Daily Market Reviews by UWCFX

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Stimulus hopes keep markets rise

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Hopes for further stimulus when the European Central Bank, ECB, and US Federal Reserve meet during this week, helped the Asian markets rise for the third day in row. After impressing gains both at Friday and yesterday, the South Asian Pacific Index, MSCI, added 0,8 percent this morning. Skepticism about any long-term effect of ECB actions, however, capped the euro. Euro/USD trades at 1.2280, down from Friday’s high of 1.2390, but well above 1.2042 reached last week.

ECB President, Mario Draghi, stated last Friday that saving the Euro was an overriding concern. However, markets are waiting to see what this mean in practical terms, and hope for a clear indication when ECB meets later this week. It is presumed that the ECB considers continuing its controversial bond-buying program and even starting printing money. This type of quantitative easing is probably still weeks away. It is neither expected that the Federal Reserve will make any move towards stimulus before after the holidays in September. The interest rate of Spain’s ten years bond fall to 6,61 % yesterday.

President Barack Obama added his voice to the Euro debate on Monday. Predicting continued months of headwinds for the US economy, Obama stressed that he thinks the EURO shall remain intact. He admitted, however, that Europe’s debt still poses a big challenge to the world economy.

Brent crude fell back to USD 106 a barrel on Monday. That in spite of lower OPEC production in July. Worries that expected stimulus may not be enough to lift slowing economies, overshadowed signs of reduced oil production.

While most attention is focused on the Euro/USD, both Australian and New Zealand dollars continue their positive upward trend. USD/JPY is at 78,18 with the yen getting stronger. Gold (1623) and silver (28,24) are inching up eying the FED meeting.

The US-markets ended flat yesterday. Intel posted weaker results than expected,. That weighed on the high technology index, Nasdaq, which closed in red. HSBC, one of the world’s leading banks, are reporting results today. It announced simultaneously that it has set aside USD 2 Billion to meet claims following a string of scandals lately, including accepting money from a Mexican drug cartel.

Copyright: United World Capital

[UWC Neeraj]

Oil and shares fall as stimulus hope fade

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

China’s official factory purchasing managers’ index fell to an eight-month low in July, underscoring that the world’s second-biggest economy is losing momentum. Oil prices are down for a second straight day with Brent crude trading at USD 104 a barrel as markets in Asia also fell. Brent has nevertheless gained more than 7 percent in July after a three months decline, due mainly to increased tension between Iran and western countries on Teheran’s nuclear program. This as markets hopes for sufficient stimulus to revive economic growth faded.

Stocks fell both in Europe and the US on Tuesday on growing realization that neither the European Central Bank (ECB) or the US Federal Reserve (FED) during their meetings this week, will come up with a new round of stimulus that seriously shall turn markets around. ECB president, Mario Draghi, succeeded to lift the Euro with his strong commitment to the common currency up last week. However, markets are expecting concrete deeds more than words, and most analysts seem to have given up believing in active measures in August and point to September as the conclusive month.

This has dampened market sentiments as all the major indexes fell. Dow Jones was, nevertheless, able to stay above the 13 000 mark while Nasdaq was saved by a 2,6 percent rise in Apple on rumors that a new product will be launched in September. The bad fortunes for Facebook continue. The quarterly results were far below expectations, and the stock price fell to USD 21 meaning a 50 % fall in its value since the IPO was introduced some few months ago.

EURO/USD stays stabile at 1.2294. The reduced expectations for forceful actions from ECB and FED along with new worrying signals that the Chinese economy is still declining weakened the Australian dollar in early trade. Japanese yen continues up. USD/JPY stands at 78,04. Hopes for forceful stimulus gave a boost as well to precious metals. Gold is falling back from 1630 during trading on Tuesday and stands at 1614. Silver is 27.94.

Copyright: United World Capital

[UWC Neeraj]

Market hopes stay with ECB

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The US Federal Reserve stopped short of offering new monetary stimulus when it met yesterday. In a carefully worded statement, FED left the door open for further bond buying to help a struggling US-economy losing its momentum. Markets reacted mutely. The US exchanges ended flat after initially sending Dow and Nasdaq down on the FED’s inaction. Asia eased 0,2 percent in morning trade. While surprisingly, strong Australian retail and trade balances’ figures helped strengthen both stocks and the Aussie dollar. The Japanese Yen is falling to USD/JPY 78,51.

FED’s inability to offer new stimulus, left the burden of markets hopes on the shoulders of the European Central Bank, ECB. The USD reached a one-week high in Asia with EURO under new pressure. EURO/USD trades at 1.2247. The dollar index saw its highest level since July 26th, keeping the bar low for additional monetary easing when the FED meets in September. The spot light today on ECB President, Mario Draghi, who last week created strong expectations, stating to do whatever it takes to protect the Euro.

The most likely outcome of the ECB meeting today is new statement declaring ECB’s willingness to use all available tools if deemed necessary. This will stop short of any concrete action, and most probably mean that ECB will postpone any concerted actions to purchase sovereign debt from Spain and Italy until September. Such steps are deemed necessary to push down the borrowing costs for these two most exposed Euro zone economies. A new strongly worded statement will, however, not be regarded as satisfactory for markets being optimistic for concrete actions.

Such inaction also from the ECB, shall surely send stock markets down and put a striving Euro under renewed downward pressure. Oil prices have picked up a dollar a barrel since yesterday with Brent crude trading at 105,90. Precious metal traders are sending gold (1602) and silver (26,45) down disappointed by FED’s decision to postpone any concrete action to stimulate the economy.

