Daily Market Reviews by UWCFX

[UWC Neeraj]

Brent climbs to 116 on war rhetoric

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Global markets taking monetary easing as a done deal continues to climb. Both oil and precious metal prices climbed to level not seen for the last months. Brent crude rose to 116, and gold flirting with 1700. Silver reached 32.20. EURO/USD is trading at 1.2617 making it likely that the EURO, in spite of a Moody down writing the Euro zone to negative, shall see 1,27 before the European Central Bank on Thursday will decide on whether to buy Spanish and Italian bonds aggressively.

The US markets were closed for Labor Day yesterday. The Asian markets were mixed going in and out of red territory. Oil prices were underpinned by expectations that weak data from China, the world’s second biggest oil consumer, would prompt Chinese authorities to ease credit policies further. Beijing has already taken decisive steps to encourage domestic consumption and lower interest rates. Israel’s stepped up war rhetoric against Iran, has increased tensions in the Middle East. This is impacting oil futures.

Gold and silver which are seen as hedges against unexpected moves in the currency market, are continuing to move upwards as are copper and soft commodities. Paring back of bearish bets against the Euro has probably helped bolster the single currency over the last days. There is also talk in the market that Asian players have been buying Euro against the Yen. The Japanese currency is stable against Dollar on 78,365. ECB President, Mario Draghi, stated yesterday that ECB purchases of sovereign bonds with up to three years maturity did not constitute state aid.

The Euro reached a two month high against the Australian dollar and rose 0,4 % against the yen. Investors continue to give the Australian dollar a cold shoulder on weaker growth in China and disappointing weak domestic retail sales.

Copyright: United World Capital

[UWC Neeraj]

Euro-USD slips ahead of ECB

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The Euro-USD slipped from its yesterday high, 1.2629, to 1.2537in Asian trading Wednesday morning. The Euro, nevertheless, demonstrated strength prior to the EC meeting tomorrow. The Euro bears who predicted a collapse in the single currency are not any longer the driving force in the markets. Whether the ECB will be able to live up to the expectations created over the last weeks, is a more complicated question. The best markets in this round can hope for is probably a strong signal of ECB readiness to intervene in the sovereign bond markets, and start buying Italian and Spanish short term bonds and not a detailed debt-buying plan.

The President of ECB, Mario Draghi, indicated that this might be in the cards when he told on Monday to European lawmakers that purchases of short term sovereign bonds to help burdened countries Spain and Italy, did not constitute a breach of European union rules. It represented an effort to stabilize the monetary situation and should not be interpreted as a state intervention in free markets. This has led critics to claim that Draghi is, too, much influenced by French Socialist President, Francoise Hollande, and Italy’s premier, Mario Monti. A final decision on ECB bond buying would most likely not be taken before the German constitutional court in the middle of the month decides on whether German participation in such bond buying is in accordance with the German constitution.

The US markets were weak after the opening after Labor Day. Manufacturing data fall for the third month in row painted a picture of a mixed, slow growing American economy stressing the need for quantitative easing measures. Stocks in Asia continue to be under pressure. Oil prices are down from yesterday’s peak. Brent crude is trading at 114 with NYMEX again tipping below 96. Gold is stabile at 1695 and silver at 32,20 demonstrates continued strength.

Copyright: United World Capital

[UWC Neeraj]

Euro, oil and metals pin hopes on ECB

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The Euro rallied one percent to a high of USD 1.2621 yesterday, close the two month high reached on 1.2638 on August 31st. The Euro is trading nearly five percent up from its low on USD 1.2042 on July 24th. Stock markets in US were flat while Asia trades up after four losing sessions on renewed hopes that the European Central Bank (ECB) may present new tactics to counter the region’s debt crisis. All eyes are on Maro Draghi and the statement the President of ECB is going to deliver later today hopefully outlining details on the bank’s much announced bond buying program.

The strength of the Euro came after a string of leaks from euro zone officials underpinning expectations that Mario Draghi will live up to its earlier statement. Draghi stated in early August that ECB would take whatever steps necessary to boost and save the Euro. The ongoing rally in the Euro has seen the dollar index plunge to its lowest level in three and half months. The Australian dollar, which has been under constant pressure over the last couple of months, bounced back after presentation of a surprise fall in Australian jobless rate.

The ECB meeting is seen as crucial for both the bank and Mr. Draghi’s personal prestige. Draghi has pinned his authority on a bond buying scheme. Buying of Spanish and Italian bonds will ease the pressure especially on these countries interest rates and their striving economies. A renewed ECB intervention in the euro zone’s bond market would give the Euro governments some spelling relief and give them time to come up with a longer term response to the bloc’s debt crisis.

Oil prices have been falling over the last two days. The development in the oil prices also very much depend on the outcome of the ECB meeting. Brent crude trades at 113,50. The future development of Precious metal prices are also dependent on whether ECB is able to deliver according to market expectations. So the situation for precious metals is likewise. Gold prices trading at 1695, shall be given a boost upwards with a detailed ECB plan for buying of bonds. The same is the situation for silver which yesterday saw its highest level in weeks reaching 32.60.

Copyright: United World Capital

Edited September 6, 2012 by UWC Neeraj

[UWC Neeraj]

ECB offers short term fix

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The European Central Bank (ECB) delivered according to expectations yesterday and gave rise to a global stock market rally. This after the ECB outlined a bond-buying scheme to help calm the euro zone’s debt crisis. Simultaneously firm US data fed speculation of a strong jobs report to be presented in the US later to-day.

The rally was broad both in Europe and US where three out of four listed stocks ended higher giving the Dow Jones its biggest daily gain in two months. Nasdaq rose to its highest level since 2000 ending at 3 135 with DOW at 13 292. Banks and high tech companies like Cisco, General Electric, Microsoft and Intel were the big winners. The positive trend continued in Asia where the South Asian Pacific Index, MSCI, climbed 1,3 percent. Reports that Chinese regulators had approved big infrastructure projects added to the positive market sentiment. The Shanghai index was up 2,3 and Hong Kong advanced 1,9 percent.

