Posted on 29th August 2015 by barry norman in Stockpair weekly Insights

Global Exchanges

A surge in Chinese stocks gave European equities their initial push. The Shanghai Composite closed up 5.3%, marking the first rise in six sessions. It was the first chance equity investors there had to respond to the People’s Bank of China decision to inject 140 billion yuan ($21.8 billion) into the financial system. “Investors are cheering the news from the People’s Bank of China. The PBOC is combating the uncertainty by turning on all of its cylinders,” said Naeem Aslam, chief market analyst at AvaTrade, in a note.

“The question is if they can do more? Yes, for sure, they can bend the liquidity easing arm as much as they desire,” he said. Aslam noted China’s central bank has already cut its benchmark interest rates and cut the reserve ratio requirement for major banks, “which itself works out another massive liquidity as the banks could use that cash to lend.”

In Frankfurt, the DAX leapt 318.19 points, or 3.2%, to 10,315.62, clawing back the steep losses logged earlier in the week. In Paris, the CAC jumped 3.5% to 4,658.18, and the U.K.’s FTSE 100 climbed 3.6% to 6,192.03.

global markets

 

Currency Markets

The greenback finished with gains against the euro and the pound as U.S. stocks stabilized and a spate of strong U.S. economic data helped assuage investors’ fears of sustained market turmoil. But the U.S. currency lost ground against the yen in a week of uneven trade that often saw the buck behave like a risk asset.

Minutes from a meeting of Federal Reserve policy makers released on Aug. 19 kicked off a period of weakness in the dollar, as investors pushed back their expectations for the timing of the first Federal Reserve interest-rate increase since 2006.

The dollar is sensitive to investors’ interest-rate hike expectations, because higher interest rates would increase the return on assets denominated in dollars, making the U.S. currency more attractive to foreign investors.

global currency

Commodity Markets

In precious metals, many investors have been betting on lower gold prices for months amid speculation that the U.S. central bank could raise rates as soon as September, and some of those closed those wagers by purchasing previously sold futures contracts, Mr. Gero said.

A rally in crude oil, which rose 6.3% to $45.22 a barrel on the Nymex, also lent gold prices some support. Gold is often traded as part of a commodity where oil occupies the largest segment, and a rally in oil prices tends to lift the value of the overall basket.

Posted on 28th August 2015 by barry norman in Stockpair Daily Insight

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Oil Surges

August 28, 2015

Barry Norman

Director

Investors Trading Academy

At this writing oil has surged $3.24 to trade at 41.78 supported by a jump in the US dollar and a higher GDP print for the US. Oil prices will likely settle between $50 and $60 a barrel in the next year as prices reach lows not seen for six years, former US Assistant Secretary of Energy Chuck McConnell told Sputnik on Thursday. Oil prices have tumbled nearly 60 percent since reaching a peak in summer 2014. After a short rally earlier this year, benchmark US crude prices have retreated to hit a six-year low below $40 per barrel.

Oversupply and high oil reserves levels amid low demand due to economic uncertainty in China and other world economies has contributed to the price decline.

However, McConnell suggested prices could be driven higher by a number of exogenous factors, including instability in the Middle East.

The global oil price drop will likely push the United States to repeal its four-decade old crude oil export ban, former US Assistant Secretary of Energy Chuck McConnell told Sputnik on Thursday.

crude oil

According to the International Energy Agency (IEA), global oil prices will fall further in 2016 in response to decreased demand.

Three members of the Organization of the Petroleum Exporting Countries (OPEC), Russia, Canada and Saudi Arabia, have the ability to raise oil prices, thereby improving energy markets.

Oil prices vaulted 6.8 percent on a global rally in equity markets and an unexpected fall in U.S. crude inventories.

Oil rocketed more than 9 percent higher on Thursday, posting its biggest one-day rally in years, as recovering equity markets and news of diminished crude supplies set off a short-covering surge by bearish traders.

Snapping back fiercely from a deep two-month slump that reached 6½ year lows this week, oil climbed as world stock markets rose on hopes Chinese government measures to stimulate the economy would pay off, while the dollar strengthened as risk aversion eased.

oil stockpair

Posted on 27th August 2015 by barry norman in Stockpair Daily Insight

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What Is A Dead Cat Bounce?