Copyright: United World Capital

[UWC Neeraj]

Euro and shares fall on ECB inaction

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The US and the European central banks had created strong market expectations prior to their meetings this week. Both failed to deliver. The Federal Reserve presented a vaguely formulated statement, which fell short of any clear indications of active monetary steps to stimulus to boost a stagnating US-economy. The European Central Bank, ECB, followed up with an equally dubious statement leaving to anybody guess, whether Europe has the will or intentions to come to grip with the sovereign debt crisis. Interest rates on Spanish and Italian bonds fell.

The markets reacted as expected by sending global stocks down and putting the Euro under new downward pressure. ECB President Mario Draghi’s powerful statement last Friday saved the Euro for one week. After ECB’s inaction, EURO/USD sniffed on the bottom level from last week, 1.2125, to trade at 1.2176 in opening hours in Asia. Draghi’s tactics to try force action from other ECB members had obviously failed. This week has again demonstrated that Germany is the European economic powerhouse. Germany is pulling the string regardless of policy statements.

After steep falls in Europe and US; Dow Jones fell 0,71 % and Nasdaq 0,36%, Asian stock exchanges were down for the third day in row. Reports on falling oil storages in US keeps Brent crude above USD 106 a barrel. Gold (1590) and silver (27,18) are as other commodities under renewed downward pressure after the one week mini “expectation’s” rally. Japanese yen is the winner in the currencies market. USD/JPY trading at 78,1955. British Pounds, GDP, is falling against USD. USD/GDP trades close to 1.55 after 3long being stabile around the 1,57 mark against the dollar.

Today’s trading in Europe and US shall give an indication on whether global markets shall continue to fall through August to build up new expectations for active FED and ECB economic stimulus after the holidays in September. The slow trend towards parity between USD and Euro is expected to continue.

Facebook’s share price came under new pressure yesterday and fell 4 % to USD 20 a share. This after doubts on the real FB number of subscribers. FB has a high number of duplicate accounts many clients registering cats, dogs, and pets.

Copyright: United World Capital

[UWC Neeraj]

Shares rally on US jobs

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Asian markets rallied in the morning hours today, following stronger than expected US jobs data and renewed optimism for European action on the debt crisis. The Euro touched a one-month high against USD reaching 1.2415, before falling back and trading on 1.2391. Oil prices also jumped on 63 000 new jobs added in US in July. Brent crude is trading at 108,48. Precious metals are stronger: Gold is at 1605.

The US jobs data gave US and European stocks a strong boost Friday after disappointing news from US Federal Reserve and the European Central bank, ECB, earlier in the week.

The overwhelming positive reaction on the US jobs data underscores global markets nervousness and volatility. A deeper look into Friday’s figures show that after job’s losing months, July’s employment kept track with jobs lost. The unemployment increased from 8,1 to 8,2 percent, and gives no reason for long standing jubilation in a market hungry for any news which can be interpreted as positive.

The jobs data has given the market a relief and bigger risk appetite for now with expectations once more building up for possible FED and ECB actions in September. However, caution shall likely remain until concrete measures are taken. The ECB statement last week demonstrated that Germany and the German Central Bank still are firmly in control, allowing no experiments from neither Francoise Holland nor Mario Draghi. Italian Prime Minister, Mario Monti, with his background as former EU-commissioner, expressed his frustration with the present development. In an interview with German Der Spiegel, Monti stated that the infighting between member countries has a devastating impact on the feeling of European unity.

The focus in global markets would probably this week be more on Asia than US and a holiday month Europe. China is fine-tuning its monetary policies, and trade, bank loans, and investment figures would give an indication on whether China has reached the bottom and is back on the path to economic growth. Australian dollar continue to be strong. The dollar is weaker against most currencies, and USD/Yen is trading at 78,4622.

Copyright: United World Capital

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EURO hits month high

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The Euro/USD hits its highest level in one month reaching 1.2444 during yesterday’s trade. The currency kept steady at 1.24 in Asian trading this morning. The Euro is supported by hopes that the European Central Bank, ECB, soon will take action to lower borrowing costs for Spain and Italy. Interest rate on both Spain and Italian bond fell yesterday on expectations that ECB may again start to buy government bonds. USD is as on Monday falling against most currencies on bigger risk appetite. USD/JPY trades at 78,256.

Oil prices rose for a second straight session closing at its highest level in 11 weeks. Brent crude is trading close to USD 109 a barrel as US stock markets extended its strong Friday rally on supportive US jobs data calmed concerns about a slowing economy, and hopes that Europe will be able to effectively address its debt crisis. Violence in Syria and Iran’s dispute with Western countries over Tehran’s nuclear program continued to worry investors about the potential threat to the oil supplies from the region.

Shares in Asia were again up on expectations that Europe will take actions to tackle the debt crisis and further hopes that China and the United States will adopt stimulus measures to boost economic growth. The Australian dollar continues to trade up. Major Chinese data are expected on Thursday, giving investors a better idea to judge whether the world’s second-largest economy is back on the strong growth path after a lackluster first half year. The South Asian Pacific index, MSCI, inched marginally up in trading Tuesday morning.

Copyright: United World Capital

[UWC Neeraj]

Markets rally; stabile currencies

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Stock markets in Europe, United States continued to rally through yesterday and in Asia this morning as investors bet on policymakers willingness to act decisively on the euro zone debt crisis and undertake measures to boost economic growth.

Oil prices rose, and reached a 12-week high. Brent crude jumped two dollar to 111. Copper, a growth barometer, is up while the Euro stabilized around 1.24 against the USD. Safe haven bonds suffered from weakening demands. Gold (1610) and Silver (28,05) are trading higher.

The more optimistic market sentiments gave equities a boost globally. The US S&P rose to its highest level since early May and was close to breaking through the technical resistance on 1400. A convincing break through 1400 will signal further buying.