The ECB decision might be seen as a short term fix. It does not, however, solve the fundamental crisis problems Europe is confronted with. But markets have been given a relief brake. The ECB decision implies launching of a new and potentially unlimited bond-buying program. The program is focused on buying of bonds with a maximum 3 years maturity. Countries which have undertaken to implement approved fiscal austerity matters are eligible for the bond-buying program. ECB has thereby demonstrated willingness to confront the high interest rate levels on especially Spain and Italy’s bonds. The high bond interest rates have worsened and made the debt crisis for these countries even more unbearable. Increased risk appetite among investors shall probably be one of the important medium term results of the ECB measures.

The Euro which rose on hopes for ECB action prior to yesterday’s decision continues to marginally strengthen both in relation to USD and other currencies in early Asian trading. At present Euro/USD is at 1.2638. Greater risk appetite has weakened the Japanese Yen. USD/JPY is at 78,925. Oil prices have fallen back after skyrocketing prior to the ECB-decision. Brent crude is trading close to 114 with NYMEX in the interval between 95 and 96. Gold and silver prices are also falling back after yesterday’s high on 1705 and 32, 90 at present trading at respectively 1693 and 32,20.

Copyright: United World Capital

[UWC Neeraj]

Crucial decisions await markets

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Global securities markets rallied in expectation of positive outcome of this week’s crucial events; the German constitutional court’s ruling on the legality of the EU bailout fund, elections in Euro-skeptic Netherlands, details in ECB bail-out package and whether FED will initiate further monetary easing. Dow Jones climbed to its highest level since 2007, and Asian shares followed suit. Asian stocks rose to three-week highs on stimulus expectations supported by a statement from the Chinese Premier Wen Jiabao that China is on track to meet this year’s target for economic growth.

The USD came under new pressure after the international rating agency, Moody’s, threatened to downgrade US if the world’s biggest economy do not produce policies to cut its debt. The dollar index, DXY, towards several other currencies reached a four-month low. Euro/USD jumped to 1.2872 on hopes that the constitutional court will rule in favor of Germany automatically participating in the European Stability Mechanism (ESM) and other bail-out arrangements. The Australian dollar which is highly sensitive to development in China, climbed to a three week high of 1.0474.

Commodities and oil prices are also living high on stimulus expectations. A weaker dollar continued to underpin most dollar-based commodities. Brent crude rose to USD 115,43 and NYMEX, traded above 97. Gold has fully recovered from the drop on Monday and is back on 1735. During trading on Friday Gold reached 1741 which is the highest level since February. Silver is at 33,60. Copper is up the fourth day in row.

The new records in the equity markets have been reached on the basis of much smaller than usual volumes. Among investors there is therefore a growing feeling that markets might have run, too, quickly based on monetary expectations without roots in economic fundamentals. Regardless of the outcome of this week’s crucial events we might therefore be in for a rather strong technical correction. The forthcoming US elections which traditionally give a boost to stock markets are also an uncertain factor. In the currency market the sentiment seems for the moment clearly in favor of the Euro. Japanese yen reappears as a safe haven, and precious metals still seem to be a safe bet.

Copyright: United World Capital

[UWC Neeraj]

Markets expect FED stimulus

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The US Federal Reserve, FED, seems set for a third round of monetary stimulus. It is further expected that FED will continue its low interest rates policies at least to 2015. If FED’s statement today clearly signals stimulus, the dollar will come under new pressure. The Euro which received a boost from the German constitutional court and by the outcome of the Dutch elections yesterday, will in short term be further strengthened. Euro/USD continues up in the opening hours in Asia and trades at 1.2926. Asian shares steady amid caution before FED’s decision.

US and European stock exchanges reacted reluctantly to the German Constitutional Court decision which opens the door for buying of sovereign bonds from exposed Euro countries. The markets had already priced in a positive constitutional outcome and consolidated earlier gains. Neither a new introduction of Apple created the great enthusiasm on Wall street nor worldwide. There is also a sober attitude towards possible FED measures. There are also strong doubts about the efficacy of further quantitative easing.

FED Chairman Ben Bernanke has on the other hand clearly stated that the central bank will not sit idly by while unemployment remains far above levels consistent with a healthy economic recovery. A strong “growth” statement will therefore be taken positively by markets, but not cause the big enthusiasm. Further easing will have a negative impact on the dollar, strengthen commodities and the risk appetite. It is, however, a clear understanding that there is limited magic in FED’s tool box. Further market growth from here depends primarily on economic fundamentals.

The careful, defensive attitude which we see during this week, is reflected in the new strength of the Japanese Yen which trades at 77,721 against the USD. Yen is seen as a safe haven when there is volatility and uncertainty regarding the market direction. Oil prices got a new boost following the tragic killing of the US ambassador in the oil rich Libya. Brent jumped above 116 a barrel, and New York crude is steady above 97. Gold is consolidating around 1730 – 1735. Silver experienced big volatility. After reaching USD 34 it fall 3 %. It is now trading at 33,25. The positive upward trend in gold and silver is expected to continue with a positive FED decision.

Copyright: United World Capital

[UWC Neeraj]

Big bet on rescue of US economy

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The Federal Reserve, FED, delivered according to expectations and launched another aggressive stimulus program on Thursday. FED would pump $ 40 billion monthly into the US economy it sees a sustained upturn in the employment. It is the first time that FED ties its controversial bond buying directly to economic conditions. It represents a big escalation in US efforts to fight a weak jobs market.

