Daily Market Reviews by UWCFX

Re: Daily Market Reviews by UWCFX

Postby UWC Neeraj » Fri Dec 14, 2012 5:16 am

14 DECEMBER 2012: THE PROBLEM OF "FISCAL CLIFF" AGAIN CAME TO THE FOREFRONT

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


After decisions coming from meeting of FRS nothing distracts investors from a problem of "fiscal cliff", especially, taking into account that till Christmas there is less than two weeks, and gleams in negotiations between democrats and republicans aren't observed yet. For example, the speaker John Beyner noted that the president Barack Obama “isn't serious" concerning a question of decrease of expenses which republicans consider as the main priority. Even successful data on a labor market according to which the number of primary requests for unemployment benefits fell in one week to 343 thousand at being expected 370 thousand couldn't affect moods of investors. Dow Jones and S&P500 ended up with loosing 0.56% and 0.63% accordingly.

In the last day of the current working week the index of China SSE again shows growth almost for 3%, practically coming back to the autumn maximum levels. As occasion to such positive became preliminary statistics on the production index PMI from HSBC bank according to which the index grew again and reached level of 50,9. It is a maximum level since October of last year, besides value of an index increases the second month in a row that testifies about growth of business activity in production sector.

Important news were coming from Europe where Ministers of Finance agreed to give a right to European Central Bank to regulate the main European banks of the Euro zone, however while it isn't known when the regulator will be able to start new duties. Besides, today the Euro group approved allocation of the following monetary tranche to Greece as it estimated efforts of the country on national debt reduction. This factor is a positive moment for the EU markets. 34 billion euro will be available to Greece immediately, and total amount for a repayment of a debt will be 49.1 billion euro.

The European currency still keeps above a level of 1.30 in relation to dollar, however today it was corrected from 1.3090 to 1.3045 points, and now reached a level of 1.3105.

Meanwhile the Japanese currency continues to fall. Today USD/JPY pair bargains at the level of 83,9, against yesterday's level of 83,5. On this background the exporters sensitive to fluctuations of exchange rates, still are leaders of growth, Sharp rises in price for 4,4%, and Toshiba and Pioneer for 1,8%.

Prices of oil following the results of last trading session showed negative dynamics against decrease in the majority of world stock markets. Further weakening of dollar in case of resolution of a collision around the budgetary agreement in the USA can become a key factor of growth of the oil prices. Today this morning Brent crude is traded on a level of 107.01.

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Re: Daily Market Reviews by UWCFX

Postby UWC Neeraj » Mon Dec 17, 2012 6:57 am

17 DECEMBER 2012: USD/JPY AT 20-MONTH LOW AFTER ELECTIONS

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


The yen slumped to its lowest level against the dollar after Japan’s conservative Liberal Democratic Party (LDP), which is committed to aggressive monetary easing, won a landslide victory in Sunday’s Japanese elections. The LDP surged back to power giving ex-Premier, Shinzo Abe, another chance to push through his agenda which includes outspoken active steps towards deflation, possibly revival of Japan’s nuclear energy program and a more nationalistic policy that might cause more tense relation towards China.

The dollar rose to 84,18 yen reaching its highest level since April 2011 from around 83,50 yen on Friday. There has been active profit taking in the morning, but USD/JPY is still trading above the 84 level. The Euro jumped to 111.30 yen from 109,81. The Australian dollar climbed above 89 for yen for the first time since May 2011. The Bank of Japan meets later this week and most analysts expect the central bank will ease policy further by asset buying and lending program which will continue to put downward pressure on the yen.

The open question is whether Prime Minister Abe shall follow up on his tough talk. Strategists at Barclays bank recommend long positions in three-month dollar/yen call options on estimates suggesting that a 10 percent multilateral nominal yen depreciation would be needed to get a one-off inflation boost of just 1,5 percent. Other analyst and market participants warned that the yen might be poised for a rebound as Abe’s actions are likely to fall short of tough intentions.

In the US House of Representative Speaker, John Boehner’s offer to accept a tax rate increase for the wealthiest Americans knocks down a key Republican obstacle to deal with the revolving year-end “fiscal cliff”. Boehner shall presumably have offered extended tax hikes for everyone who has less than one million in net annual income. Taxes for all income above USD 1 million shall rise. President Obama’s reaction on this presumed offer is going to be decisive for a possible solution within the 31st December deadline.

