World Markets Review: 18th February 2016

We take a look around the world’s markets and analyse the patterns we’ve seen for 18th February. Watch out for the bears!

Shanghai Stock Exchange
Are you losing money? Or do you fear losing opportunity to jump in the market? Currently people are seeking bargains in the Asian market this week. We are seeing everything bought but is it truly the start of new bulls leg? Possibly not yet.

On Thursday China released an inflation report of 1.8% YOY and this number still below the expected 1.9% even though it was already boosted by the Chinese New Year.

Shanghai composite closed down 4.49 point to 2,862.

Japan Exchange Group Tokyo
It only took 3 weeks for the bear to take out the trend line, meaning the outlook is not really good if a bull is unable to bring the Nikkei above trend line.
We see this week’s bullish movement only part of a bear routine to take profit before more selling pressures come to the fore.

The Nikkei closed at 16,205 on Thursday, up 369 points or 2.28%.

Also of note is that Japan’s January export and import showed an extreme decline of 12.9% and 18% respectively. Export decline contributed by a 17.5% dive in exports to China.

London Stock Exchange Group
Despite huge winners in the Asian session, the FTSE fell 1% toward 5,971 which ended the bull’s reign in last four session.

Most commodity shares retreated after gaining for several days.

The main headline in the UK is the possible ‘Brexit’ from the EU. Talk show no progress so far however. Cameron is expected to continue his talks on Friday.
Regardless of Britain leaving the EU coalition or staying within it – both will result in a better position for Britain to protect themselves from financial regulation which have previosuly burdened them.

New York Stock Exchange
After moving up for 3 days, on Thursday the Dow close down 40.40 point at 16,413.

Wednesday’s FOMC meeting tore apart the Fed’s confidence towards the four interest rate hikes planned for this year.

There has been concern shown to more evidence that inflation is rising before another hikes which essentially means for the market view that there will be no rate hike next month.

While it really hurt the dollar, we saw temporary recovery for dixie, but it won’t be too long before it drops once again.

And despite the Dow showing (an as yet unconfirmed bullish pattern), the Nasdaq doesn’t show a strong pattern, the low getting lower and the high getting lower means one thing, a downtrend. A close above 4,350 will turn the table for the short term.

Summary
The current rally might end up a short lived one.

Last week we had a major break in Nikkei (driven by Yen), a break in the USD after uncertainty in Fed ambition to reach their 2% inflation target this year.

Prices currently sit under important levels for several indices, if they cannot move above the level, the bear may well come and hammer the markets more.

World Markets Review: 4th February 2016

It’s world markets update time again. We’re on a roll!

See what happened across the world with our summary of 4th February 2016.

Shanghai Stock Exchange
It’s been hard year for Shanghai but at least it wasn’t today where Shanghai grabbed 41.78 points (1.53%) to close at 2,781.02.

Will this year of the fire monkey turn out to be “fiery” red for China?

One analyst said,”2,300 points is a near term possibility”. If Shanghai falls to 2,300, I think PBOC will be “fiery” red as their effort to inject cash into the system will have failed miserably.

Japan Exchange Group – Tokyo
As the dollar keeps rolling, people run for Yen as the Nikkei became the unlucky one in Asia.

While other majors benchmark index in Asia gain, the Nikkei is the only one to end down 146.26 points (0.85%) and close at 17,044.99.

London Stock Exchange Group
This week the market was dominated by oil news, and then suddenly the stage turned to US dollar.

The fall of dollar helped commodities shares to perform outrageously after being consistently battered for a long time. The FTSE jumped to 5,898.76, up 61.62 points or 1.06%.

Also of note were a few words coming out from today’s MPC meeting:

“The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target and in a way that helps to sustain growth and employment. At its meeting ending on 3 February 2016, the MPC voted unanimously to maintain Bank Rate at 0.5%. The Committee also voted unanimously to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375 billion.”