August 27, 2015

Barry Norman

Director

Investors Trading Academy

Litecoin-Price-Technical-Analysis-Gains-ErasedInvestopedia defines a “Dead Cat Bounce “as a temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce is a small, short-lived recovery in the price of a declining security, such as a stock. Frequently, downtrends are interrupted by brief periods of recovery – or small rallies – where prices temporarily rise. This can be a result of traders or investors closing out short positions or buying on the assumption that the security has reached a bottom. A dead cat bounce is a price pattern that is usually identified in hindsight. Analysts may attempt to predict that the recovery will be only temporary by using certain technical and fundamental analysis tools.

The Dow Jones Industrial Average’s rally Tuesday is looking like what technicians refer to as a “dead cat bounce,” which could be interpreted as worrisome for bulls. MarketWatch.com reported today that the Dow was up 227 points in midday trade, but had been up as much as 434 points at the intraday high of 16,100.11, which was reached at about 9:34 a.m. Eastern. That high failed to reach Tuesday’s high of 16,313, hit at 11:23 a.m., which in turned failed to reach the high of Monday’s intraday bounce at 16,361, hit at 1:11 p.m. With Tuesday’s apparent “dead cat bounce,” the Dow turned a 442-point intraday gain into a closing loss of 205 points. Wednesday’s bounce might look even more like a “dead cat” given that the Dow had tumbled 1,682 points over the past four sessions, producing the first-ever four-session streak of 200+-point declines.

dow jones charts

Global markets were mixed on Wednesday, with European stocks near flat and Japan’s Nikkei rising 3.20 per cent. The Shanghai index fell 1.27 per cent as monetary stimulus by the Chinese central bank failed to prompt a turnaround. US data showed new orders for durable manufactured goods rose solidly in July.

“The slowdown in China could lead … to a slower global growth rate and less demand for the US economy,” said Federal Reserve member Lockhart.

The crash of China’s stock markets and the limited impact of Beijing’s efforts to calm the situation have raised fears of a greater-than-expected slowdown in the world’s second largest economy that could drag down growth globally.

Some economists have called on the Fed to not go through with a long-anticipated increase in the federal funds rate at its September FOMC meeting, given the global markets turmoil.

dow jones stockpair

Posted on 26th August 2015 by barry norman in Stockpair Daily Insight

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China Does Its Bit To Quell Market Fears

August 26, 2015

Barry Norman

Director

Investors Trading Academy

China came to the rescue today as traders hoped but the new liquidity was not as successful as one had hoped for. Markets rebounded on Tuesday with world stocks, oil prices and bond yields all rising after China cut interest rates and banks’ reserve requirements in a bid to kick-start its wavering economic growth.

But while the S&P 500 rose as much as 2.9 percent during Tuesday’s session, trading was volatile and its gains had receded to just a 1.3 percent in late afternoon trading and ended the day with a small loss.

The dollar turned around Tuesday to rise 1.2 percent against a basket of major currencies as the stimulus boost to China economy renewed focus on U.S. economic data and a potential Federal Reserve rate hike this year. The dollar saw a gain of 73 points to 94.11 while the euro took a harsh fall giving up 127 points to 1.1492.

dow and vix

Global markets were beat up on Monday after Chinese shares fell almost 9 percent, prompting investor calls for remedial action from authorities that grew louder overnight after the Shanghai Composite slumped.

Monday’s selloff was U.S. equities’ steepest in four years, and put the S&P 500 and NASDAQ composite indexes in correction territory, topping off its fifth day in a row of declines.

“Spinning a pot on a potter’s wheel when it gets out of balance, it starts spinning a lot,” said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago. “This is all price discoveries. We had a panic yesterday. As people get back in the market they’re questioning what everything is worth. I don’t think it’s any one thing. What’s most important is where its going to close. I think we’ll have a really underwhelming close.”

Analysts said Tuesday’s response – a 25 basis point cut in key rates and 50 bps off the reserve requirement rate for large commercial banks – sent a clear signal that Beijing, which has stepped in several times this year to keep China’s growth on track, was still willing to intervene.

The surprise was the fall in gold prices which declined $14 to 1139.60 while copper soared after the news from China adding 35 points to 2.294 after it hit a multiyear low yesterday.

copper tues

Posted on 25th August 2015 by barry norman in Stockpair Daily Insight

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The Bears Trample the Bulls

August 25, 2015

Barry Norman

Director

Investors Trading Academy

Crude oil fell below $40 a barrel for the first time since 2009, and the CBOE Volatility Index — the so-called “fear index” — jumped more than 45 percent Friday and more than 90 percent for the week. WTI crude for delivery in October fell to as low as $37.75 on Monday. It quickly moved back above $38, however, and was down $1.47, or 3.6%, to $38.97 in late morning trading.