The Asian MICS-index is up for its fourth day in row. The Australian dollar, strongly influenced by commodity prices and economic growth reached a four-month high yesterday. USD has weakened on greater risk appetite as investors again gamble on smaller currencies. The Japanese yen seen as a safe haven is also weaker.

Last week US regulators accused HSBC, the Hong Kong Shanghai banking giant, for money laundering presumably accepting funds from Mexican drug cartels to be white washed. Yesterday New York banking regulators directed a blistering attack on the British Standard Chartered Bank. According to the regulators, the bank had allegedly money laundered over USD 250 Billion in transactions tied to Iran in violation of US sanctions.

These new accusations have raised eyebrows. The initiative against Standard Charter was according to informed sources, taken by an over-zealous freshman. The regulator did neither consult the US Treasury department nor the Federal Reserve before the decision was taken. This has created irritations and also questions whether the action might be politically motivated.

Standard Charter is the third bank after Berkley and HSBC, which US regulators have lashed out against in the last month. This has created questions whether this may be regarded as a witch-hunt against foreign banks competing in the US market.

Copyright: United World Capital

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Standard hits back on a “lonely” cowboy

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Standard hits back on a “lonely” cowboy

Standard Charter bank accused of laundering of Iran-funds in violation of US sanctions, hit back on New York banking regulator, Benjamin Lawsky yesterday. Critics claimed Lawsky had acted as “ a lonely cowboy” revealing information from an ongoing investigation. The Bank was supported by Mervin King of the British Central Bank, who accused Lawsky to march to his own tune, out of step with federal Washington regulators.

The stock prices of Standard Charter tumbled, but recovered when Standard Charter countered the allegations finding them “wholly disproportionate”. This is the third attack by US regulators on major British and international banks within a short period. This has raised eyebrows and led to double standard suspicions that US authorities are treating their own banks differently than their competitors. Back in 2006 a Standard Bank executive director according to leaked information, lashed out at the US and told: “who are you tell us and the rest of the world how to deal with the Iranians”.

The banking rhetoric somewhat overshadowed yesterdays market news. Equity markets in Europe and US were flat, while Asia was up for the fourth day in row helped by strong jobs data and reduced unemployment in Australia. The Japanese Central Bank stated willingness to undertake growth measures. The MSCI Asia Pacific Index is up 3,5 % in three trading days hitting its highest level in three months. Stimulus expectations are driving the upturn.

The Euro slipped back against the USD yesterday trading down from the 1.24 level to 1.2350. EURO/USD is at present at 1.2379. USD/JPY is at 78,4625 marginally up from Tuesday. Oil prices are high with Brent crude trading at 112. Gold and silver are as copper up.

Copyright: United World Capital

[UWC Neeraj]

Chinese trade data disappoints markets

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The European debt crisis and global fear for sluggish economic growth in China are back in the headlines. The Euro came yesterday under renewed pressure. EURO/USD lost more than 100 points from its 1.24 level; to recover in Asia trading at 1.2295. A four day stocks rally in Asia came to an abrupt halt as China’s export and import data for July fell short of expectations. The same did trade figures from other Asian countries influenced by the negative growth and recession in Europe.

China’s export in July were up only one percent from previous year, while markets had expected a 8,6 % increase. Imports were marginally lower than the forecast of 7,4 % growth and posted 7,2 percent. The data had a negative impact on commodities, the China reliant Australian dollar and equities. Brent crude is down, but still trading at 112,95 after reaching 113 on Wednesday. Gold lost some dollars and fell to 1612 an ounce. Jobless claims in the US came in better than expected. 361 000 filed claims against the expected 370 000. The US trade balances were also marginally better than forecasts.

The recent data shall raise expectations for concerted economic stimulus measures after the summer holidays in May. After creating a short August rally more based on hopes and wishful thinking than realities and fundamentals, markets are this morning back in a sober mood. Analysts are expressing serious doubts on whether new European summits would be able to get Europe out of its present impasse. The new Greek government seems unable to come to grip with its debt situation.

In spite of the fact that ECB President, Mario Monti, for a short time was able to talk interest rates on Italian and Spanish bonds down, the Euro zone has not even inched closer to solving its sovereign debt and banking crisis. The upward pressure on interest rates levels on the exposed southern European countries shall probably be back in the headlines within soon.

The technical resistance level on Euro/USD is around 1.18 which it reached during the 2008 – 2009 financial crisis, is going to come under new pressure. As long as words are not substituted by concrete measures the downward trend on EURO/USD is most likely going to continue. Don’t be surprised to see 1.10 during the next months; inching towards parity in 2013.

Copyright: United World Capital

[UWC Neeraj]

Oil hits USD 114 on Israeli comments

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Oil prices hit a 3-month high in early Asian trading. Brent crude rose above USD 114 a barrel on worries of supply disruption from the Middle East. Israeli Prime Minister, Benjamin Netanyahu, stated yesterday that Israel’s security was threatened by the prospect of Iran obtaining nuclear weaponry. His comments are seen as a direct threat for a possible Israeli strike against Iran’s installations to stop it’s disputed nuclear program. The prospect of an imminent Israeli strike keeps oil markets at bay.

In spite of forecasts of a further slowdown in oil demand due to weaker economic growth in the United States, Europe and China, Brent reached a three month peak of USD 114,28 in early Asian trading to retreat to the 114 mark. Precious metals as Gold and Silver are also trading higher, and the Euro/USD inched marginally up, helped by expectations of monetary easing from the European (ECB) and the US (FED) central banks.

The Japanese Yen is keeping strong, USD/JPY at 78,25. Weak Japanese GDP figures had no negative impact on the Yen. Japan’s economy expanded just 0,3% in second quarter of 2012 as a rebound in consumer spending lose momentum and Europe’s debt crisis weighs on global demand. China, US and Japan have reported weaker growth in the April – June quarter compared with previous quarter figures.