Source: Bank of England

In short, it says there will be no interest rate increase for a while, until the persistent headwinds weighing on the economy subside.

New York Stock Exchange
Yesterday we posted about the dollar index and it’s possibility of continuation, today we see the dollar rolling down under the stop level.

This movement proves to us, “It is unlikely The Fed will hike interest rate in 2-3 months”, which effectively translates into a weak dollar.

We also had the unemployment claims report come out at 285k, 6k higher than expected.

The NFP report tomorrow will give clues as to how bad the employment market is after a series of bad earnings reports and layoff plans mentioned by several big names.

The Dow Jones followed through yesterday 183 points up, currently up 47 points, and looks to close the day on a positive note.

NASDAQ
Contrary to the Dow, the Nasdaq fell 20 points.

Leading the way down, Google’s parent company Alphabet fell 2.15% and Facebook fell 1.8%.

Surprisingly Yahoo added more than 5%; investors and analysts accepting then that strategies outlined on Tuesday were “positive development”.

Summary
Its flight to safe haven assets and get out of US dollar movement today, Yen and CHF were loved by risk averse traders.

Aside from safe haven assets, shares related to commodities also moved up.

Traders will look at Non-farm payroll data on Friday, which means the price might be ranging until that news release.
Extremely bad numbers will make the market think there will be no more rate hikes this year.

Worst case scenario may worsen if the Fed join the “easing” team and everyone will want to import inflation but who actually is it that will have the inflation?

World Markets Review: 2nd February 2016

Some interesting movements in the market yet again. Enjoy our recap of the world’s stock markets from 2nd February 2016.

Shanghai Stock Exchange
Whatever comes down, will go up in the end. A temporary relief / technical rebound finally happened!

Today the Shanghai composite started the day with an up movement and without hesitation it has been slowly creeping up from it’s daily open. 2,687 to close at 2,749.

Contrary to Shanghai composite, we have consistent decreases in oil price. Lower liquidity is expected as Chinese traders will celebrate Chinese New Year next Monday which mean ranging movement.

Japan Exchange Group – Tokyo
Enjoying almost 1000 points (5%) in a 2 day surge.

The Nikkei corrected 0.6% to close at 17,750 as traders locked profit. It’s a good sign with stock moving up after Friday’s shock where BOJ surprisingly join ECB on negative rates.

Negative rates application will hurt banks, especially the one with big reserve.

They will find a way to lend money out of their pocket as much as possible. This translates into more lending or flight of funds from Japan, pushing the Yen lower and finally driving up inflation.

London Stock Exchange Group
The FTSE suffered a heavy loss under poor results from BP, down 2.3% to close at 5,922.

The FTSE shed 138 points.

BP reported a net profit of $196M Vs expected $730 and plan to layoff 3,000 more workers.

Similar to BP, oil price is also moving down and taking other casualties such as Royal Dutch Shell (down 4.3%) and BG group (down 3.2%).

Besides oil, the insurance sector also took a hit – Prudential fell 8.2% and halted due to fear of China’s restriction on buying overseas insurance.

Dow Jones
While others slip (except China), the Dow also joined the move into the red and perhaps this is due to oil decline.

Leading the Dow into 300 points red, Goldman Sachs tumble 5.56%, the energy sector also suffered with Exxon’s fourth quarter profit sliding a huge 58% compared to the previous year’s profit.

NASDAQ
Alphabet (Google’s parent company) outperformed the market after it reported extraordinary earnings.

Currently Alphabet are competing with Apple to be the world’s most valuable company.

The Nasdaq overall is down 2.32% currently sitting at 4,187.

After Alphabet’s earnings report last night, today is Yahoo’s turn to report its earnings.

Summary
Negative sentiments keep hitting the market with the energy sector and financial sector bleeding heavily.

Japan is pressing the market with negative rate to spur growth, while China are using their reserves and spelling out ‘Don’t mess with us’ policies.

Wednesday might be another bear day especially if oil continues to move down under $30 again.