Immediately upon FED’s announcement global markets rallied. US stock exchanges raised to a five years high followed by a 2,5 % jump in stock prices in Asia this morning. Commodity and precious metal prices are skyrocketing led by oil, copper, gold and silver. The dollar is falling against all currencies. Euro/USD bounced back through the 1,30 level and is trading at 1.3024. USD/Yen is 77,63. Gold hit a six month high at 1765 as investors braced for higher inflation. Brent crude is 116,50 also triggered by increased tension in the Middle East.

The new program would be concentrated on purchase of mortgage-backed securities, so called MBS, to encourage the housing sector which FED chairman, Ben Bernanke, called “the missing piston” in the US recovery. Bernanke said that the employment situation remains of grave concern. FED further decided to stick to its low interest rates policies at least to 2015, half a year longer than earlier announced.

The new program would be met with criticism. Republicans see FED’s action as an effort to help President Obama’s reelection and as a confirmation of failed economic policies. The stimulus measures would weaken the dollar. Many observers see FED’s initiative as a clear token of currency manipulation making American products cheaper in an effort to increase US exports and create jobs. If FED’s measures on the other hand succeed in turning the US economy around, it would spur the whole global economy again with US as its major engine. In the first place, however, FED’s initiative have given global stock market investors and precious metal believers a reason for jubilation.

Copyright: United World Capital

[UWC Neeraj]

Time for stocks and precious metals

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Asian stocks were trading close to a four months high when global markets Monday morning started to digest the US Federal Reserve, FEDs, decision. FED is going to buy bonds for USD 40 Billion monthly for as long as it takes to see growth and an increase in US-employment. Gold, oil and copper prices continue to rally on hopes that fresh stimulus from both FED and the European Central bank shall boost the global economy. FED’s decision imply printing dollars and inflationary pressure. These measures shall play up to riskier assets and boost stocks and precious metals as gold and silver.

The Euro/USD at 1.3128 is consolidating after strong gains last week. The Euro has fallen from its 1.3169 peak on Friday and after a steady climb from 1.2042 only some weeks ago, the Euro might be in for a technical correction as we have seen with USD/JPY over the last two trading days. The Tokyo markets are closed for holidays.

Oil prices are still trading up helped by stimulus and increased tension in the whole Middle East. Israel is continuing its saber rattling against Iran with the Israeli Premier trying to make a possible strike against Iran a key element of the US elections. Brent is at 117 and NYMEX is trading on 99. Gold is 1776. The expected flow of dollars pumped into the market has already weighed in on the US dollar.

One of the favorite Wall street stimulus wags have lately been to compare the Federal Reserve with a rehabilitation clinic offering addicted investors a synthetic high. For each stimulus you need more to get the same high. The euphoria is followed by a crashing comedown. The markets have experienced new highs over the last days. But the blue Monday is lingering around the corner, when markets try to settle and are back to fundamentals and economic realities.

The Chinese government has announced that presentation of a new five year plan is imminent. The new plan might imply the full convergence of the Chinese Yuan as the US government has pushed for the last years.

Copyright: United World Capital

[UWC Neeraj]

Profit taking follows rallies

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Oil prices dropped sharply yesterday as Asian shares fall back from a four week-high last this morning. Also the US stock markets, gold, copper and other commodities retreated from last week’s high. As markets digested the growth impact from the Federal Reserve’s aggressive stimulus. Eyes were again on the debt crisis in Europe. The big question is whether Spain will request a bailout to ease its fiscal strains. Concerns about growth slowdown in China also weighed in on investors sentiment as investors took profit from last week’s rallies.

Brent crude fell more than 5 dollar a barrel in late trade in US on Monday. The high volume selling seemed to stem from an automated computer trading program. The oil prices recovered this morning and are at present trading at 114. Euro/USD is continuing down from its peak on 1.3169 on Friday and consolidating around 1.31. USD/JPY is at 78,50. The MSCI-index for South East Asia outside Japan retreated 0,4 percent after five winning days in row. In the United States Apple again saved the day posting orders for USD 700 million for its iPhone 5 models. Also European stocks slipped from a 14 months high on Monday mainly on profit taking. Gold has fallen close to 20 dollar an ounce trading at 1759.

The Japanese Nikkei bucked the trend in the stock markets this morning up 0,2 % helped by a weaker yen. This offset concerns over Japanese firms having large exposure to China where anti-Japanese sentiments have been running wild on escalating tensions over territorial disputes between Asia’s two biggest economies. There are increasing fears that the conflict between the Asian giants might run out of control and lead to a bigger confrontation.

In Asia there are furthermore strong rumors that Japan will follow FED and undertake its own stimulus measures to stem the Yen’s appreciation after FED’s move. The Bank of Japan ends its two day meeting tomorrow. FED’s move undermined the dollar and lifted the Yen to a seven month high to 77.13 last Thursday. The development of the Yen in relation to both Euro, USD and other currencies is to be closely followed during the next days.

Copyright: United World Capital

[UWC Neeraj]

Saudi intervention causes oil prices tumble

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Brent crude fell below USD 112 a barrel on Wednesday, five dollar down from its peak last Friday. Concerns over the capacity of a fragile global economy to support demand and indications that the world’s top exporter, Saudi Arabia, is pumping more oil to bring down prices, have weighed in on oil markets. Prices hit a 2012 low at 88,49 in June and have since increased 27 percent. Automatic trading executions where one big sell order was followed by thousands of small, also contributed to the tumble.

The trading week is off to a weak start after the market bonanza experienced by the resolute actions from the European Central Bank, ECB, and the US Federal Reserve, FED, seem to fade. Both central banks undertook last week resolute economic stimulus actions. The last days worries about the debt crisis in Europe focused on Spain and a possible Greek Euro exit have along with fears for a hard landing in China kept investors funds on the sidelines.

Equity investors seem confused to which direction markets shall take. Europe fell yesterday on profit taking and question marks regarding whether the stimulus injections are enough to turn global markets around. These concerns were highlighted by a small, but vocal minority of FED officials opposing fresh stimulus and asking if the monetary measures have been taken, too, early; if a car is stuck in the mud, you continue to push till the wheels start turning; one official stated. The US stock markets were flat yesterday. Asia is also negative.

