Jump to content

Market update by UWCFX - 05.08.2011


uwcfxcom

Recommended Posts

Daily Update - 14.02.2012

 

Moody’s includes England

on credit “watch” list

 

British pounds are falling

 

 

The international credit rating agencies have busy times. Yesterday it was Moody’s turn to downgrade the creditworthiness of Italy, Spain and Portugal simultaneously putting France, England and Austria under “active watch”. Moody characterizes their credit perspective as “negative”.

 

This has led to a substantial fall in the British Pound vs. USD. The USD world index shows a general strengthening in the short and medium term for the USD. USD/JPY is trading at 77,9725 up 0,65 % basically due to last quarter’s report on a 2 % fall in Japanese GNP.

 

Moody’s downgrading of central EURO-members comes as no surprise, more or less in line with similar credit ratings done by other agencies. The most interesting is that England for the first time appear on thir credit watch list. Minister of Finance Osborne sees this as an active encouragement to continue the country’s drive towards ambitious austerity measures.

 

It is also likely that Moody’s downgrading would set the stage for a renewed debate on the very role of international rating agencies; are they really the neutral and objective observers as they would like market participants to believe; or do they have their own agendas as earlier strongly stressed by France and Germany, taking handsome profits for not even trying to play even handed?

 

Wrangling is continuing before EU Finance Ministers are meeting in Brussels tomorrow to decide whether the promised Greek government austerities are seen as binding enough. This comes among increased concerns on the effects of dramatic austerity measures: are they worth the price? All the Euro countries which have swallowed the medicine and as Greece have introduced harsh measures as Spain, Portugal, Ireland and Italy, have seen severe recession, fast climbing unemployment along with increased social unrest.

 

Monday’s securities markets were positive. Both Europe and US reacted favorably on Greece. The Apple share for the first time reached the USD 500 level; making the capitalization of Apple even bigger than the oil giant EXXON. The US market has risen for weeks. Analysts are voicing concerns, and stressing that Technical signals are pointing towards a correction.

 

Oil prices are flat this morning, while Gold is loosing ground dipping below 1720.

Link to comment
Share on other sites

  • Replies 80
  • Created
  • Last Reply

Top Posters In This Topic

Daily Market Review

Thursday, February 16, 2012

 

EURO falls on

Greek wrangling

 

Assurances from the leader of the Euro-group, Jean Claude-Juncker that all necessary decisions regarding Greece shall be taken on Monday 20th, did not calm markets in today’s morning trading. The Euro is in free fall trading at 1.3017, down from high 1.3250 on continued uncertainties on Greece. This trend seems doomed to continue.

 

Written confirmations from the leaders of the the two big Greek parties assuring that they would continue to support the agreed austerities also after the parliamentarian elections in April, seem now to be in place. This along with agreements on how to cut an extra 310 M Euros in budgetary expenditures. This has, however, not been been sufficient to stop rumors that the leading EURO-countries now see Greece leaving the Euro as a foregone conclusion.

 

Remarks from the German Minister of Finance to his Portugal colleague has been seen as an assurance that the line goes with Greece. A Greek retreat shall not lead to further contagion inside the Euro-zone, and Portugal shall have the necessary backing. The general feeling is that especially the strong Northern European countries feel exasperated and more than willing to see Greece leave the Euro. Markets have consequently started to gamble on a Greek retreat.

 

The nervousness surrounding Greece is influencing markets. After heavy gains yesterday Asian exchanges lost ground in morning trading after both Dow Jones (- 0,76 %) and Nasdaq ( – 0,55 %) fall yesterday evening. Futures for Europe are down indicating that the promising New Years rally which have seen many exchanges jump 10 % , are running out of steam. Technical signals are pointing towards a correction.

 

Gold and metal prices which increased substantially yesterday have lost its gains. Gold is trading at 1720. Oil prices are going against the stream. Nymex is clinging on to the 101 – 108 level and Brent reached 118. The war of words going on around Iran still the main driving factor.

Link to comment
Share on other sites

Daily Market Update - Monday, February 20, 2012

 

Greek debt deal

expected today

 

Global markets have over the last days calculated into prices that a solution is going to be reached when the EU Ministers of finance meet in Brussels today. Asia was no exception. Markets were in a positive mood and added new increases to former gains. The composite Asian Stock-index is up one %.

 

The US Finance secretary, Timothy Geithner, added his voice in support for Greece bail-out when he during the weekend strongly encouraged The International Monetary Fund, IMF, to extend credit to Greece. He characterized the “bail-out” package on 139 Billion Euros as “strong and solid” deserving the support of the international community.