Global stock markets have been rallying in August on raising expectations in financial markets that policymakers will take actions to lift their economies. However, hopes remain dark. The situation is especially troublesome in Europe. As one commentator stated: “Each time I am looking at Europe, the picture is more gloomy. Neither the sovereign and banking crisis, nor the problems facing the EURO, disappear by strong words. As a dark omen news tell that new Greek government again has failed to deliver on its austerity measures, and that German patience – once again - is running out”.

Copyright: United World Capital

[UWC Neeraj]

Euro/USD gains on speculation

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

EURO/USD rose 50 points to 1.2343 from yesterday as investors hunted for bargains and waited for new economic figures from Europe and the US. Traders halted their bets for a further drop in the Euro. They were also influenced by a lack of fresh news. Recent data have shown that the Euro zone’s debt crisis is eroding global activity. Asian shares rose in morning trade in Asia with the MSCI South Asian Pacific index marginally up 0,3%. Gold is falling on faltering hopes for central bank monetary easing. Brent crude stays above USD 113 a barrel.

New economic figures released this morning show that also German economy is stagnating strongly impacted by the Euro zone crisis. GDP, Gross Domestic Production, figures for Greece show a 6,2 % contraction in the last quarter. It is telling that these serious recessionary figures are hailed for being better than expected! Shares in Europe and the United States were down yesterday on deteriorating global growth prospects. Market volumes are weak. Expectations for further central bank growth stimulus seem for the moment to be the only real factor that supports investor’s sentiment and keep up the stock markets.

Soaring grain prices caused by the worst US drought in more than 50 years and poor crops from the breadbasket in the Black Sea area are simultaneously creating global worries for a serious food crisis. The G-20 (the group of the twenty leading industrialized countries) is planning for an emergency meeting in the end of the month. The global society is eager to avoid a repetition of the pike in food prices, which triggered riots in poor countries in 2008.

The G-20 has, however, no sanction means at its disposal. The G-20 can to try convincing member countries like the US to halt its ethanol production, and urge upon Russia not to impose an export ban on corn as it did two years ago. There is nevertheless little hope for concerted actions. The group is severely split big consumers and producers interests.

Copyright: United World Capital

[UWC Neeraj]

Dollar higher on upbeat retail data

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The dollar traded near a one-month high against the Japanese yen on Wednesday spurred by surprisingly strong US retail sales. Together with the better employment numbers presented in the beginning of August, the new data have at least for now dampened talk of more monetary stimulus from the US Federal Reserve, FED. The reduced likelihood for monetary easing had an immediate impact on the Asian markets, which fall in morning trades. The Chinese markets were especially hard hit. The Hang Sheng Stock index fall more than 1%. USD/JP trades at 78.75 after reaching 78.93.

The broad based expansion in retail sales helped bolster the view that the slowdown seen in US economic growth during the second quarter of 2012, was only temporary. The retail data led to a jump in a US Treasury yields. If the US consumer inflation and industrial data presented later today, are positive, the dollar is likely to continue up against yen and other currencies.

The Euro was little affected by the newest US-data. Euro/USD is trading at 1.2325. The Euro has been supported by expectations that the European Central Bank, ECB, will take measures to reduce the crippling borrowing costs for Spain and Italy. Short term technical charts look favorable to the Euro, trading in an upward channel between the 1.2042 low reached in the end of July and the 1.2444 high reached last week.

There are, however, no changes in the longer term Euro picture. Capital continues to flow out from Greece. The New Greek government has neither been able to carry through promised austerities. Many observers therefore see a Greek Euro-exit as a foregone conclusion which European policy makers already are relating to. The big test for the Euro is Spain, and how the country shall handle their debt. In the medium perspective the Euro is heading by year’s end heading towards 1.15 against the dollar. The trend towards parity is equally clear in a year’s time.

Copyright: United World Capital

[UWC Neeraj]

Israeli attack rumors have oil skyrocketing

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Brent crude rose to a three month high above 116 yesterday on concerns over disruptions to supply from the Middle East. Oil storages in the United States, the world’s top consumer, fell also more than expected. Worries about a conflict over Iran’s disputed nuclear program have escalated with reports on plans for an imminent Israeli attack on Iranian nuclear reactors. Rumors telling that Israel would attack prior to the US elections, had oil prices to jump more than two dollars a barrel. There are also growing concerns that the Syrian situation shall seriously affect neighbor countries. Saudi Arabia yesterday ordered its citizens to leave Lebanon.

US stocks, the dollar and most commodities rose on Wednesday while the Euro and US Treasury bills fell the US industry output rose 0,6% in July. The report followed strong July retail sales and employment data released earlier. Although US economic data remain mixed, signs of stabilization and a slow upward trend continue to emerge. This development has scaled back expectations for new economic stimulus from the US Federal Reserve, FED, on its meeting in September.

Asian stocks were flat in today’s morning trading. The Chinese government indicated new stimulus measures. Prime Minister Wen Jiabao stated that slowing inflation had given China more room for economic growth stimulus measures. This lifted stocks and after new published figures had shown that foreign investments in China dropped with 8,7 % in July.

USD continued to raise against Japanese yen. JPY fell to 79,25 losing more than one percent to dollar over the first days of the week. Gold prices are stabile on 1605. EURO/USD is stabile at 1.2280 with continued downward pressure on Italian and Spanish bond’s interest rate levels.