Representatives for the organization of oil producing countries, OPEC, stated on Tuesday that Saudi Arabia, a close ally of the United States, wanted to give the markets a clear signal for lower prices. Saudi has increased its daily production to 10 million barrels a day. Metal and precious metal prices were also influenced by the downward trend in oil. Gold fell to 1750 from its 1779 peak and trades between 1750 and 1770. Euro/USD is gaining Wednesday morning at 1.3071 trading in a new interval; 1.30 – 1.31. The Japanese Yen is falling as a result of the expected intervention from the Bank of Japan, highlighted in the Daily Report yesterday. USD/JPY is falling close to one percent trading at 79,18.

Copyright: United World Capital

[UWC Neeraj]

20 September 2012: USA: the market in thoughts

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

On Wednesday, 19 September, the stock market of the United States finished trading session with moderate growth of the main indexes on a basis of quite good data on the housing market for August. Let's remind that 3 main indicators were published yesterday: the number of the new constructions of houses increased from the reconsidered 0,733 million to 0,750 million - this is the strongest growth for 2 years ; the number of licenses for construction of houses was reduced from 0,811 million to 0,803 million though more serious reduction was expected; sales of houses in the secondary market increased from 4,47 million to a two-year maximum - 4,82 million though the increase only to 4,55 million was expected. Despite visible improvement in comparison with July, these data didn't cause full-scale rally - FRS meeting already behind, and the central bank already declared start of the new program of monetary stimulation. Let's note that originally indexes showed more considerable growth, but subsequently retreat of oil and gas sector in addition to falling prices for "black gold" moderated appetites of bulls.

The external background for the American session was rather favorable, Asian and European indexes grew against unanimity of the central banks in respect to start additional measures of quantitative mitigation - the Bank of Japan declared impressive extension of the program of purchase of assets, having followed the lead of European Central Bank and FRS which recently have also laid out all the trumps on a table. The central bank of Japan increased the program of purchase of assets more considerably, than assumed the majority of economists, and determination of the monetary authorities caused lifting of purchasing enthusiasm.

More briskly recently the situation changes in the raw materials market that makes the muffled impact on behavior of stock market. The world prices for oil on Wednesday again sharply decreased against messages that Saudi Arabia offered the major customers additional supply of oil until the end of the year, having expressed intention to bring down a speculative rise in prices for a “black gold".

Confirmation of increase in oil deliveries to the world markets was sudden and strong growth of commercial stocks of oil in the USA which accordingly to the data published yesterday grew in a week at once by 8,5 million barrels while the market waited growth of this indicator by 1 million barrels.

After three days of falling oil prices in aggregate more than for 7 % - that became maximum for the last three months, it is possible to expect some rebound. Nevertheless, it is impossible to exclude that on the threshold of November presidential election in the USA actions of market’s "invisible hand" will provoke further sag of the prices for "black gold".

Futures for share indexes of the USA this morning lose 0,2-0,3 %. At stock markets in Asia mainly negative dynamics is noted.

Copyright: United World Capital

[UWC Neeraj]

21 September 2012: The IMF can lower forecasts on growth of world economy

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Representatives of the International Monetary Fund reported that they can lower a forecast on growth of world economy. It is necessary to note that in July growth of world gross domestic product by 3,5 % in the current year and for 3,9 % in 2013 was expected.

Yesterday the main American indexes finished trading session in different directions - Dow Jones in moderate plus, and S&P 500 and Nasdaq - in a small minus against deterioration of economic statistics on China, Japan and the USA. Statistical data from Europe also didn't give a special optimism. The block of yesterday's data reminded investors that world demand continues to weaken, as well as on the American labor market it is not visible appreciable improvements. Despite all accepted measures - fundamental indicators remain former and we still don't see special changes in economy. So, it became known that the industry of China showed reduction in September, export and an import of Japan fell in August, and in the USA, in turn, the number of primary requests for unemployment benefits surpassed forecasts of economists, having made 382 thousand.

However, it didn't lead to aggressive sales. Superfluous liquidity supports stock markets, and besides other statistics was not so bad, as economists predicted. At the end of the trading session market were supported by the message in Financial Times that, according to information from the informed sources, the European politicians work over the program of economic reforms for Spain.

The prices for oil went up after falling in New York. Now Light ads in price 55 cents - quotations came nearer to 93 dollars. Brent bargains on a level of 110,46 dollars for barrel.

Copyright: United World Capital

[UWC Neeraj]

24 September 2012: Growth concerns back on the agenda

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Riskier assets fell broadly Monday morning, dragging down Asian shares, copper, precious metals and oil. The US dollar strengthened with EURO-USD at 1.2949. The Q3 party seems to come to an end as investors shift their focus to weak economic fundamentals and the euro zone debt bailout scheme. There also seems to be serious disagreements between German chancellor, Angela Merkel, and French President, Francoise Holland, to the implementation of an EU banking union and the EU bail-out fund.

The south East Asian Pacific index, MSCI, fell 0,7 % with the Shanghai composite and the Japanese Nikkei also falling. Renewed fears for a hard landing in China saw both the Australian dollar and resource-reliant Australian shares falling. The dollar index measured against a basket of key currencies, is up 0,3 %. Investors are also increasingly nervous about the unintended consequences of last Q 3 decision of the US Federal Reserve. FED buying of state bonds means more printing of money. Last week the Brazilian Finance Minister directed a blistering attack on the US, accusing FED for starting a currency war.

Markets have over the last days oscillated between euphoria of central bank’s monetary stimulus measures and uncertainties over weak economic fundamentals. Investors are nervous over downside risks and wariness ahead of US corporate earnings reports next month. Euro zone fears are back on the agenda with disagreements on the banking union, whether Spain shall ask for a full bail out and Greece where the “troika” of representative from the International Monetary Fund, the European Central Bank and European Commission have postponed presentation of their last report strengthening rumors about a possible Greek Exit from the Euro.

