Daily Market Reviews By Uwcfx

[UWC Neeraj]

17 JANUARY 2013: CAUTIOUSNESS BEFORE CHINESE GDP-DATA

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Asian shares consolidated posted modest gains after better than expected US company earnings. Investors’ sentiment was, however, cautious ahead on Chinese GDP (Gross Domestic Product) data to-morrow. Dollar and Euro regained against yen after two days of profit taking on the sharp fall of the Japanese currency since November. USD/JPY trades a 88,24. The benchmark Nikkei index inched up after tumbling 2,6 % on Wednesday. World stock markets were flat.

The serious earnings season in US were off to a good start yesterday led by major banks as JP Morgan/Chase, Goldman Sachs and Bank of America. Goldman Sachs nearly tripled and JP Morgan fourth-quarter net income jumped 53%. Earnings for 2012 set a new record illustrating that banks, “too, big to fail”, with strong support and injections of government funds, have recovered from the 2008 break down in the financial markets. The rest of the economy is, however, still lagging behind, fighting to get out of recession.

Investors’ eyes at the end of the week are on China’s release of fourth-quarter GDP, December industrial output, retail sales and house prices. The data will offer clues to the health of the world’s second biggest economy. Individual numbers have given rise to cautious optimism that the downtrend in Chinese economy has come to a halt. Certain Western circles have seeded doubts on these numbers, stressing that China is manipulating statistics and not to be trusted.

Australia, very much dependent of the Chinese market, presented surprisingly bad employment figures yesterday. Unemployment rose with 5 500 in December bolstering odds for another interest rate cut. This prospect boosted shares and sent the Australian dollar down before the presentation of Chinese data. In In recession-stricken Europe car sales fell to a 17-year low in 2012. The challenges facing the global economy were outlined in the World Bank’s outlook for 2013. Citing slow recovery in developed nations the bank sharply cut its growth forecast to 2,4% economic growth down from 3 percent.

In an independent analysis, one of the world’s leading bank, HSBC, predicts that reduced concerns over the euro zone debt problems, last year’s more solid economic fundamentals and Chinese recovery will present buying opportunities in cyclical shares and boost commodities. The recent 3 months rally in platinum regaining its premium over gold is seen as an indication that investors start to be more proactive and take risks. There were small changes in the commodities yesterday. Brent crude dips below USD 110 a barrel, while NYNMEX is up on lower than expected US oil storages. Precious metals hang on to earlier gains.

Copyright: United World Capital

[UWC Neeraj]

18 JANUARY 2013: CHINA GREW 7,9% IN 2012

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The Chinese economy grew 7,9 percent in the fourth quarter of 2012 rebounding after seven straight slowdown quarters. An uncertain global outlook reflected in the World Bank’s forecast for 2013 reducing global growth from 3 to 2,4 percent, might, however, mean that Chinese authorities would have to undertake strong stimulus in 2013. 7,9% is up from 7,4% in the third quarter, the lowest since the financial crisis started in the end of 2008. 2012 is the weakest year in Chinese economy since 1999. The presented numbers are slightly stronger than market expectations.

Analysts were pleased with the numbers. The momentum at the end of 2012 is fairly strong, but the rebound in Chinese economy is not astonishing, BNP Paribas stated. Data for industrial output in December saw a growth of 10,3% while 10, 1% was expected. Retail sales in December rose 15,2% demonstrating a strong growth in domestic consumption. This indicates that the Chinese government is succeeding in turning the economy from export to domestic consumption. China’s target for annual growth was 7,5% in 2012. That is lower than the 8% goal set for the previous eight years. The GDP growth target will be 7,5% in 2013. To encourage growth China has increased infrastructure investments and encouraged energy-saving measures for consumers.

Asian stocks rose on the Chinese data cementing positive market sentiment after presentation of strong US labor and housing mark reports yesterday. Dow Jones increased 0,63% and Nasdaq jumped 0,59. Intel, Home Depot and Walt Disney were among the winners. The Asian Pacific index, MSCI, rose 0,5%. Shares also rose in Hong Kong and Shanghai. The better market sentiment strengthened riskier assets and currencies. Euro/USD has gained 100 basis points since yesterday morning trading at 1.3382 close to the 1.2404 peak seen a week ago.