Copyright: United World Capital

[UWC Neeraj]

Merkel boosts global markets

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Wall Street rose to its highest level since April after German Chancellor, Angela Merkel, seemed to support the European Central Bank’s efforts to strengthen the Euro and fight the region’s debt crisis. The high technology index, NASDAQ, outperformed the market after Cisco shares jumped nearly 10% and Apple reached a new high. This came after the US indexes had moved sidelong for the last two weeks. Yesterday’s gains seem to indicate a continued upward market trend. The positive stock developments in US were followed up in Asia where both the South Asian MSCI- and Nikkei indexes rose in morning trade.

At press conference with the Canadian Prime Minister yesterday, Angela Merkel voiced strong support for the EURO, along ECB President Mario Draghi’s statement last month to do whatever it takes to save the euro. Merkel also stressed the need for Europe’s swift fiscal policy integration. Merkel’s statement was interpreted as Germany is inching closer to take active steps for economic stimulus. Germany has so far been reluctant to give up on its strict monetary and fiscal policies.

Merkels comments gave a boost both to stock markets in Western Europe and strengthened the Euro. Euro/USD rose from 1.2275 to a high on 1.2373, trading at 1.2350 in opening in Asia, well inside the established short term corridor where the EURO for the last two weeks has floated between 2050 and 1.2450. USD/JPY is stronger than in weeks, trading at 79,32. The dollar has weakened towards other currencies on increased risk appetite. This has boosted commodities which are trading higher. Gold bounced back from low 1600 to trade at 1615. Also silver (28.15) is higher. Brent crude is back on 114 level from Wednesday’s high on 116 while NYMEX crude saw USD 95 for the first time in several weeks.

While few observers doubt that ECB will take decisive action to tackle the ongoing debt and banking crisis in the Euro zone, the outlook is less clear for the US Federal Reserve’s future policy measures. US data continue to be firm. Two top Federal Reserve officials yesterday weighed in against further monetary policy easing. A third one stated that US interest rates needed to be raised earlier than the 2014 deadline set by the Federal Reserve.

Copyright: United World Capital

[UWC Neeraj]

Risk appetite still robust

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Japan’s Nikkei share average continued to inch higher Monday morning as risk appetite remained robust. The Nikkei index reached a three month’s high on Friday helped by a weaker Japanese yen. USD is still up against JPY trading at 79,50. The weaker Yen has given Japanese exporters a welcome support. Thailand presented much stronger than expected GDP-figures this morning while Chinese stocks reached its lowest level in 3 years.

The increased risk appetite and optimism in Asia and other markets seems to be driven by sustained hopes for progress in European leaders tackling of Euro zone debt crisis. German Chancellor Angela Merkel went last week far in backing ECB President Mario Draghi in his unconditional support for the Euro. During a state visit to Canada Ms Merkel seemed to second Draghi’s statement, in that Germany will take all means necessary to support the EURO.

The strength of the content of these statement will be tested later this week when Greek Premier Antonis Samaras on Friday meets Merkel in Berlin to ask for a revised austerity schedule. So far, neither Germany nor the EU-commissions have demonstrated any willingness for compromise, and threatened not to pay out the September bail out tranche if Greece fails to meet its austerity obligations.

EURO/USD is in early trading Monday morning at the same level as Friday 1.2331. Further short term development will depend on how ECB and EU-institutions handle Greece and higher Spanish and Italian bond prices. Rumors say that ECB is considering a ceiling for bond prices to avoid further speculation. Oil prices are higher as the US proposal to use oil strategic reserves to dampen prices, have met with skepticism. Brent is at 114,50 and NYMEX crude reached above 96. Gold (1617) and Silver (28,15) are also trading higher.

Copyright: United World Capital

[UWC Neeraj]

Apple most valuable company in history

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Apple shares reached a new high becoming the most valuable public listed company of all time yesterday. Shares rose to USD 665 up 2,6 % from last week. The combined value of Apple shares exceed the previous record set by Microsoft. Stocks were otherwise flat in New York on Monday experiencing signs of fatigue after six-week of gains and uncertainty regarding the handling of the debt crisis in Europe. The South Pacific Asian stock index, MSCI, is as the Japanese Nikkei up in early trading in Asia.

EURO/USD is trading up, 1.2357, on expectations to the top level meetings in Europe in the second half of the week.Greek Premier Antonis Samaras is likely to ask for a two years postponement of the execution of austerity measures when he meets with German Chancellor, Angela Merkel, in Berlin on Friday. Germany seems adamant. Finance Minister Schaubel stated yesterday that he sees no point in throwing more money into a bottomless Greek hole. The Foreign Minister of Finland stated that a possible Greek exit from the Euro is on the agenda. The Minister added that the Greeks know what it takes to stay in the Euro. It is up to Greece to decide whether they are willing to undertake the necessary obligations and measures to stay as a EURO- member.

While there is little room for compromise and new postponements for Greece, Germany seems to have moved closer to other Euro-countries and the European Central Bank, ECB, regarding possible purchase of bonds from struggling Euro-economies as Italy and Spain. A ceiling or threshold for the interest rate on these bonds have been discussed as a measure to avoid speculation.

As long as such solutions are aired, the Euro is probably going to inch upwards for the rest of the week till we see a more clear picture. Long term odds point against the Euro and in support of USD and precious metals. Gold prices have reached 1621 and silver is also stronger (28,85). Oil prices are stable: NYMEX at 96 and Brent 114.

Copyright: United World Capital

[UWC Neeraj]

Asia slips back on Japan export

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Asian stocks slipped back after Japan’s export fell an annual 8,1 percent in July. Collapsing shipments to Europe and a steep fall in sales to China caused the deepest drop in export in six months. The Japanese yen strengthened against the dollar trading at 79,28. The South Asian Pacifix index, MSCI fell 0,7 percent. The US-markets rallied during the first part of the session, but fell back from record highs. Standard and Poor’s 500 index rose to a four year high before slipping back into red.