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Re: Daily Market Reviews by UWCFX

Postby UWC Neeraj » Tue Dec 18, 2012 5:07 am

18 DECEMBER 2012: “CLIFF” OPTIMISM BOOSTS MARKETS

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Both US and Asian shares inched higher as optimism grew for a “fiscal cliff” deal as President Barack Obama yesterday met with his Republican counterpart, House of Representative Speaker, John Boehner. Obama presented a counter-offer to the Republicans that is said to include a major change in position on tax hikes for the wealthy in efforts to hammer out a compromise to avert steep tax hikes and indiscriminate spending reductions set for the beginning of 2013.

According to informed sources the White House in a dramatic change of position has proposed leaving lower tax rates for everyone except for those earning above USD 400 000. That is up from the former threshold of USD 250 000 proposed by the President, but still far from the Republican proposal of USD 1 million. Obama is also said to be willing to compromise on budget cuts and revenue figures.

The rumors on movement in the negotiations had the US stock indexes to soar led by financials and other growth-orientated sectors. Bank of America jumped by 3,97 % followed by other major blue chips as Home Depot, JP Morgan, General Electric and Sisco. Dow Jones were up 0,76 % to 13 235. Nasdaq rose 1.32 % and ended at 3010 again passing the 3000 threshold. The positive trend continued in Asia this morning where Australian shares outperformed with a 0,7 percent increase. Also Nikkei, Shanghai and the MSCI index for Asian Pacific rose.

The more optimistic market attitude had a positive impact on commodities and precious metals. Oil prices led by Brent crude are up to 108,18 and gold again passed the USD 1700 ounce level after falling back to below 1690. The pressure on Yen following the Japanese elections continues. USD/JPY is trading at 83,98 after reaching 84,48 on Monday. The dollar has probably still an upside against yen prior to the Central Bank of Japan’s meeting later this week. Prime Minister Abe’s comments yesterday strengthened the assumption that BOJ would initiate monetary easing. EURO/USD stands at 1.3170, in line with the new higher level seen established in relation between USD and Euro. The Euro countries principle decision to establish a banking union has positively impacted the strength of the Euro.

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Re: Daily Market Reviews by UWCFX

Postby UWC Neeraj » Wed Dec 19, 2012 4:58 am

19 DECEMBER 2012: EURO OUTPERFORMS ON INCREASED RISK APPETITE

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


The Euro reached multi-months high against dollar and Japanese yen on Wednesday extending recent gains. Signs of progress in the US fiscal talks bolstered demand for riskier assets. Euro/USD is trading at 1.324655. USD/JPY stands at 84,282. The Scandinavian currencies, Norwegian, Swedish and Danish krones have gained substantially against the dollar over last week.

The US House of Representatives Majority Leader, Eric Cantor, said yesterday that he expected a vote on a Republican offer to avert the “fiscal cliff” on Thursday. Republicans plan a vote on a bill to raise taxes on income above USD 1 million while extending low rates on other tax payers. The White House has proposed a compromise USD 400 000 threshold. Cantor said he expected to have enough votes to pass the measure.

In spite of the big distance between the two parties’ stock markets all over the world rose on expectations of a compromise. Gains in Asia this morning came after Wall Street S&P 500 index for the biggest 500 companies rose more than one percent completing the best two-day rally in a month. The US market is higher driven by the fact that the parties now at least are engaged in constructive negotiations striving to find a middle ground.

Tokyo’s Nikkei rose 1,3 percent topping 10 000 points for the first time since April as Bank of Japan (BOJ)started their two day meeting. BOJ is expected to take measures for monetary easing and a more expansionistic fiscal policy. The Yen continues to fall against most currencies. Australian shares rose to a 17-month high led by miners and banks. Australian dollar, however, barely budged in part because currency speculators were already holding record long positions.

Boosted by optimism on a US budget compromise analysts predict that EURO/USD might reach the 1.33 level year-end targets. Oil prices are steady with Brent crude trading at 108,88 on better economic outlook. Copper is flat in the morning after falling Tuesday. Both Gold and silver fell rather dramatically yesterday slowly recovering somewhat this morning. Gold fell from a 1705 peak down to a 1660 bottom. It is now trading at 1670.

