian shares extended their rally on Monday on increased hopes for a smooth Chinese landing. Visiting the Southern, Western province of Sichuan, the Chinese Premier Wen Jiabao raised the prospect of more stimuli if needed. The composite Asian stock index, MCSI, continues 0,3 % up after jumping 1 % on Friday. Euro/USD is inching up at 1.2242 after trading at 1.2169 on Friday. Japan is closed for holidays, but the Yen is, nevertheless, gaining ground, trading up 0,2 % against USD at 79,0955. Brent crude stays above 102 Gold is flat at 1589.

With worries about China off the boil, market concerns are shifting back to the United States and the Federal Reserve’s next policy move. The attention this week is on quarterly results. A slew of US corporate earnings are expected. The main focus is, however, on FED Chairman, Ben Bernanke’s semi-annual testimony to the US Congress on the economy set for Tuesday and Wednesday.

After central banks in Europe, China, South Korea and Brazil all have lowered their interest rates to stimulate growth, markets will seek clues on the Fed’s stance over a stronger monetary policy to support US recovery. Bernanke has earlier stated that the FED will take further easing measures only if necessary.

After the international rating agency Moody’s downgraded Italy to near junk status last week, the outcome of the Italian bond auctions on Friday were better than expected. Three years bond yields were at lowest levels since May. 10-year yields rose to near 6 %. Reflecting investor’s jitters over the Euro, currency speculators last week raised their bets in favor of the US dollar, boosting their positions against the Euro to their highest in one month.

Copyright: United World Capital

[UWC Neeraj]

Grimmer outlook for global economy

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Both Brent crude (103,57) and NYMEX (88,57) rose for the fourth straight session Monday. Oil is up on expectations on stimulus measures for a slowing world economy. Tension on Iran creates increased worries for oil supplies and crude storages in the US is down.

Stocks rise and the dollar eased as investors await Fed Chairman Ben Bernanke’s testimony to Congress. EURO/USD trading at 1.2292 as investors covered short positions and hunted for bargains. Australian dollar is up on expectations (1.0300 vs USD) that further Chinese stimulus shall increase demand for coal and other commodities exported to China.

US retail sales numbers came weaker than expected yesterday. Together with the International Monetary Fund’s (IMF) new low forecast for global growth in 2013, the weaker retails has increased investors expectations for FED monetary stimulus. IMF is predicting 8,5 % economic growth for China and reduces India’s growth to 6,5 %. IMF has a grim outlook for both the US and Euro zone.

In its midyear “health check” on the global economy, IMF said that emerging markets were dragged down by the economic turmoil in Europe. IMF has reduced their global forecast for 2013 from 4,1 to 3,9 %. Its outlook for 2012 is kept at 3,5 %.

Copyright: United World Capital

[UWC Neeraj]

Mixed message fails to impress markets

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Ready, but not yet, was the FED’s Chairman Ben Bernanke’s mixed message in a Congressional hearing yesterday. Bernanke offered a gloomy view of the economic prospects, but gave no concrete clues on whether FED is moving one-step closer to a fresh round of monetary stimulus.

Bernanke’s testimony failed to make any impact on global markets. US exchanges mainly concentrated on companies’ earnings where several blue chips came in with better results than expected. Both Coca Cola and the banking group, Goldman Sachs, beat profit forecasts. Tin Asia the Japanese Nikkei was up 0,3 % mainly due to a slight fall in the Yen. USD/JPY is trading above 70 this morning at 79,005.Other Asian exchanges are mixed with no clear direction. Copper prices, a sensitive barometer for growth, are up after four negative days on expectations for growth stimulus.

Bernanke’s statement had no impact on the Euro/USD which continues to hover close to 1,23 at 1.2281. The Australian dollar is still strong close to four weeks high. The British pound, GBP is also showing a stronger trend. Oil prices are falling from yesterdays high, but still steady. Brent crude stays above 103 with NYMEX close to 89. Gold and Silver are striving to find a clear direction. Gold trading at 1579 after reaching 1598 and falling back to 1573 yesterday.