Brent crude on London’s ICE Futures exchange sank $1.98, or 4.4%, to $43.48, dropping below $44 for the first time since March 2009. It is now trading more than 55% below its one-year high of $103.19 reached in August last year.

These are “epic times in the oil market,” said Matt Smith, director of commodity research at ClipperData. Still, “while the market does look weak from a fundamental perspective, sub-$40 oil means a lot of bad news is being price in,” he said.

The oil losses deepened in the wake of losses in stock markets around the globe. In the U.S., the Dow Jones Industrial Average plunged 1,000 points at the open, but it has since pared some of its steepest losses.

crude oil prices mon

Iran’s Oil Minister, Bijan Zanganeh, said over the weekend that holding an emergency OPEC meeting may be “effective” in stabilizing the oil price, Iran’s oil ministry news agency Shana reported.

Algeria said earlier this month that the Organization of Petroleum Exporting Countries could hold an emergency meeting to discuss the drop in oil prices but other OPEC delegates said no meeting was planned.”Iran endorses an emergency OPEC meeting and would not disagree with it,” Zanganeh told reporters in Tehran, according to Shana.

U.S. oil prices fell below $40 a barrel on Friday for the first time since the 2009 financial crisis, pressured by signs of oversupply in the United States and weak Chinese manufacturing data.

OPEC is not due to meet until Dec. 4.

While OPEC rules say a simple majority of the 12 OPEC members is needed to call an emergency meeting before then, some OPEC delegates say a meeting is unlikely unless Saudi Arabia is in favor.

Saudi Arabia, the world’s top oil exporter, and other Gulf States pushed OPEC’s strategy shift last year to defend market share rather than cut output to support prices.

dow falls 613

Posted on 24th August 2015 by barry norman in Stockpair Daily Insight

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Stock Markets Plunge

August 24, 2015

Barry Norman

Director

Investors Trading Academy

china us economic overlapWall Street plunged as the week drew to a close capping a week of carnage that sent the Dow Jones Industrial Average into correction territory as fears about China’s economy and global growth spurred heavy selling. Investors are worried about everything — China’s faltering economy, falling oil prices, the big question mark over the Federal Reserve raising interest rates in September and corporate earnings that just aren’t strong enough to justify stocks as such a high level. The Dow fell into correction mode, down 10% from its most recent high point on May 19.

Overseas stock markets’ losses were just as bad, if not worse, with some indexes in China and the U.K. stock market all now in correction.

The S&P 500 was also down 5.7% for the week, its worst weekly performance since 2011, while the NASDAQ fell 6.8%, also in correction territory. Despite these dire numbers, it’s worth remembering that U.S. stock indexes hit record highs earlier this year, after logging double-digit gains in each of the last three years.

The latest red flag came Friday morning from China. The government reported that its manufacturing activity — a key sign of economic performance — hit a 6-year low in July. After the government devalued its currency last week, Wall Street has become extra worried about the China slowdown. Although Chinese officials say the economy grew 7% earlier this year, many experts wonder if it’s worse.

global equities

European stocks fell into correction territory Friday, enduring their worst week of the year as downbeat Chinese data and Greek uncertainty weighed. In Frankfurt, the DAX 30 dropped 3% to end at 10,124.52, while France’s CAC 40 tumbled 3.2% to 4,630.99. The U.K.’s FTSE 100 fell 2.8% to close at 6,187.65, marking its biggest weekly decline of the year.

In Athens, the Athex dropped 2.5% to 635.31. Late Thursday, Greek Prime Minister Alexis Tsipras resigned as the debt-troubled country’s prime minister and called for a snap national election to be held within a month.

dow jones weekly

Posted on 22nd August 2015 by barry norman in Stockpair weekly Insights

Global Exchanges

US markets recorded their largest two-day decline since the financial crisis on Friday as the Dow Jones Industrial Average fell 530 points to 16,459.

“We have oil breaking below $40 and the stock market falling and that financial market volatility continues to push back expectations for when the Federal Reserve will raise interest rates,” said Matt Weller, senior technical analyst at Forex.com.

Higher rates would increase the return on dollar-denominated assets making the U.S. currency more attractive to foreign investors.

Overseas stock markets’ losses were just as bad, if not worse, with some indexes in China and the U.K. stock market all now in correction.