These developments have led to increased downward pressure on the Euro and weaker oil prices. Both NYMEX and Brent crude is falling. Brent is trading one dollar down to 110,40 pr. Barrel. Copper has fallen 0,9 percent. Gold is weaker at 1761 down from its peak on 1787 on Friday. The optimism over the strong measures taken by central banks in the US and Europe are fading on realization that the monetary measures are not backed by economic fundamentals. Spain has displaced Greece as the center of the euro debt crisis. Markets worry that Spain might eventually need external aid to help solve its debt problems.

These factors combined mean that the markets are off to a rather gloomy start on the week.

Copyright: United World Capital

[UWC Neeraj]

25 September 2012: New nervousness in global markets

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The Euro recovered somewhat in early Asian trade this morning trading at 1.2928 against the US dollar. This after the stock markets and the Euro slipped on Monday as investors looked past recently announced central bank stimulus to focus on economic fundamentals.

German business sentiment was weaker and Spain dragged its feet on asking for an international bailout causing a high ranking German official to ask Spain to make up its mind. Germany and France quarreled on when to implement a EU banking union, and in the US Caterpillar, the world largest maker of earth moving equipment, warned of slower demand for its products due to fears of weaker commodity prices. All factors contributing to a more negative market sentiment.

Japanese Yen, which has surged over the last days gave up some ground against both dollar and Euro, trading at 77.77 against the USD. German business sentiment dropped to its lowest level since early 2010 created concerns about a slowdown in the euro zones largest economy. Spain remained in focus. Its government yield rose on concerns that the Rioja government is postponing a request for an international bailout. Greece is still a concern after a report indicates that its budget deficit is bigger than previously thought.

Oil prices recovered from yesterday lows. Brent crude is trading above USD 110 a barrel on renewed fears for a major conflict in the Middle East. After the Israeli Prime Minister, Benjamin Netanyahu, has been bellicose for weeks, the head of the Iranian revolutionary guard stated that Iran was ready for an attack and would hit back. In an interview with CNN yesterday night, the Iranian President, Ahmadinejad, took a more conciliatory tone before his speech the UN General Assembly tomorrow. Gold prices has strengthened trading at 1765 which is still far below it Friday peak on 1787.

Copyright: United World Capital

[UWC Neeraj]

26 September 2012: Worries on Spain weakens EURO

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Street fights and protests in Spain sent the Euro down below 1.29 in early Asian trading this morning. Euro/USD recovered to 1.2950 during yesterday’s trade to fall down to 1.29 on protest news from Madrid in the evening. Euro/USD is at present trading at 1.2875. As has been the pattern in Greece, Spaniards took to the streets and surrounded Parliament. Violent clashes with riot police over austerity followed. The protests came in the wake of weeks of indecisive foot dragging by a Spanish government unable to decide whether to ask for an international bail-out.

Serious concerns over a slowing global growth are back on investor’s radars as equity rallies fed by major central banks monetary easing, are fading. Both Dow Jones (- 0,75 %) and Nasdaq (- 1,36 %) fell yesterday, pushed down by Caterpillar and Apple. Caterpillar issued a profit warning and fell close to 5 %. Apple fell 2,5 % as the company sold out of its initial supply of iPhone 5, raising concerns whether Apple would be able to keep up with demand. The South Asian Pacific Index (MSCI) and the Shanghai composite both fell on weariness on Spain.

New worries about the development in the Euro zone and slowing economic growth, led to further fall in commodities. Oil prices, which were lifted on increased tensions in the Middle East over the weekend, fell back. Brent crude which traded at 111 yesterday dropped one dollar to 111 a barrel. Gold which rose 20 dollars an ounce yesterday, has fallen back to 1760 in Asia.

Australia, which is very dependent upon growth in China, has seen both stock prices and the Aussie dollar falling. USD/JPY is stabile at 77,74. As a positive sign in yesterday’s market, July numbers show that US home prices rose for a sixth straight month. Together with a jump in consumer confidence in September, these are positive indications that Americans are ready to loosen their spending.

Copyright: United World Capital

[UWC Neeraj]

27 September 2012: Wary of Spain and Greek debt

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Demonstrations in Athens and Madrid ended in bloody clashes between protesters and riot police as uncertainty over a bailout for Spain and European leaders struggling to find a unified position to tackle the Euro debt crisis, continue to dominate news and market sentiments. EURO/USD stays at the same level at 1.2877 as Wednesday morning. Dow Jones and Nasdaq fell on uncertainty over Europe while Asian stocks rebounded on Thursday. The MSCI-index for the South Asian Pacific state traded up 0,5 %. The Shanghai composite index fell to its lowest level since February on the possible negative impact of the economic slowdown on corporate earnings.

Oil prices are under pressure with Brent crude clinging to the 110 USD a barrel. In his speech to the UN General Assembly the Iranian president, Ahmadinejad, stroke a more conciliatory tone towards Israel dampening the war rhetoric. Amadinejad called for a new world order not dominated by Western powers and stated that Iran was under constant threat of military action from what he called “uncivilized Zionists”. Precious metals are as commodity prices steady. Gold is trading at 1755 and silver at 34.00 in early Asian trading.

As protesters against severe austerity measures took to the streets and clashed with police in Spain and Greece, European equities saw their worst day in two months. Spanish 10-year bond yields rose to above 6 percent for the first since the European Central Bank, ECB, for two weeks ago introduced its scheme for buying bonds from exposed and struggling Euro-countries as Italy and Spain. This plan has trimmed borrowing costs for the last two weeks, but the effect of the monetary stimulus seems to be running out of steam faced with grim global economic fundamentals and realities.