The financial news is dominated by the British parliamentarian hearings on Barclays Bank and the libor scandal. Adding to the bad image of banks internationally, American regulators have accused one other of the world banking giants, HSBC, for comprehensive money laundering of Mexican drug cartel money and for involvement in shadowy terrorist weapon deals.

Copyright: United World Capital

[UWC Neeraj]

Shares rally on US earnings

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Asian shares rallied on Thursday on better than expected quarterly results from heavy weights IBM and stronger US-housing numbers. The MSCI, Asian Pacific Index, is up 1,6 % and the South Korea’s Kospi bounced nearly 2 %. Japan’s Nikkei is up 1 % in spite of a stronger Yen. USD/JPY is trading at 78,65. Oil prices are high on increased tensions in the Middle East. Brent reached above USD 105 pr. Barrel and NYMEX is for the first time in weeks trading above 90.

US stocks are at highest levels since May helped by IBM, Bank of America and Honeywell. Analysts had expected negative figures from the leading chip-maker Intel. Results were weak, but not shocking. That helped sentiments, which also received a boost from housing figures raising hopes that the market is flattening out. There are still strong expectations that the Federal Reserve shall take active measures to stimulate growth. These expectations contributed to yesterday’s rally.

During his Congressional testimony, FED head Ben Bernanke kept the door open for measures if needed, but downplayed the risk a double-dip recession. The prospect for possible FED actions weakened the dollar and made investors look for riskier assets like the Australian dollar, which yesterday rose to a 11 week high. Economic growth stimulus shall give a boost to the commodity sector with Australia one of the biggest commodity exporters.

A similar upward trend as investors see in the commodity market with oil and copper on the raise is apparent in light commodities. Corn has skyrocketed over the last weeks on the drought in the US and a rapid increasing global population hungry for food.

Copyright: United World Capital

[UWC Neeraj]

US-data and earnings fight for upper hand

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

After a string of good corporate quarterly results, US- factory activities contracted for a third straight month in July as new claims for jobless aid surged last week. The tech sector with companies as IBM, eBay and Google presented strong earnings and lifted the S&P to a two and a half month high. Nasdaq gained 0,80 %. Dow Jones ended also slightly up after a mixed session where earnings were fighting dismal economic macro news for attention, raising new hopes for an injection of economic stimulus.

Asian shares were down this morning after a strong week posting its biggest weekly gain since January. Oil prices reached a 8-week high as Middle East tensions stoked supply concerns. Brent crude traded close to USD 108 barrel and NYMEX jumped to 92 on fear that the serious internal situation in Syria might spill over and tempt an Israeli/American strike on Iran. The rally in soft commodities as corn and soybean continues. Copper prices, which have traded upwards this week, fall in Asia trade. Gold is steady on 1582.

The Euro zone crisis was back in focus as the German Bundestag discussed emergency aid for the Spanish banks. Spain has tried to distinguish between their 100 Billion Euro bail-out package for their struggling banks and the country’s sovereign debt. The debate made abundantly clear that the Spanish state in the end is fully responsible for support given to its bank through different EU emergency mechanism. The demands for austerity measures have created strong reactions in Spain with mass demonstrations in Barcelona and Madrid.

The Euro is under continued pressure falling towards the USD to 1.2258. The Euro fall to a record low level against the Australian dollar. USD/JPY is keeping up its high levels trading at 78,605. The Libor scandal continues. A group of banks investigated for interest-rate rigging, are looking to pursue a group settlement with regulators. This rather than to face a Barclays style backlash. Barclay settled with British regulators paying a USD 453 million penalty.

Copyright: United World Capital

[UWC Neeraj]

EURO/YEN at 12 years low

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Euro fell to 12 years low against JPY in Asian trading this morning. The Euro zone sovereign debt crisis and the survival of the Euro are back in the headlines after two of Spain’s indebted regions sought financial assistance from the central government in Madrid. This comes in addition to the 100 billion Euro bail out sought for Spain’s struggling banking sector. The last developments have increased fears that the fourth biggest economy in the euro zone will be forced to follow Greece, Portugal and Ireland for sovereign bail outs. The Euro saw its lowest levels in years also against the USD trading at 1.2112. USD/JPY is at 78,191, down 0,41 %.