The Euro/USD jumped back to a high on 1.2488 on expectations that the European Central Bank, ECB, will act to rein in surging borrowing costs. The interest rate on both Spanish and Italian bonds fell sharply in yesterday’s trade. Crude oil prices are steady. Brent close to 115 and NYMEX above 96. Gold (1640) and silver (29,25) are bullish, and some experts claim that we are turing into a bullish commodity and precious metals market.

The Euro broke through the short term technical resistance level in its recent two week corridor where the common currency has seen movements between 1.2042 and 1.2444 on the upside. The rally we recently have seen in stocks is, however, has been built not on fundamentals, but on expectations that ECB shall convince resistant Germans to buy bonds to cap the yield of troubled euro zone sovereign states.

German Chancellor Angela Merkel voiced last week principle support for ECB’s crisis-fighting strategy. This boosted the short term both the Euro and global market sentiment. 1.2488 is the highest level seen on the Euro since early July. Euro zone top level meetings at the end of this week will give a more clear indication as to the future direction of the common currency. ECB bond buying and whether European leaders are willing to give necessary promises to keep Greece in the Euro, are on the top of the agenda.

Copyright: United World Capital

[UWC Neeraj]

FED minutes lift EURO and gold

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Three weeks old minutes from the US Federal Reserve’s meeting August 1st have lifted global stock markets and given ERO/USD a welcomed boost over the last 12 hours. The Euro touched a seven week high at 1.2553 on Thursday as Premier Antonis Samaras started his European charm offensive to keep Greece in the Euro. The South Asian Pacific stock index, MSCI, rose one percent on expectations that the minutes indicate FED willingness for economic stimulus, and early losses in the New York were nearly trimmed off. Crude prices, gold and silver are strongly up.

FED wrote minutes reflects end of July’s rather pessimistic outlook on US economy. Since then data on better employment, retail and to a certain degree housing figures, have turned market sentiment around, and convinced that the US economy is back on the right track. The open question and decisive for eventual FED action is whether employment figures for August will confirm latest data. Market expectations are in favor of further quantitative easing and buying of treasury bills and bonds. This weakened the dollar towards most currencies yesterday.

The Euro saw its highest level since early July and burst through the upside in the short term technical corridor between 1.2040 and 1,2450 where it has moved the last weeks. If Samaras succeeds in convincing that Greece is sincere in its austerity intensions and wish to stay in the EURO, his European partners might agree to give him the t two years postponement chance he his bidding for. Such a nod to recession fighting Greece, would eventually in the short term lead to a further strengthening of the Euro as will a European central Bank decision to buy sovereignSpanish and Italian bonds.

The prospects for monetary easing and economic stimulus will weaken the dollar and give a boost to commodity driven currencies as Canadian and Australian dollar, Norwegian krones and indirectly Swedish krones, a trend clearly seen over the last days. Commodities quoted in USD will be given a further boost. Oil, copper, gold and silver rallied yesterday and reached their highest levels in weeks. Even HSBC’s report yesterday that China’s manufacturing purchasing Manager index, PMI, for August, fell to its lowest level since last November, did not spoil the commodity and precious metal party. This is probably going to be gthe case as long as investors continue to cultivate expectations that monetary easing and economic stimulus are just around the corner.

Copyright: United World Capital

[UWC Neeraj]

No Samsung copy of iPhone

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

SAMSUNG did not copy Apple’s iPhone. Even if Samsung Electronic flagship Galaxy smartphone looks very similar to Apple’s iPhone, Samsung did not violate the iPhone design, a South Korean court ruled on Friday. Simultaneously nine jurors started deliberations in California in one of many disputes between the two giants fighting for supremacy in a market the two companies control more than half the world’s smartphone sales. The companies have infringed on each other copy rights. The judge therefore ordered Samsung to immediately stop selling 10 products including Galaxy S 11 and also banned sales of four Apple products. Both the rivals were ordered to pay each other relatively small compensation damages. Samsung stocks fell 3 % prior to the court’s decision, and recovered substantially – up 2,5 % from the bottom – when the verdict was published.

Angela Merkel and French President Francois Hollande agreed that Greece have to stick to its debt obligations prior to Antonis Samaras separate meetings in Berlin and Paris today. The firm German-French stand is most likely to be regarded as part of a negotiating strategy; and as an initial reaction to the Greek premier’s bid for a two years leniency period before austerities are carried through. Compared with Spain and Italy relatively small funds are needed to keep Greece afloat. A Greek Euro exit will primarily have an important symbolic value and be regarded as a beginning of a breakup of the Euro. European leaders might, therefore, be willing to pay the price and give Greece a grace period.

EURO/USD have stabilized after strong gains earlier in the week, trading at 1.2554. The interpretation of the outcome of Samara’s meetings today would have a bearing on the short term direction on the value of the Euro. The British pound against USD has also increased substantially over the last days. Oil prices are dropping from its high levels on Thursday, Brent crude is at 114 and NYMEX back to 96. Gold prices continue to climb, and reached 1667 in early trading in Asia. Silver is at 38,50. Both precious metals are seen as a hedge in a volatile currency market.

What might be seen as overblown expectations for monetary easing in US and the Euro zone front collided with fundamentals in early Asian trading. The outlook for growth is dim in spite of all expectations. The South Asian Pacific Index, MSCI, fell 2 % after a similar reality test saw European and Asian markets falling on Thursday. The general feeling is that expectations and market fundamentals are, too, far apart and that equity markets are in for a correction.

Copyright: United World Capital

[UWC Neeraj]

Tropical storm raises oil prices

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Brent and NYMEX crude rose more than a dollar Monday morning on supply worries as tropical storm Isaac threatens to interrupt most US offshore oil production in the Gulf of Mexico. Brent which fell below 114 on Friday, reached 115 in early Asian trading. An explosion in the biggest oil refinery in Venezuela has claimed 39 lives and cut supplies of refined oil products. War mongering over Syria likewise keep up the tension in the Middle East.