The S&P 500 was also down 5.7% for the week, its worst weekly performance since 2011, while the NASDAQ fell 6.8%, also in correction territory.

global equities week

Currency Markets

The U.S. dollar dropped against most major currencies on Friday as investors lowered their expectation for an interest-rate hike as early as September following the release of weak economic data from China.

The Caixin Flash China General Manufacturing Purchasing Managers’ Index (PMI) retreated to 47.1 in August from 47.8 in July, the lowest level since March 2009.

Analysts said the soft Chinese data added to the sliding commodity prices, raising uncertainties on the timing of the Federal Reserve raising interest rates.

They noted that higher rates would increase borrowing costs for companies and consumers, causing possible damage to the global economic growth.

The U.S. dollar was further under pressure as the country’s economic data came out negative. Financial data firm Markit reported Friday that U.S. manufacturers indicated a renewed loss of momentum during August.

Among the G-10 currencies, gains were concentrated in the euro and the yen, with both currencies up more than 1% against the buck on Friday. The dollar slid to Yen122.20 from Yen123.44 in late North American trade on Thursday, its lowest level against the Japanese currency in nearly two weeks. The euro rose to $1.1360 against the dollar from $ 1.1215 on Thursday, its highest level in two months.

global currency

Commodity Markets

In precious metals, “Gold is regaining its role as a safe haven investment amid global equities rout, with the precious metal set for its biggest weekly gain since January,” the Financial Times reported today.

“The metal is diverging from other commodities to benefit from risk aversion in markets amid weak oil prices and a rout in emerging market currencies. It has risen 8.5 per cent from its intraday low for the year reached on July 24.”

The oil slide is also weighing heavily on pockets of the stock market. The energy sector of the S&P 500 has lost nearly one-third of its value over the past year alone. The oil plunge has spooked some investors who fear it’s a warning sign about the global economy. They argue if all was well in the world oil would be rising, not falling. If oil settles below $40 a barrel it could be looked at as another bearish signal by energy analysts. That’s something that hasn’t happened since February 2009.

Posted on 21st August 2015 by barry norman in Stockpair Daily Insight

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Oil Prices Continue To Fall

August 21, 2015

Barry Norman

Investors Trading Academy

oil heart forexwordsEarlier this week the US Energy Information Administration reported that the amount of oil held in US commercial stockpiles rose last week, contrary to expectations. US oil output fell by 0.5 per cent during the week, but remained near multi-decade highs at 9.3 million barrels a day.

“Supply remains the main obstacle to any potential price recovery,” analysts at broker Marex Spectron wrote in a note to clients.

On the demand side, an unexpected outage that started last week at BP PLC’s large refinery in Indiana, is adding to concerns that the ample supply won’t be met by enough demand during the fall refinery maintenance season.

BP’s refinery could remain offline for as long as two months following leaks, said analysts at consultancy Energy Aspects.

Meanwhile, Mexico hedged its oil exports for 2016 at an average price of $US49 a barrel, down 36 per cent from the hedge they put on crude for this year. That signaled that Mexico expects prices to remain low, a further bearish marker for the market.

The world’s ninth-largest oil producer, Mexico buys options that will guarantee a minimum price for its crude and so protect its public finances from unexpected oil shocks.

oil production chart

A volatile WTI is still trading for the September contract, while Brent moved into October. Jamie Webster, research director at IHS Energy, said in response to email questions WTI could be facing a steep turnaround when it moves into the October contract and could trend lower once oil services company Baker Hughes publishes weekly figures on the upstream oil and gas sector.

“WTI likely got oversold and will retest tomorrow if the rig count shows another increase, or next week if stocks rise again,” he said.

Oil prices are driving lower in a market where supply far outweighs demand. In a mid-week report published Wednesday, the U.S. Energy Information Administration reported domestic crude oil inventories increased slightly from the previous week by about half a percent to 456.2 million barrels. At 9.3 million barrels per day, U.S. crude oil production was down about a half percent for the week but still at multi-year highs.

crude oil

Posted on 20th August 2015 by barry norman in Stockpair Daily Insight

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Fed Minutes Indicate That Economy Isn’t Ready For Increase

August 20, 2015

Barry Norman

Director: Investors Trading Academy

yellenThe dollar fell below 124 yen for the first time in a week Wednesday after minutes from the July meeting of Federal Reserve policy makers revealed that they might not be ready to raise interest rates. The minutes, which were published ahead of their scheduled 2 p.m. Eastern release time, showed policy makers were concerned that inflation remained stubbornly below target. Some also expressed concerns about the impact slowing growth in China might have on the U.S. The dollar recently traded at 123.90 yen from 124.30 shortly beforehand. The euro rose to $1.1111 from $1.1050. The pound rose to $1.5689 from $1.5660.

