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Trading News and Views: 09 February 2010
Indices:
European markets:Stocks in Europe saw a rebound yesterday after dropping for a week, on indication that equity markets have fallen more than needed. David Shairp and Rekha Sharma, strategists at JPMorgan Asset Management, said: "The market moves are beginning to look overdone. Our technical indicators suggest that markets have largely corrected their exuberance from the beginning of the year and that a buying opportunity may be approaching.”
(source: bloomberg.com).
Another expert, Gerhard Schwarz, head of global equity strategy at UniCredit in Munich, said: "Markets are in a tug of war. There is a chance of stabilisation in the short-term. But the choppy conditions are likely to prevail over some time, unless we get a more clearer picture of what is happening (with the euro zone sovereign debt problems) and what help looks like coming."
(source: reuters.com).
The FTSE 100 index gained 0.6 percent, Germany's DAX was 0.9 percent higher and France's CAC 40 rose 1.2 percent.
(source: reuters.com). US markets:Shares in the US however fell after forecasting higher operating costs for 2010, more than what analysts forecasted. Mike Vinciquerra, an Atlanta-based analyst with BMO Capital Markets, said: "They are spending for growth and will have a higher cost base than we previously assumed. Clearly that’s a significant difference.”
(source: bloomberg.com). Frank Pavilonis, senior market strategist at Lind-Waldock in Chicago, said: "The market is still being pressured by concerns about Europe, and banks are being pressured more so because of their possible exposure to the sovereign debt issues, specifically that of Greece."
(source: reuters.com).
Dow Jones closed down 103 points at 9,908. The S&P 500 index gave back 9 at 1,056. Nasdaq shed 15 at 2,126.
(source: sharecast.com). Asian markets: Asian markets also were dragged down after investors remained risk averse. Chris Hall, at Argo Investments Ltd. in Adelaide, Australia, said: "The market is still pretty nervous. Greece is still just one part of a bigger concern about the growing size of budget deficits.”
(source: bloomberg.com). The Nikkei 225 index closed down 105 points at 9,952 in Tokyo. The Hang Seng index closed 114 points lower at 19,551 in Hong Kong.
(source: sharecast.com). Forex: Immense pressure from investors kept the euro low as uncertanties dettered investors from venturing into risky currencies. Jessica Hoversen, a foreign-exchange and fixed-income analyst at the futures broker MF Global Ltd. in Chicago, said: "Greece was uncovered, and the bloodhounds are out now in the market looking for fiscal instabilities. In the recent week, there has been increased rhetoric about Portugal and Spain. It’s putting pressure on the euro.”
(source: boomberg.com).
The euro slid 1.3 percent to $1.3678. Against the yen, the euro dropped 2.4 percent to 122.09. The dollar fell 1.1 percent to 89.25 yen.
(source: bloomberg.com). Commodities: Oil:Oil fell in Friday's session as demand for the black metal may have fallen in the US with a significant rise in dollar. Chris Jarvis, senior analyst at Caprock Risk Management in Hampton Falls, New Hampshire, said: "The dollar remains the focal point for both the equity and commodity markets as Greece's debt issues put pressure on the Eurozone."
(source: reuters.com). US crude oil for March delivery settled down $1.95 at a seven-week low of $71.19 per barrel.
(source: reuters.com). Gold:Gold also tumbled as dollar's rise gave the precious little attention from investors. Tom Schweer, a senior market strategist at LaSalle Futures Group Inc. in Chicago, said: "The dollar just keeps gaining momentum. Gold could fall another $20 to $40 before people start to load up again.”
(source: bloomberg.com). The yellow metal tumbled $49, or 4.4%, to $1,063 an ounce on the New York Mercantile Exchange.
(source: sharecast.com). Bonds: (Yields move inversely to bond prices) US Treasuries:Treasuries were one of the favourites with investors looking for safety, with volatile markets in the vicinity. Larry Milstein, managing director in New York of government and agency debt trading at RW Pressprich & Co, said: "Sovereign risk has taken center stage and the beat of the drum is starting to get louder and louder. The safe-haven bid has come back into play, and investors are looking for safety.”
(source: bloomberg.com).
US 30-year bonds fell for the week, pushing yields up three basis points to 4.52 percent.
(source: bloomberg.com). European Bonds:
Bonds in Europe too were favoured against equities as growing concern over the european economy. Nick Stamenkovic, a fixed-income strategist in Edinburgh at RIA Capital Markets Ltd., said: "Equities are suffering and in an environment of increasing uncertainty core European bonds are benefiting. There’s a credibility gap in Greece and markets want to see clear signs of implementation.”
(source: bloomberg.com).
Ten-year yields fell four basis points to 3.13%.
(source: sharecast.com). Economic Calendar 09 February 2010: 09:30 am Goods Trade Balance (Dec) - UK:
The trade balance released by the National Statistics is a balance between exports and imports of goods A positive value shows trade surplus, while a negative value shows trade deficit. It is an event that generates some volatility for the GBP. If a steady demand in exchange for UK exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the GBP.
Previous Rate: -£6.8B.
Consensus Rate: -£6.6B. (High Volatility). 09:30 am Total Trade Balance (Dec) - UK:
The Trade Balance released by National Statistics is a balance between exports and imports of total goods and services. A positive value shows trade surplus, while a negative value shows trade deficit. It is an event that generates some volatility for the GBP. If a steady demand in exchange for UK exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the GBP.
Previous Rate: -£2.9B.
Consensus Rate: -£2.8B. (High Volatility).
Recent Market Action:
(percent changes based on previous day's underlying market data, for indication only) Sources include: Bloomberg.com , Reuters.com, Fxstreet.com, Economicnews.ca, g20.org and FT.com (Any opinions expressed in these updates do not reflect the views of the company, and as such should not be taken as trading advice.)
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