The Japanese yen is keeping strong against both USD and Euro. USD/JPY is trading at 77.66. The dollar index, DXY, measured against a basket of currencies eased 0,1 %, off a two week high on 80,012 reached yesterday. A weaker dollar helped a modest recovery in dollar-denominated industrial commodities and helped copper, oil and gold from falling further.

Copyright: United World Capital

[UWC Neeraj]

28 September 2012: Spain’s budget triggers market optimism

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The new Spanish budget which makes austerity rather than tax cuts a priority has been well received by markets. The MSCI-index for South East Asia Pacific rose with 0,7 percent. Brent crude registered its highest level in weeks and jumped above USD 112 a barrel. The Euro and commodities drifted higher with USD on the defensive. Euro/USD is trading at 1.2935. Also smaller and more risky currencies opted up. The New Zealand KIWI and the Indian rupee are among the winners over the last weeks. The Japanese yen continues up. USD/JPY is at 77,55.

The Spanish government announced Thursday a detailed timetable for economic reform with sharp spending cuts and no tax hikes. Today president Francois Hollande will present his austerity budget for France, punishing the rich. Spain is simultaneously conducting negotiations with European Union authorities on the terms for a possible aid package. A successful conclusion of these talks shall pave the way for European Central Bank bond-buying and easing of Spain and Italy’s borrowing strains.

The US Finance Secretary, Timothy Geithner, stated yesterday that Europe still was the weakest link in the global economy, but the last measures taken by the European Central Bank, ECB, had given ammunition which made Europe’s situation far better than it was three months ago. Early Asian trade also saw a spike in Chinese shares triggered by speculation on further Chinese economic stimulus. Risk seemed primed for a comeback, and in such a scenario Australian dollar may be one of the biggest beneficiaries.

As the Yen continues to strengthen numbers for Japan’s industrial output in August was very disappointing. Industrial production is down, and all the big Japanese car makers presented negative growth figures. With central banks printing more money, gold is on the offensive and reached a week’s high yesterday with 1777. The big precious metals winner is, however, silver which traded close to months high on 34,70, jumping more than 30 % since early summer.

Copyright: United World Capital

[UWC Neeraj]

01 October 2012: USD and Yen back in favor

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The Euro rally which saw the common European currency reach a 1,3165 high, seems to have come to a definite halt this morning with Euro/USD trading at 1.2820. Manufacturing data from China and Japan weighed in on market sentiment after a weekend with mass demonstrations against austerity measures in Greece, Spain, Portugal and France. Uncertainty about Spain’s bailout saw MSCI index of Asia-Pacific fall 0,4 percent after similar drops on Dow Jones and Nasdaq in New York on Friday.

Apple Inc (AAPL O) was the big mover on news it sold out its new iPhone 5 Smartphone. Apple announced more than five million smart phones sold in the three days since it hit stores. Apple fell, however, 2,1 percent to USD 685 on analysts concern that the company was unable to produce the phone fast enough to meet demand. Japan’s Nikkei fell to its lowest level in three weeks after profit warnings from some of the Japanese heavy weights.

Commodities led by Nickel and Copper are down on a stronger dollar. Gold (1765) and silver (43,28) also drop along with oil. Brent crude is down one dollar after reaching USD 112,50 on Friday. The Euro lost its momentum against the USD after a disappointing survey on German business sentiment. Spain and Greece further undermined the strength of the euro zone common currency. The German business sentiment is at its lowest level since early 2010.

The weak sentiment in the European markets is playing into the hands of traditional “safe haven” currencies as USD and JPY. The European Central Bank, ECB, is meeting again this week. It is expected that the interest rate would be kept at the same level and more details are going to be revealed on the bon buying scheme the ECB presented in August.

Copyright: United World Capital

[UWC Neeraj]

02 October 2012: Gold outshines in positive market

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

After a weak start in October, markets bounced back yesterday helped by a surprising expansion in US factory activity, and what was regarded as a satisfactory stress test of Spanish banks. Dow Jones gained 0,58 % while Nasdaq closed down 0.1 percent. Wall Street closed the third quarter as the best since 2010. The MSCI-index for Asia-Pacific shares were up 0,3 percent with similar positive developments in South Korea and Australia. In Japan Nikkei index rose 0,3 % after reaching a three weeks low on Monday.

The Euro/USD was fluctuating strongly during whole yesterday, dipping down below 1.28 to recover to 1.2920 before falling back. The most traded currency pair is stronger in early Asian trading at 1.2914. USD/JPY is weaker at 78.07. The Australian dollar and South Korean currency also traded up by a US court decision which permits Samsung to sell its Galaxy iPhone in the US after being banned last month.

The European debt crisis remains investors focus. There is still some confusion with regards to when Spain eventually will ask for a bail-out. The German government shall according to well informed sources have asked Spain to wait before asking for a sovereign bail-out not only involving its banks. Unemployment figures released for the Euro-zone yesterday painted a very grim picture with 11,4 % percent out of work and with unemployment rates on 25 % both in Greece and Spain.

These numbers did, however, not have any clear negative impact on the Euro. Greece is this week going to present a new austerity budget for the Parliament entering its sixth year in recession. The austerity measures are disputed not only expressed through mass demonstrations in Europe. The US economic Nobel Prize laureate, Paul Krugman, accused the European governments for “austerity madness” clinging to an austerity culture which could only lead Europe into deeper misery.

Stronger stock markets also helped commodities. Brent crude is at 112,20, and the strong underlying upward trend in precious metals continue. Gold trades at 1778 and Silver close to 35, the highest levels seen in 10 months. Copper and nickel are also up.

Copyright: United World Capital

[UWC Neeraj]

03 October 2012: Investors are waiting for signals to choose final direction in the markets

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Stock markets in the United States showed on Tuesday mixed dynamics. The index S&P500 showed positive dynamics and ended up session in plus with 0,09%, however it grew up only in the last hour of the trading session.