The troika consisting of representative from the International Monetary Fund (IMF), European Central Bank (ECB) and European Commission (EU) is back Greece today to control whether Greece has been able to live up to their austerity obligations. The new Samaras government which is supported by the former ruling party PASOK and a small center left party, has been off to a slow start since the elections a month ago. New privatizations have been announced, but nobody really believes in Greece’s intentions.

In Berlin Angela Merkel issued a strong warning, stressing that if Greece was not able to live up to its obligations the country would be forced to leave the Euro. With Spanish regions asking central aid in addition to the banks, the scene is set for a dramatic development. Madrid, Barcelona, and other big cities saw mass demonstrations and clash between demonstrators and police during the weekend. This constitutes a bad omen to the bond auction today. Last week the interest rate on long term Spanish bonds fell to 7,2 %, below the critical 7 % floor.

In Asia, stocks fall strongly on worries on the Euro zone and a renewed report of slowing Chinese growth. A central bank analyst predicted 7,4 % growth in the third quarter, lower than the 7,6 % growth in the second quarter which most observers saw as a bottom and a token that the decline in GDP is flattening out. MSCIs broadest index for Asia-Pacific shares fell two percentages. Mining stocks were especially hard hit. Oil prices also fell moderately. Brent crude is at 105,56. NYMEX at 90.51. The speculations on weaker growth in China have put commodities under pressure.

The bad news from Asia is expected to have a negative impact when markets open in Europe and USA where futures are pointing down. The earning seasons continue with Apple on Tuesday and Facebook reporting results on Thursday.

Copyright: United World Capital

[UWC Neeraj]

Euro drops on Spanish fears

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The Euro fall to multiyear lows versus the Yen and the dollar on Tuesday on fears that Spain shall be forced to ask for a full-scale international bailout; and renewed rumors that Greece might have to leave the Euro. The international rating agency Moody’s changed its outlook on German, Luxembourg and the Netherlands to negative, warning that Europe’s top rated AAA countries may have to increase support for indebted Spain and Italy. Euro/USD is trading at 1.21.26 after dipping even lower Monday and in Tuesday morning trade. Analysts predict that the Euro might drop as low as to 1,10 during the next half year.

The Spanish bond auction saw a 7,50 record high interest rate on ten years bond after two of Spain’s regions, Valencia and Catalonia sought help under a 18 billion Euro program aimed at helping regional finances. More regions are said to follow suit. The Euro also hit record lows against the Australian, Canadian, and New Zealand dollars. A European Central Bank statement stressing that Greek bonds are not eligible as collateral, did neither serve to support the euro. The Euro fall to a three and a half years low against British pounds, GDP and saw half year bottom levels against Norwegian and Swedish crowns.

The Asian stock market stabilized Tuesday after yesterday’s steep fall. The South Asian Pacific index, MSCIX, fall 0,8 % after a second negative day in New York. McDonald delivered a disappointing result and fall 2,8 %. With one third of the companies reporting quarterly results, 67 % have reported better than expected results. That helped market sentiments last week, but McDonald’s results did not change this week’s negative trend.

Oil prices fell sharply on Monday down for a second day on worries that Spain is heading for a bailout and the euro-zone debt crisis is spreading. This prompted investors to sell assets perceived as risky boosting the dollar and US treasuries. Brent fell more than 3 % to 103,50 and NYMEX to 88 USD pr. Barrel. Gold is steady on 1576. The last developments in global markets have increased the likelihood that US Federal Reserve shall undertake monetary measures to stimulate the economy. That shall probably boost precious metals as gold and silver. Statistics presented by one of the biggest global banks, HSBC, indicates better July factory numbers from China, an indication the Chinese government stimulus have started to work.