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Re: Daily Market Reviews by UWCFX

Postby UWC Neeraj » Thu Dec 20, 2012 7:07 am

20 DECEMBER 2012: STALLED NEGOTIATIONS TURN MARKETS

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


After reaching a 18-month high Asian stocks eased and commodities fell in morning trade on stalled budget negotiations in Washington. President Barack Obama accused his opponents of holding a personal grudge against him and threatened to use his veto power. The top Republican negotiator branded the President “irrational”. The mutual accusations came after substantial progress to avert the so called “fiscal cliff” had been obtained during the last days. The personal taunts put a timely solution at risk and threaten the world largest economy with recession.

The harsh rhetoric had an immediate effect on markets. After a flat opening Dow Jones plunged 0,78 while Nasdaq lost 0,33 %. Financials and retailers, the big winners earlier in the week, were hardest hit. General Electric, Alcoa, Home Depot and the Bank of America were among the big losers. The Asian indexes with exception for the South Korean Kospi which rose 0,3 % on news of the election of its first female president, lost ground. Australia is still up. It is expected that European and US markets today will open lower on profit taking and risk aversion. Decreased risk appetite shall probably hit also smaller currencies.

Bank of Japan (BOJ) has according to expectations expanded its asset-buying program by 10 trillion yen to fight deflation. USD/JPY which saw 84,50, has fallen to below 84 as result of the stalled budget negotiations. Euro/USD peaked to 1.33085 on Wednesday has fallen back trading at 1.3210. Smaller currencies are due to the changed risk sentiment atmosphere losing ground.

Oil prices which rose on growth optimism, has retreated somewhat in early Asian trading. Brent crude stands at 110.08 with NYMEX just below USD 89 a barrel. Copper is down. Gold and silver are at the lowest levels seen for months.

US prosecutors have charged two former UBS (Union Bank of Switzerland) traders for participating in a scheme to manipulate Libor and other benchmark interest rates. This is the first individuals criminally accused in the Libor scandal. UBS has agreed to pay a fine of USD 1,5 billion to regulators in the US, UK and Switzerland. The Hong Kong Monetary Authority has simultaneously stated that UBS is under investigation for similar fraud in Hong Kong.

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Re: Daily Market Reviews by UWCFX

Postby UWC Neeraj » Fri Dec 21, 2012 5:09 am

21 DECEMBER 2012: SERIOUS SET-BACK FOR “CLIFF” NEGOTIATIONS

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


In a statement to the House late yesterday, Republican Speaker, John Boehner, announced that there was not enough support to have “Plan B” to avoid the fiscal cliff voted through. Two options seem to remain: The Republicans can wash their hands on the entire matter or try negotiate a compromise with Democrats that could secure support from a sufficient number of Republicans. Plan B involved increased taxes on incomes above USD 1 million. President Obama’s proposals set the threshold at USD 400 000.

Dow Jones and Nasdaq gained on new expectations for a budget solution within year-end before the news announcement. A solution seems for the moment unrealistic. A possible compromise would mean that a substantial member of Republicans give up their bedrock resistance to all tax hikes. The non-vote in the House represents a serious set-back for the prospects to avert the “fiscal cliff”, automatic spending cuts and tax increases set to start in January. The news had an immediate effect on Asia. Asian shares slid. The MSCI index for the Asian Pacific dropped 0,7 %. Nasdaq and Dow Jones futures are down 1,7 %.

Risk assets from shares, oil to currencies as the Australian dollar and EURO, were sold off in the morning hours. Euro/USD is falling below 1.32 losing 60 basis points. The USD/JPY is slightly firmer at 83,93 down from 84,50 yen a dollar yesterday. The market uncertainty has generally strengthened the dollar. The DXY index where the USD is weighed against a basket of major currencies, gains 0,2%. The steep fall in precious metals continue. Gold is USD 1640 an ounce and silver has dropped two dollars during the last day trading to 29,72.

The Republican-led House of Representative which abruptly recessed late Thursday may return with a not yet decided new plan on December 27th. Markets see the event yesterday as major set-back for a fiscal compromise. The chance for a deal is downscaled from 60 to 30 %. Markets are extremely volatile and will continue to be swayed by the budget negotiations over the next days.