Euro and USD posted new highs against the Japanese Yen which after two days rebound earlier in the week continues down. Yen passed the critical 90 yen level in relation to USD. Expectation of monetary easing has put the yen under strong pressure over the last two months. Bank of Japan (BOJ) will probably next week announce removal of the 0,1% floor on short-term interest rates and commit itself to open-ended asset buying with a 2% inflation target as demanded by the new Prime Minister Abe.

The Chinese and better than expected US jobless claims and housing data have strengthened commodities and the appetite for risk. New York crude, NYMEX, rose stronger than Brent crude yesterday. Brent futures have recovered and trade again with the interval between USD 111 and 112 a barrel. Precious metals like Gold and silver jumped yesterday.

Copyright: United World Capital

[UWC Neeraj]

21 JANUARY 2013: YEN VOLATILE PRIOR TO BOJ MEETING

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Yen firmed this morning after USD/JPY dipped below 90 yen a dollar last week. Investor’s eyes are on this week’s Bank of Japan’s (BOJ) meeting which starts today. BOJ is expected to follow up the newly elected Abe’s government’s call for strong monetary easing measures. Asian shares were steady at the start of the new trading week after searching to multi-month highs on Friday. Dow Jones gained marginally in New York on Friday with Nasdaq weaker. General Electric and Caterpillar were up, while the technology company Intel lost 6,31%.

Euro/USD has stabilized in early Monday trading at 1.3325 while British pound, GBP, continues to fall against the Euro and the dollar. Commodity and oil prices are up on last week’s 7,9% growth in the Chinese GDP and better than expected US labor and housing data. Brent crude trades at USD 111,54 a barrel. Precious metals, Gold (1690) and Silver (31,95), seem to follow up the upward trend from last week.

The dollar reached 90,25 and a fresh two-and-a-half-year high against the yen when markets in Asia opened today. The Euro rose to 120,27 yen near its peak of 120,73 reached on Friday. Profit taking pushed dollar and euro down, but short covering lifted them off their lows. The last two month’s fall in the yen will continue if BOJ decides on tough measures such as a firm commitment buy assets till the 2% target for inflation is reached.

A weaker yen has strengthened Japanese exports and have already been met with accusations of unfair competition from the US car industry. The US government has for years accused China for deliberately manipulating their currency to the disadvantage of US exporters and home producers. A currency war, where countries again are looking for precious metals as a buffer and basis for their currencies, seem to loom in the background. These speculations have gained ground on the recent decision by the German Central bank to have 20% of their gold reserves in US and their total reserves in France transferred back for storage in Germany.

Copyright: United World Capital

[UWC Neeraj]

22 JANUARY 2013: ASIAN STOCKS DROP ON BOJ EASING DELAY

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Bank of Japan (BOJ) at its meeting yesterday delayed to set a 2 percent inflation target and will wait until January 2014 to start Federal Reserve-style open ended asset purchases. This had the immediate effect that Asian stocks retreated and USD/JPY turned around. After trading above 90 yen a dollar, USD/JPY has dropped to 89,18. A closer scrutiny of the BOJ records would, however, be necessary to decide whether this represents a more permanent change back towards a stronger yen.

The big open question is how the combined fiscal and monetary stimulus presented by the new Abe-government will work. Observers stress that the Japanese Nikkei stock exchange seems overbought. The yen on the other hand does not seem to be oversold. Asia’s benchmark equities index is poised to gain for a third month amid signs the US and Chinese economies are recovering and as Japanese stocks have rallied on Prime Minister Shinzo Abe’s more aggressive stimulus policies.

At the opening of the yearly Davos conference among the world’s leading business and political leaders the sentiment was more upbeat reflecting belief in a turnaround in markets and a bullish attitude towards stocks. In spite of the somewhat confused reports from the BOJ meeting both the South East Asian Pacific, MSCI, Hong Kong Seng and the Shanghai indexes were slightly up. It was a good day for stocks in Europe yesterday while the US markets were closed due to the Presidential inauguration.

Euro/USD trades at 1.3341 slightly up form yesterday, while GDP is under continued downward pressure. Both EURO and USD are up against the British Pound. Prime Minister David Cameron is Wednesday going to deliver his most expected speech on England’s future relation to the EU. Cameron is under strong pressure from EU-critics inside his own party to renegotiate the EU-treaty. The US government is pressing for stabile relations and no changes in England’s relations to the EU. The German chancellor Angela Merkel suffered a setback in local elections during the weekend. With her strong position in the EU and EURO-cooperation this might have a negative long term impact on the Euro.