The index Dow Jones lost about 0,24 %. Analysts connect this growth in the last hour with positive dynamics in trading of highly technological sector. Especially movements in the shares of Apple Company gave support to index growth, they have been losing in the moment 1,3 %, but were able to close trading session in a green zone.

The main fears and the main negative factors were coming to us from Europe. Mainly it was rumors around Spain. Though the prime minister of Spain told that the financial help after all will not be required to the country.

In the Asian Pacific region today China and South Korea are closed. China today is celebrating its National Day, and naturally markets are closed, but we are still receiving macroeconomic data. In China index PMI for the non-productive sphere decreased to 53,7 points in relation to the previous value of 56,3 points. It is the next signal of slowdown of the Chinese economy, especially of the sector of services - the sector by which China is guided first of all.

The Asian bank reduces forecasts on growth rates of the Asian region except for Japan, now growth according to ADB should make 6,1 % in 2012. We will remind that it is already the third decrease this year.

It is necessary to note also negative data which come to us from Australia; it is a data on sales of new houses. As well it is a decrease in an index of activity in a services sector and expansion of deficiency of trade. All this reflects the Australian dollar; it is on the minimum values against US dollar. Currency pair EUR/USD is on a level 1.2902, here are no any serious changes at present moment.

Today in the morning the future for oil of the Brent bargains with fall, losing 0,25 % to closing of the previous trading day.The prices for gold and silver are stable at levels of previous day.

Copyright: United World Capital

[UWC Neeraj]

04 October 2012: Today the ECB will announce results of meeting, no surprises are expected

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Stock markets are balancing between economic signals. Paul Krugman says that the USA and Europe have good chances to finish crisis. Today in the spotlight is the decision of European Central Bank on an interest rate.

The Asian Pacific region today at the beginning of trading session shows positive dynamics – indicator of Japan adds 1,3%, Nikkei is 225, other markets of Asia which are opened - growing on the average on a 0,5%, basically due to favorable yesterday's trading session in the USA and good macroeconomic signals from America.

The American stock market grew by 0,4% on an index S&P500 and was closed on a level of 1450 points. Two positive signals are data on employment from ADP which appeared better than expectations and data on the ASM indicator in the non-productive sphere – also better than experts expected. The future contract on S&P500 index now also is in a green zone, it adds about 0,4%. Minor macro-signals also didn't pump up yesterday – demand for mortgage lending is at a maximum level in 3 last years in the USA, it naturally also promotes revival in the real estate market. At least, those companies which are engaged in this market and mortgage lending were yesterday one of the best during trading session in the USA.

However there are enough pessimists in the market and they discuss more long-term idea which will start to influence markets shortly - it is certainly the fiscal rock which threatens America with new recession. In general the ratio of positive and negative signals, now about 1:3, meaning 1 signal positive – 3 signals negative, thus it is natural if there is a positive signal – many speculators start to disperse the market. Though, in principle, it moves within diapason which it entered at the beginning of September.

One or two changes towards one or other side are not a tendency to understand that now occurs in the world, recession or economic growth. To understand anything, it is necessary that this tendency last at least 3-4 months.

The future contracts on oil are now correcting, and grow for 0,2% after yesterday's fall almost for 3%.

Copyright: United World Capital

[UWC Neeraj]

05 October 2012: Statements of European Central Bank and data on unemployment support markets

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

On Thursday, October 4, key indexes of the USA finished the trading session in the positive territory due to Mario Dragi's statements, and also the publication of data from a labor market, which have surpassed expectations of analysts.

Yesterday the head of European Central Bank confirmed the readiness to activate, in case of need, the Outright Monetary Transaction (OMT) program if certain conditions will be performed and declared that taken before measures helped to facilitate intensity in the markets in recent weeks.

Following the results of the trading session the indicator of "blue chips" the index of Dow Jones Industrial Average raised for 0,598 % to value 13575,36 points, the index of the wide market S&P 500 left in plus for 0,717 % to level 1461,40 points, and the index of the hi-tech companies Nasdaq raised for 0,454 %, having closed on a level of 3149,46 points.

The market of oil should be noted separately, now future contracts are corrected down, loss makes 0,5% and 0,3% on Brent and WTI. Yesterday there was a sharp splash on top, oil returned to those levels which we saw at the beginning of the current week. Uncertainty again appeared in the Middle East, connected with the conflict between Turkey and Syria. Military operations shortly are possible, respectively the geopolitical factor comes back to the market, but today's morning correction is absolutely natural to that growth which was yesterday.

The price for futures for gold with delivery in December today following the results of the session on COMEX rose for 16.70 dollars or 0.9 % to value of 1796.50 dollars for ounce. Gold added in the price owing to weakening of dollar towards all competing reserve currencies.

In the currency market first of all we note actions of European Central Bank, well more exactly it is Mario Dragi's statement and respectively favorable macroeconomic statistics in America - this allowed Euro to become stronger, it left at a boundary 1,3020-1,3025, now besides small correction at level 1,3014.

The main event of today is certainly data on the American unemployment.

Copyright: United World Capital

[UWC Neeraj]

08 October 2012: Currencies mixed after jobless data

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The United States unemployment rate dropped to 7,8 percent, a near four-year low, down from 8,1 percent, on Friday giving markets a welcome boost at the end of last week. There are different interpretations of the better unemployment figures, but the overall picture is that America’s labor market appears to be in better shape than originally thought, if only slightly. The chief economist of one of the world’s biggest banks stated that “The labor market situation in US is slowly improving”.

The most encouraging aspect of the data is the large and unexpected decline in the jobless rate which gives President Barack Obama some reason for joy after a disappointing first debate with this Republican opponent, Mitt Romney, last Wednesday. The fall in unemployment occurred due to the numbers of employed Americans soared by 873 000 while the number of unemployed fell by 456 000. A worrying signal though is the jump in part-time workers suggesting that many Americans are not finding the well paying full time positions they would like to see.