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Re: Daily Market Reviews by UWCFX

Postby UWC Neeraj » Wed Dec 26, 2012 6:14 am

24 DECEMBER 2012: THE OPEC DOESN'T WANT THE PRICE OF OIL TO BE LOWER THAN $100

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Last trading session in America was closed with drop, the index S&P500 lost 0,94%. Price stopped at the level of 1430,15 points. Dow Jones lost 0.91%. With approach of 2013 tension at the stock markets increases: the problem of "fiscal cliff" isn't solved, moreover, investors are getting new reasons for concerns. So, the speaker of the House of Representatives of the Congress of the USA John Beyner cancelled vote according to the project of republicans in connection with insufficient support of the ideas, thus, the resumption of negotiations between republicans and democrats is expected only after Christmas, and for achievement of the agreement they will have only 4 working days.

The most part of "blue chips" included in index finished session in "a red zone". The most notable decrease showed Bank of America (-2,00%), Exxon Mobil (-1,87%) and Walt-Disney (-1,86%), in plus there was only American Express (+0,44%) and McDonald’s (+0,16%).

Recently we heard news which can become the reason of correction of the world markets at the beginning of the next year. The prime minister of Italy Mario Monty retired on Friday, but thus declared on Sunday that he will consider opportunity to stand for the second term at parliamentary elections on February. Chances to get the second term are insignificant.

As a whole rather quiet situation remains in the oil market. Quotations are consolidating within the trade range of the last months. All attempts to leave out from these limits are unsuccessful. Among the latest news of the sector, it is necessary to note the message of several news agencies referring to the minister of oil of Iran - Rostam Ghasemi. According to him, the OPEC will hold an emergency meeting if price of oil falls lower than 100 US dollars. Besides he also noted that the price of oil is predicted to be higher than 100 dollars for barrel in 2013. This morning we can see Brent on a level of 108.78.

Gold and silver are stable this morning and a slowly recovering from the minimum levels we have seen last week. Gold is traded on a level of 1663.22 and silver is on a level of 30.236. As a whole, for this year prices of gold grew by 5.9% and this is the 12th year of growth of metal. One of the reasons of the high prices is demand of the world Central Banks which buy up metal for hedging of the risks. Nevertheless, judging the last data of the Commission of the market of futures of the USA, rates on further rally of gold fell to 13% to 112.42 thousand contracts.

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Re: Daily Market Reviews by UWCFX

Postby UWC Neeraj » Wed Dec 26, 2012 6:19 am

26 DECEMBER 2012: MARKETS ARE WAITING FOR PROGRESS IN NEGOTIATIONS ON BUDGETARY QUESTIONS IN THE USA

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Without special enthusiasm passed the pre-Christmas truncated trading session on Wall Street. Key indexes lost about 0,2-0,4% on small trading volumes. As a part of an index of blue chips - Dow Jones, the greatest contribution to decrease in the indicator made the representatives of hi-tech sector: Hewlett-Packard (-2,3%), Microsoft (-1,42%), Cisco Systems (-0,65%).

Besides, in the days which have remained to New year, statistical departments will submit data on the housing market, in particular housing prices, sales of new buildings and incomplete sales of houses. The research organization Conference Board will publish data on dynamics of an index of consumer confidence in the USA for December. While stock markets stiffened waiting for news from America regarding "fiscal cliff".

Asian share indexes bargain today in more expanded structure, than yesterday, however the stock exchanges of Australia and Hong Kong are still closed in connection with celebration of Catholic Christmas. At the same time the Japanese Nikkei index continues the ascending movement caused by the next round of weakening of national currency, but the index of continental China SSE corrects today a yesterday's steady growth.

The Japanese yen continues today to decrease, USD/JPY pair bargains at the level of 85,3, again updating thereby an one-and-a-half-year maximum, and approaching a maximum of 2 years, established at the level of 85,5.