Copyright: United World Capital

[UWC Neeraj]

23 JANUARY 2013: INCREASED RISK APPETITE DRIVES GLOBAL MARKETS

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Asian shares edged higher on Wednesday as investors’ appetite for riskier assets improved. The MSCI-index for Asia-Pacific outside Japan reached a 17-and-a-half month high after recent positive data from United States and China improved investor sentiment. Revenue from the world’s largest internet research company Google’s core internet business outpaced analyst’s expectations pushing the stock 5% up. Google benefited from a new product listing during fourth quarter and business growth in international markets.

The Japanese yen is up for the second day after the monetary easing announced by Bank of Japan (BOJ) failed to meet market expectations. A US-Federal Reserve inspired aggressive bond buying was postponed to 2014. USD/JPY is trading at 88,50 down from its above 90 yen a dollar peak. BOJ’s 2% inflation target boosted, however, commodities and precious metals. BOJ’s move is seen as supportive for global economic recovery and boosted gold and silver as a hedge against rising prices.

The stronger yen had a negative impact on the Japanese stock market. BOJ’s delay of action disappointed exporters, and Japan’s benchmark Nikkei average fell 0,8%. Experts see a stronger yen as a technical correction to its rapid and sharp decline. After consolidation it is most likely that the yen would continue its downward trend. The yen has over the last two months declined from 81,69 to a bottom of 90,25. 95 yen against the dollar is seen as realistic. The fact that BOJ is joining other central banks to support growth is generally seen as positive for the global economy.

Euro/USD is steady above 1.33 level. The Euro was helped by better investor sentiment in Germany and by successful bond auctions in Portugal and Spain. Spain has succeeded to reach 14 percent of its 3013 funding target. GBP is still under downward pressure, USD/GDP is fighting to keep above the 1,50 level. Prime Minister David Cameron is today making his much awaited speech on UK's relations to EU. It is expected that Cameron will offer a Euro critical British public a referendum on the EU if he is re-elected in 2015. The wording of his speech might have an impact both on the strength of the GBP and the future direction of the Euro.

Copyright: United World Capital

[UWC Neeraj]

24 JANUARY 2013: USA INDEXES UPDATED 5-YEAR MAXIMA

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

On Wednesday, January 23, the stock market of the United States finished trading session by the moderate growth of the main indexes, S&P500 and Dow Jones appeared on fresh 5-year maxima. The positive information background on stock markets was provided by quarterly reports of representatives of hi-tech sector and favorable forecasts of a number of industrialists.

However the reporting of the Apple company which came after closing of the trading session disappointed investors. Within the additional session price of shares of Apple fell in price for 11%. Futures for the Nasdaq 100 index at the morning electronic trading are decreasing by 1,4%. Thus, the technological sector appeared under pressure today.

Asian stock indexes today "is in a fever", session began with decrease, subsequently the Chinese statistics allowed to resume purchases and helped indexes to reach profitable zone, but at a present moment sales again reign in the markets, and only Japanese Nikkei continues growth. Purchases in Japan are caused by the renewed decrease in yen, USD/JPY pair grew by 0,7% to level 89,2, after a release of data on trade balance. According to these data, in 2012 Japan recorded annual deficiency of foreign trade the second time in a row, thus the negative balance this year was maximum for all history and made 6,927 trillion yens.

Coming back to China, it should be noted that the production index PMI, from HSBC bank, increased the fifth month in a row, and according to preliminary data, it was in January at the level of 51,9, against December value 51,5. In the moment this news was apprehended by traders very positively, the Chinese continental SSE index came in plus of 2% and pulled for itself other Asian indexes, however so sharply growth was leveled.

Prices of oil between the Brent and WTI brands considerably differ. Brent raised to 112,83 dollars for barrel while the price of WTI fell almost by 1,5% and bargains at the level of 95,57. So essential distinction is caused with the advent of news about an operational malfunction on the key oil pipeline - Seaway. Through this branch oil is delivered from Cushing storage in Oklahoma to key oil processing regions on the coast of the Gulf of Mexico. Capacity is reduced from 400 thousand to 175 thousand barrels per day. Stocks are in Cushing at maximum levels, and at such technical failures they can only continue to increase. It also is at present the main factor of sales of a WTI contracts.

Copyright: United World Capital