Policy makers at the U.S. central bank said conditions hadn’t been achieved yet for the first policy tightening in nearly 10 years, due primarily to inflation that is not yet moving toward the necessary conditions.

The yield on the 10-year Treasury note was down 6 basis point to 2.14 percent, off its peak of 2.23 percent. Short-term maturities were also at session lows.

currency wed

Following the announcement, RBS said its calculation of market pricing suggests traders are betting that the Fed’s first full rate hike will occur in January. Expectations for a September rate hike fell to 36 percent.

Earlier on Wednesday, U.S. data showed that consumer prices rose slightly in July, suggesting inflation pressures were stabilizing enough to support expectations of an interest rate hike this year.

The yield on the 30-year bond also dropped to trade at 2.8207 percent following Tuesday’s close of 2.86 percent. When a bond’s yield falls, its price rises.

The timing of the U.S. central bank’s first rate hike in nine years has been a constant source of debate in the markets, as traders await the final pieces of economic data the Fed will take to its September rate meeting. Minutes of the Fed’s July meeting could give investors some clarity.

The market will also be on the lookout for any Fed speakers, particularly after recent comments from Atlanta Fed President Dennis Lockhart signaled a willingness for the Fed to move.

Posted on 19th August 2015 by barry norman in Stockpair Daily Insight

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Gold Dips As Traders Wait On Federal Reserve Minutes

August 19, 2015

Barry Norman

Director: Investors Trading Academy

Gold eased today as US housing data soared to record highs, backing up stronger data on Monday. Otherwise the market was quiet except for the pound that rallied to 1.5659 adding 72 points after inflation climbed higher than expected giving the Bank of England a nudge towards raising interest rates. Stronger than expected US retail sales data undercut some of the recent safe haven trades in bonds, the yen and gold sending all three lower in today’s session.

major currency tuesday

For the first two weeks of August, retails sales are up 1.7% versus a year ago and up 0.3% from July. That got the “Fed is going to hike in September” talk starting up once more which of course send the Dollar higher and most commodities lower. Gold was no exception to the selling pressure across much of the complex.

In other economic news, a Commerce Department report showed housing starts in the U.S. inched up by 0.2 percent to an annual rate of 1.206 million in July from the revised June estimate of 1.204 million. Economists expected housing starts to climb to a rate of 1.180 million from the 1.174 million originally reported for the previous month.

gold charts tuesday

Meanwhile, the report said building permits, an indicator of future housing demand, plunged 16.3 percent to an annual rate of 1.119 million in July after jumping to an eight-year high of 1.337 million in June. Building permits had been expected to pull back to a rate of 1.230 million from the 1.343 million originally reported for the previous month, reflecting an 8.4 percent decrease.

From Europe, the number of persons in employment in Germany increased further in the second quarter, but at a slower pace, preliminary figures from Destatis showed Tuesday. Total number of employed persons in the country rose 0.4 percent, or by 175,700 persons, to 42.8 million in the second quarter from the corresponding period last year. This was lower than the 0.6 percent hike logged in the first quarter.

U.K. consumer prices rose unexpectedly in July on smaller discounts on clothing prices during summer sales, while core inflation reached a five-month high, the Office for National Statistics revealed Tuesday. Consumer prices advanced 0.1 percent in July from last year, while they were expected to remain flat as seen in June.

Gold ended lower on Tuesday, ahead of the FOMC meeting minutes due for release on Wednesday, even as the dollar trended higher against a basket of major currencies.

The release of the minutes from the July Federal Reserve meeting could shed light on when the Fed intends to raise interest rates. However, the general view is that the Fed’s plan for an interest rate hike may have been ruined with China surprisingly devalued the yuan last week.

Gold slid 0.1 per cent to settle at $1116.90. On Monday, gold advanced 0.5 per cent after a drop in a Fed manufacturing gauge eased rate concerns.

Investor holdings in exchange-traded products backed by gold have posted three straight monthly declines, and bullion has fallen 5.7 per cent this year. Prices will drop to $984 before January, according to the average estimate in a Bloomberg survey of 16 analysts and traders late last month.

gold daily tuesday