Copyright: United World Capital

[UWC Neeraj]

Apple misses earning targets

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Apple, the world most valuable technological company, fell short of markets expectations when it presented its quarterly results yesterday. Shares dropped more than 5 percent. A sagging European economy and a pause in iPhone sales ahead of a new version saw revenues slip from previous quarter. The rare miss highlights how the Apple brand is becoming less resistant to economic and product cycles that for a long time have plagued rivals. Net income jumped 21 % to USD 8,8 billion, 10 percent below expectations. The steepest fall was registered in Asia.

Stock markets continued to fall for a fourth day in Asia. Technology stocks were hardest hit. The fall followed stock losses in Europe and the United States. The Euro wobbled above multi-year lows against major currencies. Euro/USD fell to 1.2068 trading at 1.2074 in the morning. Spain’s ten years bonds hit a record low interest rate on 7,64 % increasing fears that Spain might need a sovereign bail-out. Greece seems unlikely to meet terms conditional to its aid package. This has led to renewed speculation of a breakup of the Euro zone.

The Japanese Nikkei fell to a seven-week low before trimming winter session losses to 1 %. Grain prices, the big commodity winner over the last weeks, have dropped on profit taking the last two days. Better weather forecasts in drought stricken areas; have given some relief to the outlook for US crops. Copper hit a month low with a further easing in NYMEX, US crude oil to USD 88,36 a barrel. Brent crude steadied around 103,50. Oil investors are following the development in the Middle East with increased fear.

The outlook for commodities is closely linked to Europe. The continued downward pressure on the Euro might, however, lead investors to seek towards traditional safe havens as precious metals, this also taking the weak state of the US economy into consideration. Gold is trading at 1582 in the morning up from yesterday’s low seventies. Silver has over the last weeks several times hit back from a technical resistance level on 26 – 26,50, trading at 27,02 in the morning.

Copyright: United World Capital

Edited July 25, 2012 by UWC Neeraj

[UWC Neeraj]

USA: Cocktail from News and Quarterly Results

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

On Wednesday, July 25, the stock market of the USA showed multidirectional dynamics against an exit of weight of quarterly results, statements of representatives of FRS and European Central Bank, and also the publication of statistical data. Therefore, the representative of FRS with a vote in FOMC - Sara Raskin declared that at the next meeting the question of purchase of bonds on balance of Federal Reserve System will be considered. On this message expectation of investors, concerning introduction of the new program of quantitative mitigation inflamed with new force.

As to the Old World, here the member of executive council of the European central bank Evald Novotny reported about existence of arguments in favor of granting to the ESM banking license. This statement was apprehended by investors with a positive since increase of potential of Stabilization Fund could help to fight more effectively against debt crisis, especially in case of the request of Spain for the international financial help.

The statistics on housing sector in the USA appeared disappointing. Therefore, sales of new housing in June were reduced from 0,382 million month earlier to 0,350 million while analysts predicted decrease only to 0,370 million.

In the middle of the week, some large companies of the USA reported financial results of the past quarter. Thus, Apple and ConocoPhillips firms absolutely disappointed investors, while the reporting of Boeing pleased expectations.

Following the results of the trading session the indicator of "blue chip" the index of Dow Jones Industrial Average grew up for 0,465 % and was closed on a level of 12676,05 points, the index of the wide market S&P 500 went down for 0,031 % to level 1337,89 points, and the index of the hi-tech companies Nasdaq "grew thin" for 0,306 % to a level 2854,24 points.

Oil has been rising in price yesterday. This morning prices of "black gold" are slightly pointing down and traded on a level of 104.00 for Brent and 88.61 on Light a barrel. Oil has risen despite the unexpected and significant increase in its reserves in the U.S. for the last week, most probably in connection with the statements of the Ewald Nowotny – the representative of ECB on the advisability of granting the European Financial Stability Fund ESM banking license.

The euro is strengthening against dollar due to the coming news background and is traded this morning on a level of 1.2146 rebounding from the support level of 1,20 to which the pair came down the day before. But, nevertheless, the growth is sluggish and does not dispose to open "long positions" at current levels.