Investors’ concentration will this week be back on the US Federal Reserve and its annual meeting of central bankers and economists in Jackson Hole August 31st. Fed Chairman Ben Bernanke’s speech will probably give clues whether the FED is ready for a third round of quantitative easing. Time for FED-action is, however, running out with the Presidential elections approaching. Republicans have been highly critical to the first rounds of monetary stimulus, and a new round of easing shall be interpreted as a boost to Obama.

Whatever statement shall have an important impact on where the markets are going to move for the next weeks and on the strength of the USD. The steam seems to be running out of last week’s Euro rally which saw the common currency jump to 1.2575. Euro-USD is now trading at 1.2505 in Asia with volatile stock markets without direction.

The charm offensive of Antonis Samaras ended in Paris Saturday with the Greek Premier asking for time and not more money. Back in Greece he stressed the message that Greece belongs to Europe and wants to stay in the Euro. Angela Merkel echoed Samaras’s concern when Sunday encouraged party followers eager to see Greece leave the Euro, to watch their words The French President solely repeated that Europe is waiting for results from Greece and the last “troika” report on austerities.

After an evenhanded sentence from a South Korean court last Friday morning in the patent conflict between Samsung and Apple, A Californian court issued Friday afternoon a pro-Apple verdict which considerably block’s Samsung’s opportunities in the US-market. The court orders Samsung to pay USD 1 billion in damage compensation for infringing on Apple’s propriety rights. Samsung’s share fell 7 % in South Korean trade in the morning.

Copyright: United World Capital

[UWC Neeraj]

Apple reaches all-time high

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Shares of Apple climbed to another record on Monday reaching 680 dollar a share the day after the iPad maker won a USD 1 billion judgment in a patent lawsuit against South Korean Samsung Electronics. Samsung shares plunged 7 % Monday, but recovered and was up two percent in Asian trading this morning. Apple has claimed a ban on 8 Samsung phones in the US. The Korean company is going to contest the verdict after a Korean court last Friday morning presented a much more even handed decision blaming companies for stealing patents from each other. Other competitors are heavily influenced by the recent verdict. NOKIA shares rose 9 % yesterday.

Both US and Asian stock exchanges saw the lowest trading volume of the year kept alive only by the increased trading in mobile smart phones. Investors are sitting on the fence looking ahead to a key speech by Federal Reserve Chairman Ben Bernanke on Friday. The markets are also waiting news on whether the European Central Bank, ECB, shall start to buy sovereign bonds of the most pressured Euro-states, Italy and Spain. Merkel seems to have given up her former strong opposition to ECB bond intervention. The German Central Bank is, however, staying the course and likened bond buying to a drug injection in the markets.

The Euro/USD dips to 1.2488 is coming under renewed pressure after last week’s short term high on 1.2575. USD/JPY is down 0,2 % at 78,515 with Japanese export trading figures weaker as result of the European debt crisis and the Chinese slowdown combined with a strong yen. The Euro is pressed by continued uncertainty as to which measures to take to handle the debt crisis. The German business sentiment index fell for a four month in row to its lowest level since March 2010.

Oil prices tumbled yesterday after the Isaac storm forecast proved less serious than firstly reported. Brent crude fell from 115 to 112. NYMEX, New York, crude trades below USD 96 a barrel. Also copper and precious metals fell. Gold trades at 1661 with Silver at 30,65. Markets are expected to be volatile during this week waiting for the Federal Reserve and top economists meeting in Jackson Hole over the weekend. Ben Bernanke is giving his speech on Friday followed by ECBs Mario Draghi on Saturday.

Copyright: United World Capital

[UWC Neeraj]

ECB-optimism boosts EURO

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

EURO/USD jumped 100 points to 1.2570 yesterday on optimism that European leaders will take positive steps to tackle the debt crisis. The Euro is at 1.2557 in early Asian morning trade, close to a seven week high towards the dollar. Rumors that the European Central Bank, ECB, is on the verge of starting to buy bonds from Italy and Spain, gained strength when ECB president Mario Draghi unexpectedly cancelled his visit to Jackson Hole during the weekend where FED Chairman Ben Bernancke on Friday is going to address world central bankers.

Global investors have for the last weeks had their eyes locked on Jackson Hole and, Wyoming, and an upcoming ECB meeting next week; for any signs of monetary easing from Europe and the United States. Bernanke’s speech precedes the Federal Reserve’s September 12 – 13 policy meeting. Bernanke has for the last two years used this meeting with central bankers to signal FEDs policy intentions. Better US housing and employment data pointing to a modest recovery have, however, dampened the optimism for economic stimulus.

Equity markets in the United States were flat yesterday on very low volumes. Asian markets are mixed. Latest economic news from China tell that the stock markets are under pressure. Chinese stocks have fallen dramatically and their companies are in contradiction to their US counterparts delivering weak quarterly results. Some analysts state that China is in for a hard landing and that the growth in GDP which was 7,6 % in the second quarter, shall be far lower In the two remaining quarters of 2012.

Except for the jump in the Euro, there are small changes in the currencies and commodities. USD/JPY is 78,575. The dollar gains somewhat versus the more commodity driven currencies. Oil prices are unchanged. Brent crude at 112 and NYMEX trades at 96 with hurricane Isaac having a major impact. Gold is steady at 1665, at a 4 month high, on expectations that Bernancke would give hints of further stimulus measures. Gold reached 1676 on Monday. Silver, which often tracks gold, trades at 30,86 close to Monday’s three months high. Gold and silver are likely to stay at these levels till Bernancke makes his speech on Friday.