Yesterday futures of gold rose in price in Tokyo for the first time for the last four days this is connected with statements of the new prime minister of Japan Shinzo Abe who is the supporter of "soft" approach to economy. He insists that if the Central Bank of the country will not raise a level of inflation for stimulation of economic growth, he will change his powers. All this promotes that gold acts again for investors as "smooth water". Today this morning, we can see gold traded on a level of 1655.98. Silver is slightly strengthening and traded at level of 29.95, getting closer to a level of 30 dollars per troy ounce.

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Re: Daily Market Reviews by UWCFX

Postby UWC Neeraj » Thu Dec 27, 2012 4:52 am

27 DECEMBER 2012: MARKETS WAIT FOR NEWS FROM WASHINGTON

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


The European stock exchanges were closed yesterday, but American indexes showed not so positive dynamics and were closed with a decrease. Dow Jones lost 0.18%, but Nasdaq and S&P500 were closed with a fall of 0.74% and 0.47% accordingly. Fears of the American investors are again connected with a dependence of the main problem of year - "fiscal cliff", and also with a ceiling of the public debt which limit, according to the Minister of Finance - Timothy Geithner, will be reached already on December 31 of the current year.

Also oil to fire was added by data on retails which were record-breaking low, their volume from October 28 till December 24 grew only by 0,7% in comparison with the similar period last year. Master Card also specifies that many people show today restraint in the purchases, being afraid of "fiscal cliff" which can come on January 1 and bring with itself increase of taxes.

Futures for WTI brand oil yesterday jumped up for $2,37 to $90,98 for barrel. Today WTI oil is traded on a level of $91,18 for barrel, Brent is decreasing less than 0,2%, bargaining at the level of $111,05 for barrel.

Gold loses the positions in one of the last days of 2012, trading passes very inertly as many participants of the market already left for holidays. Gold is losing 0.25% and traded on a level of $1656.50, silver is bargaining around level of $30.00 second day in a row.

Absolutely other situation is observed in copper futures which add more than 1.3%. Quotations break through a level of $7900 after the National bureau of statistics of the People's Republic of China reported that the profit of the industrial companies in the country grew in November by 22.8% in comparison with the similar period last year. China is the largest consumer of copper therefore investors hope that recovery of the Chinese economy will positively influence demand for metal.

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Re: Daily Market Reviews by UWCFX

Postby UWC Neeraj » Fri Dec 28, 2012 6:55 am

28 DECEMBER 2012: LAST TALKS ON “FISCAL CLIFF” STRENGTHEN EURO

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


President Barack Obama and lawmakers are launching a last chance round of budget talks just days before a New Year’s deadline to reach a deal to avoid a “fiscal cliff”: an increase of USD 600 billion of taxes and budget cuts to be automatically executed from January 1st if politicians fail to find a budget compromise. Obama and Vice President Joe Biden will meet with congressional leaders from both parties in the afternoon today. The news has for now strengthened risk appetite and Euro/USD is up.

The two political parties remained far apart particularly over plans to increase taxes on the wealthiest Americans to help close the US budget deficit. The coming days are likely to see intense bargaining over numbers or political theatre as each side attempt to avoid blame if a deal looks unlikely.

US stocks sharply cut losses and rose on news of the House reconvening as investors clung to hopes of an 11th –hour deal. Even a partial agreement on taxes that would leave tougher issues like entitlement reform and the debt ceiling until later could be enough to keep markets calm. US stocks recovered, but fell for a fourth day after a jittery session which saw a one % fall after Senate Majority leader, Henry Reid, initially warned that a deal was unlikely. Stock markets recovered and ended flat on news on new negotiations. Dow Jones ended down 0,14 % to 13 096 after a one percentage free fall in the opening of yesterday’s session.

Asian shares inched higher on signs that Washington is making a last ditch effort to reach a budget compromise. The USD/JPY fell to its lowest level in 2 years trading at 86,64, and Japanese stocks to 21 months high on expectations of drastic monetary easing. Australian shares rose to a 19 month high and are on track to post its strongest annual gain since 2009. Oil prices rose on hopes of a US political deal. Brent crude reached USD 111 a barrel.

EURO/USD has recovered to 1.3240 after falling to 1.3170 before Christmas on news of failed budget negotiations. A budget settlement will create renewed optimism for continued US economic growth and increased risk appetite which will strengthen the Euro and smaller currencies. Australian dollar hit a 20-month peak against the yen at 89,93 and is also up against the USD.

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