Today we are expecting a block of information on the U.S. labor market, the statistics on U.S. real estate market and data on orders for durable goods. As well as the season of the presentation of quarterly results continue, reports will provide Amazon.Com, Facebook Inc. which expected earnings per share are $ 0,12, France Telecom SA, New York Times Co., Rolls-Royce Holdings PLC, Starbucks Corp., Statoil ASA, Volkswagen AG.

Copyright: United World Capital

[UWC Neeraj]

Speech of Mario Dragi inspired the world markets, but it is not obvious for how long time.

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

On Thursday, July 26, the stock market of the United States finished trading session by considerable growth of the main indexes. Following the results of session the indicator of blue counters of Dow Jones Industrial Average raised on 1,67 % to level of 12887,93 points, the S&P500 increased by 22,13 points or 1,65 % to a mark of 1360,02 points, and the Nasdaq reached a point 2893,25 points.

The external background for the American session was extremely favorable taking into account comments of the president of European Central Bank at investment conference in London. Mario Dragi declared that all necessary measures will be taken for rescue of euro, "believe me, it will be enough". On concepts of investment community the statement of the Dragi means that from European Central Bank it is possible to expect intervention in a situation in the debt market for the purpose of knocking down of profitability of debt papers of Spain and Italy.

The markets also count that Bernanke will keep the promise to stimulate economy growth in spite of the fact that the yesterday's figure on unemployment could reduce this probability. The number of addresses decreased to 353 thousand while 380 thousand were expected. Meanwhile, more important figure will be presented today. Data on gross domestic product of the USA, as expected, will finally strengthen or will weaken a factor of FRS of the USA. Let's remind that from meeting of FOMC 31 of July-1 of August investors wait for decisions, significant for the financial markets. Besides gross domestic product, figure data on consumer inflation in Germany is coming today.

The optimistic spirit on world markets remains in the morning, after yesterday's rally, however, players will wait for new drivers of growth in case of which absence "bulls" risk to get under a wave of fixing of profit. On Friday important news can arrive from a meeting of the Greek prime minister with "Troika" of creditors. Investors in general are ready to continue purchases that only really disappointing news can change.

Copyright: United World Capital

[UWC Neeraj]

Asia extends gains on stimulus hopes

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Asian stocks extended their impressing gains from last week on Monday. The Asian Pacific MCSI index gained 1,1 % to reach a three week high. This after posting its biggest daily rise in a month with a 2,2 % jump on Friday. Korean, Australian, and Japanese shares all rose supported by expectations that the US Federal Reserve and the European Central Bank, ECB, will undertake stimulus measures to support its fragile economies.

The turn in global market was triggered last week when the President of ECB, Mario Draghi, pledged he would do whatever it takes to safe guard the Euro. His comments raised hopes that ECB on its meeting tomorrow, will act to ease borrowing strains for Spain which last week saw interest rates on 10 years bonds raise to 7,78 percent. Both Spain and Italian bond rates fall after Draghi’s statement.

The Euro/USD fell 0,4 % to 1,2285 after reaching a three week high on 1.2390 touched on Friday. The Euro fall as deep as 1.2042 before Draghi’s statement. The currency picture has stabilized somewhat with USD/JPY trading at 78,381. Oil prices are up with Brent crude at 106,64. Gold is at 1621 and Silver 27,61. Copper is higher and corn raises gain after technical downward corrections last week.

The hopes for a new round of quantitative easing received a new boost by dismal US growth figures at the end of last week. US growth is slowing to an annualized rate of 1,5 % in the second quarter. The pace of growth is now, too, slow to bring down unemployment, threatening both global economic recovery and President Barack Obama’s prospect for reelection.

Friday’s figures were broadly in line with market expectations. It shall add to Federal Reserve’s fear on unemployment, but may not be alarming enough to force immediate action for monetary easing during the FED is meeting this week.

Copyright: United World Capital