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.

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”.

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.

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.

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.

World Markets Review: 27th January 2016

Welcome back! Hot off the back of our review yesterday, we cover the world market’s movements from 27th January 2016.

New York Stock Exchange
As expected in yesterday’s review, the FOMC meeting produced a dovish outlook with the Fed acknowledging worries of slower growth.

So there’s nothing new in this rate decision. The Fed voted to keep the interest rate unchanged which most had already anticipated by market.

They also mention that inflation will pick up and another rate increase is on the cards.

We think under current circumstances, when everyone is resolved to easing (China, ECB, BOJ), eventually the Fed will reverse the rate increase to another stimulus policy.

The market reacted negatively to The Fed’s dovish stance as the Dow Jones fell 222.7 points (1.38%) to close at 15,944.

The Dow declines lead by Boeing after a lower than expected 2016 earnings projection. Looking from a technical perspective, MACD are favoured for a cross and if it happens we might see another leg up.

The Nasdaq cannot be worse.

Lead by Apple which dived 6.57% after a lethargic earnings result. The NDX corrected 2.48% to close at 4,128.86.

We still think 4,000 is strong level which maintains NDX (as long as NDX stay above the level it’s safe for the bull to start another leg up).

Several earnings announcement to note: AMZN will announce earnings after market close, Visa before the market opens.

Shanghai Stock Exchange
A mixed day in the Asian market.

Hang Seng, Australia ASX, South Korea Kospi and India’s Nifty enjoy marginal increases, while both Shanghai and Nikkei were trading lower.

Down 79.9 point (2.92%) at 2,655.66, Shanghai composite is already down nearly 10% in 3 days.

A technical correction therefore is bound to happen soon before further decline.

Initial oil fears already subsided for the time being as OPEC meet with Saudi Arabia and they will discuss the key issues on the table: limiting production.

Japan Exchange Group Tokyo
Jumping on the bandwagon, Nikkei followed Shanghai down the bear path, positioned at 17,041.45 after market close.

The Nikkei fell 122.47 points (0.71%). In the past, Japanese markets highly correlate to the US markets (when the Dow is up, the Nikkei is also up), but recently Japan seems more correlated to Chinese market.

London Stock Exchange Group
FTSE opened below yesterday’s close.

Initially it moved up and regained it’s level, but after several hours we see the FTSE underwater 100 points.

As of now, it has moved up and will stay -24.76 from yesterday close.

Its down market today, all major indices reacted negatively to The Fed’s dovish statement.

Most of the indices stay well above their support – meaning we may see a technical correction or break through under the support level, as the week and the month will end tomorrow.

We expect a rebalancing of portfolio and a favour towards technical correction. Oil will be moving up and a by-product of this is that energy sectors might benefit from any oil movement.