 

The proposed “bail-out” package is though offering little comfort to ordinary Greeks who again took the streets yesterday protesting against austerities which have driven their country deep into recession and mass unemployment. Many see the “bail out” rather as a support for European banks bringing no relief to a struggling nation. During the week end Spain also saw huge demonstrations against austerities organized by the trade unions.

 

In the wake of the minister’s meeting EURO/USD is trading on on 1.3214. Expect a relief rally and a stronger Euro when the package is eventually adopted. The Yen is considerably weakened after a huge deficit on their balance of trade figures were presented last week. USD/JPY is at 79,515. Of the smaller currencies Norwegian krones (NOK) continue to climb gaining both versus EURO (7,4886 and USD (5,6691) helped by increasing oil prices and and strong reserves.

 

Oil prices continue to climb. NYMEX is up 3 dollars from Friday trading at 105. Brent is consolidating above the 120 and trades at 121. Metals are up with Gold posting a 0,75 % jump to 1735. The tensions around the Persian Gulf continue. As a reaction to renewed sanctions, Iran has cut oil deliveries to France and Germany. If Iran follows up its threat to close the Hormuz straits, oil experts foresee dramatic jumps in crude prices possibly to above 200 barrel levels.

Link to comment
Share on other sites

Daily Update – 27.02.2012

 

The Summit has Come to the End,

but Questions Remained the Same

 

High appetite to risks remains in the markets, which helps indexes to be kept near yearly maximums. During weekends there were no any significant events, which could be capable to change an alignment of forces in the beginning of this week. At summit G20 the arrangement on possibility of allocation of additional funds of IMF has been reached, however it will be possible only if Europe will realize additional anti-crisis measures. According to the head of IMF, K. Lagard, it is a question of additional 500 billion dollars.

 

On Friday Government of Greece has directed the offer to private creditors on an exchange of bonds with reduction of their nominal value, now creditors have 10 days to consider this offer. The following provision has been included in the offer of an exchange: In case if 66% from total number of creditors will agree on "voluntary" restructuring - the remained bonds will be restructured compulsorily. In our opinion, it will have bad influence of the markets and fall of ratings.

 

Positive spirit remains in the commodity markets due to the upcoming LTRO: copper has returned to a level of 8.5 thousand dollars per ton; the oil of mark Light came nearer to a level of 110 dollars/barr., and Brent has finished week above a price of 126 dollars/barr., having updated a historical maximum. However, already today we can see some cooling in the commodity markets: the euro already is under symbolical pressure as expected in the middle of the week huge input of liquidity from ECB (on Wednesday), will break balance between dollar and euro. It is not excluded that probable correction on euro will have influence also on growth of raw actives.

 

From important events today, we are expecting news from Germany where the package of the help to Greeks should be discussed. However, it is improbable that the German parliament will refuse granting of additional funds to Greece. Therefore today, quite possibly, the markets will lie down in a side trend in expectation of events in the American stock market.

Link to comment
Share on other sites

Daily market Update - 01.03.2012

 

FED’s Bernanke turned

markets upside down

 

The quantitative easing markets had hoped for were not included in FED’s Ben Bernanke statement to the Financial Committee in Congress yesterday. This had an immediate effect. Shares, bonds, oil prices and gold dropped dramatically in minutes. The gold prices fall 100 dollar to recover to 1721 during trading in Asia. Dow Jones had to give up its flirt with the 13 000 level and ended on 12 952. The dollar was strongly strengthened. The Euro fall back, but has recovered from bottom levels. Euro/USD is in the morning trade at 1.3345. USD/JPY at 81,01 with Yen falling further.

 

Bullish global markets which had been looking forward to Bernanke giving signals for a possible third round of quantitative easing with the Federal Reserve letting more funds into the money market, were disappointed. Bernanke repeated his sober message of moderate economic growth. BNP in the US increased in fourth quarter to 3 %. 2,8 % was expected. Quantitative easing would have given global markets fighting its way out if recession, an extra impetus.

 

The effects of Bernanke disappointing markets are probably not, however, going to be long lasting. News from Japan reveals stronger investments and Chinese manufacturing numbers for the last three months indicate that the growth problems in Europe and US are going to be temporary. The new strongly emerging markets keep their appetite for oil and metals. Oil prices have recovered and NYMEX is back at 107. Brent trading at 122,25.

 

After several bullish weeks Asian markets were marginally down this morning pointing towards a possible correction in world equity markets after big gains. It is Also worth noticing that China has reduced their US treasury bill holdings to proportionally its lowest level in years. This has been a gradual process. China has for a long time been aware of the vulnerability its big exposure in US treasury bills And bonds have created. It has therefore obviously been a deliberate policy to scale down this exposure to more balanced and controllable level.

Link to comment
Share on other sites

  • 1 month later...

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

×
×
  • Create New...