Copyright: United World Capital

[UWC Neeraj]

Asian shares hit one-month low

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Asian stocks hit a one-month low this morning after Chinese growth concerns and weaker export and retail figures from Japan. The Euro stays steady as global markets waited for hints on further US economic stimulus in Federal Reserve Chairman Ben Bernanke’s address at Jackson Hole tomorrow. Wall Street edged higher on an increase I home sales in July. The daily volume was again very weak reflecting market reluctance to make bet prior to Bernanke’s speech.

Volume traded at the New York exchanges was 4,1 billion shares compared with the previous low on Monday of 4,6 billion shares. The daily traded average a year is 6,6 billion shares. The Dow Jones industrial average inched up 4,6 points and reached 13 107. The S&P is trading at four-year high compared the Shanghai Composite Index which hit its lowest close since February 2009.The share indexes reflect investors strong expectations for a turnaround in US economy helped by FED monetary easing. Investors are simultaneously bearish on China, in spite of, the fact that China’s relatively low 7,6 % increase in GDP in second quarter of 2012, far outpaced any other country in the world.

The Commerce Department said yesterday that US gross domestic product expanded at a 1,7 percent annual rate helped by stronger export growth. The pace of growth remained nevertheless, too, slow to shut the door for further monetary easing from the Federal Reserve. At the Republican Convention, Paul Ryan, the vice Presidential running mate to Mitt Romney, directed a blistering attack on President Obama’s economic policies Ryan promised to make the tough choices needed for a US economic turnaround that would generate jobs, cut government spending and revitalize small businesses.

Euro/USD is steady at 1.2543 and there is small changes in other currency pairs. Hurricane Isaac has had little impact on oil prices over the last 24 hours. Brent crude is staying above 112 with NYMEX dropping to 95 USD a barrel. Gold is trapped in a tight trading range between 1655 and Monday’s 4-month high on 1676. If Bernanke’s address misses to give clear signals for a new round of quantitative easing, both gold and silver would come under sell pressure.

Copyright: United World Capital

[UWC Neeraj]

Close call on FED easing

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The US Federal Reserve’ decision on whether to take economic stimulus to boost a stagnating economy, is “too close to call”, a top FED official stated yesterday on the eve of Ben Bernanke’s annual speech in Jackson Hole today. Quantitative easing shall have a positive effect on a stagnating job market, but could risk creating inflationary pressure. In his speech to the convention, last night, Republican contender. Mitt Romne, signaled job creation as the major issue, promising to create 12 million new jobs during an eventual Romney term.

Asian shares fell to a four-week low Friday morning on cooled expectations for stimulus. The meeting of world central bankers precedes the decisive Federal Reserve meeting on September 12th and 13th. US and European stocks also fell. Dow Jones gave up 0,81 % while the technology index, Nasdaq, dropped 1.03 %. In Japan Nikkei slipped 1,1 % to a two-week low after Japan’s industrial output unexpectedly fell in July. Japanese manufacturing activity has so far in August contracted to its lowest level in 16 months as a clear token that the European debt crisis is biting Japan painfully.

Currencies and commodities are in the waiting mood prior to signals from the federal Reserve. The Euro/USD is steady above 1.25 level, but has lost some ground towards the USD trading at 1.2515. Japanese yen has gained against USD at 78,42. The Norwegian krone (NOK) is stronger both against Euro and USD after the Norwegian Bank yesterday decided to keep the interest rate at 1,50 %. NOK is under strong upward pressure and a representative for the Norwegian bank indicated possible intervention if NOK gets even stronger. As an oil producing country Norway has strong reserves, a 600 Billion sovereign oil fund, a balanced budget and trade balances surplus. That makes Norway’s finances, a non EU and Euro-member, outstanding in an European context.

Brent crude keeps steady above USD 112 a barrel ahead of today’s speech, set for the second monthly gain. Gold continues to move in the tight corridor between 1655 and 1675 with silver dropping one percent to 30,40. Copper is up after four losing sessions.

Copyright: United World Capital

[UWC Neeraj]

Bernanke keeps stimulus hopes alive

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Stressing that US Federal Reserve if necessary is prepared to take further steps to strengthen the economy, Chairman, Ben Bernanke, kept market optimism for monetary easing alive in his speech in Jackson Hole Friday. US equity markets rose. The trend continued in Asia this morning where the South Asian Pacific Index, MSCI, is up, in spite of, a steep decline in China’s industrial production in August. Chinese manufacturing is at its lowest level since 2009.

Bernanke’s speech gave commodity and precious metals price a strong lift. Gold jumped USD 40 an ounce and trades at 1690 in Asia. Silver also rose 3 % trading at 31.80 Oil prices are strong. Brent crude is at 114 and NYMEX trades above 96. Soft commodities continue to raise. EURO/USD which got a strong lift on Friday when it reached 1,2685 is still trading at the highest levels seen in weeks. If the European Central Bank, ECB, which meets on Thursday, decides to start buying sovereign bonds from the most exposed Euro-countries, the Euro shall probably in the short term perspective, be lifted further up. Japanese yen is strengthened since last week and trades at 78,315 against USD.

The most awaited Bernanke’s statement dashed some hopes for a quick FED action. Bernanke’s comments, however, bolstered bets that the US central bank will provide more stimulus for an economy that is close to stalling. US Labor market numbers for August is going to be published later this week, and shall give a new indication on whether more active measures are needed.

This week markets are going to be concentrated on the ECB meeting where it seems that the German government very reluctantly, is giving up their resistance against ECB intervention in the bond markets. A EU Commission for tighter central control with the banks inside the Euro zone is also on the table.

Copyright: United World Capital