The dollar index fell 0,2 percent as the euro gained 0,3 percent to USD 1.3049. The euro is falling back in Asian trade during the morning hours and is at 1.2987 against the USD. There are nervousness regarding the meeting with EU finance ministers in Brussels today and Angela Merkel’s surprise visit to Greece tomorrow where an apparent cover up of a memory stick with a list of nearly 2 000 Greeks with Swiss bank accounts threatens to become a political firestorm with demonstrations against the Samaras-government.

The dollar, however, surged against the Japanese yen, gaining 0,5 % after the release of the better unemployment figures. The Yen also fell against the EURO. USD/JPY has recovered slightly in morning trade and stand at 78,54. Both crude oil and precious metals fell on the unemployment news. Brent crude is trading at USD 11,40 a barrel and gold is at 1772. The Asian stock exchanges are all trading down before the Brussels finance ministers meeting. Shanghai composite index fell 0,9 % after being closed one week for holidays.

Copyright: United World Capital

[UWC Neeraj]

09 October 2012: Shanghai jumps on policy support

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The Shanghai composite index jumped with 1,2 percent this morning as the governor of the Chinese central bank stressed the need for monetary flexibility, sustained growth and financial reform. The statement was seen as Chinese political willingness to take necessary steps to encourage the economy which according to the last global economic analysis from the International Monetary Fund (IMF), will grew 7,8 % in 2012. IMF has lowered its forecast for global economic growth from 3,5% in July to 3,3 percent. IMF is painting a grim picture especially of the development in the euro zone where economic growth forecasts are lowered from 0,5 to 0, 3 %.

Other Asian exchanges were also up in Asian trading except for the Japanese Nikkei which falls 0,3 %. MSCI for the south east Asian Pacific is up 0,6 and Australia with 0,5 percent helped by higher copper and precious metal prices. Oil prices are also up. Brent crude is at 112,67. Futures for the stock exchanges in Europe and the US are pointing to a positive start after concern over China and weaker third quarter profit earnings for US-companies, spoiled the party both in Europe and US yesterday. Dow Jones was down 0,19 percent while the technology stock index, Nasdaq, fell with 0,69 percent.

EURO/USD has been trading far below its Friday peak on 1.3172. The Euro fall below 1.29, but has recovered slightly at 1.2987 in early morning trade. The EU Finance Ministers met in Luxembourg and have agreed on an emergency fund on 472 billion Euros to eventually pump into banks and sovereign states. The ministers seem also to have agreed on a single supervision for euro zone bank which will strengthen cohesion and the mutual currency. Spain has not yet decided on whether to ask for a sovereign bail-out. German chancellor Angela Merkel is visiting Athens today in an effort to boost the three party coalition governments which has come under increased pressure following new scandals and accusations of cover up of a list of Greek politicians and business people seeking to avoid taxes by stuffing funds in Swiss banking accounts.

The USD/JPY has recovered from yesterday’s low trading at 78,40. The Australian dollar which reached a three week low yesterday, has gained 0,5 % in relation to dollar on the statement from the Chinese central bank governor. Precious metals are on rise. Gold which fell to 1771 yesterday is trading eight dollars up at 1779. Silver is recovering from the low of 33,75 and trades at 34,20. In Europe the Swiss franc is under pressure.

Copyright: United World Capital

[UWC Neeraj]

10 October 2012: Dollar rises on gloom concerns

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Asian shares fell on Wednesday after a technology sell out on Wall Street last night. The Japanese Nikkei dropped 1,86 percent after car exports to China tumbled. Toyota, Nissan and Mazda saw their exports reduced to half in September. The Euro/USD also tumbled to 1.2859, down 75 points from its high on Tuesday. Angela Merkel was met by mass demonstrations and street fights between austerity measure protesters and police in Athens. Merkel assured the Samaras-government that Germany would support continued Greek membership in the EURO conditioned of willingness to carry through the tough austerity measures.

Concerns on companies’ third quarter results and the Chinese economy dragged stock markets down and created new volatility in currency markets. Shares of the world’s largest semiconductor maker, Intel, lost 2,7 percent on downgrading due to weak demand for notebooks. The whole technology sector came under strong pressure. Both Apple and Google have fallen strongly during the last trading days. The aluminum producer Alcoa issued a profit warning due to weaker Chinese demand. A Chinese expert in the French Credit Agricole, countered by saying that some Western medias and companies are trying to bash China negatively. Chinese aluminum export has increased strongly over the last year, and big infrastructure projects mean that China will continue to import huge quantities of raw materials. Growth forecasts of 7, 5 – 8 % for China for 2012 is far outnumbering a recession stricken Western economy.

Oil prices have risen strongly over the last 24 hours. Brent crude reached USD 114 a barrel with New York crude, NYMEX, again trading above USD 92. Increased tension in the Middle East is behind the spike in oil. Turkish forces have amassed tanks and troops in the Syrian border ready to hit. An escalation in the late border skirmishes between the two countries will increase the risk for a NATO intervention Turkey being a NATO member. Precious metals were down yesterday and in early Asian trade with Gold 1765.

The last half yearly report from the International Monetary Fund, IMF, is highlighting the problems the Euro zone represents to the global economy. IMF urged European politicians to deepen its financial and fiscal ties to restore sagging confidence in the global financial system. The austerity measures offered by the IMF and leading Euro-countries like Germany, have, however, worked poorly. Greece is entering its sixth year of recession with strong social and economic costs, witnessed by Merkel’s visit to Athens. Merkel’s visit has done little to calm the unrest in the streets. It might, however, have given the three part coalition of Antonis Samaras a briefing spell to carry through highly unpopular cuts which primarily hit the weakest strata of the population like pensioners and the increasing number of unemployed. The currency markets answer to the last pictures from Greece is to send the Euro down illustrating the volatility inside the Euro zone and question marks whether European finance minister have done enough to turn the tide around.

Copyright: United World Capital