Market Insight Newsletter – Vol. 2, Issue 36 Futures, FX, CFDs, Equities
2013 March 11 by Company
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Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2013 March 7 by Graham
Good morning
Overnight
# European stocks hit their highest levels since the GFC crash before retreating, the EuroStoxx600 ending down 0.25%. Meanwhile U.S bourses have had a relatively quiet session generally holding onto the sharp gains made in recent days. The S&P500 has retreated back to flat for the session at time of writing whilst the Dow recorded another all-time high before falling back a touch.
# The private payrolls firm ADP reported that their parallel (to the official govt. report due Friday) non-farm payrolls series showed solid gains in the U.S labour market. The report showed U.S. private-sector employers added 198,000 jobs in February. Economists surveyed had forecast the ADP National Employment Report would show a gain of 170,000 jobs. Further to the good news for Feb, January’s private payrolls were revised up to show an increase of 215,000 from the previously reported 192,000.
# U.S Factory Orders were a bit of a dud, with bookings to U.S. factories sliding 2 % in January, the most in five months, after a revised 1.3 % increase in December that was lower than a prior estimate.
# The Fed’s Beige Book survey showed activity continued to expand at a moderate pace, as consumer spending and manufacturing strengthened. Interestingly however, the Beige Book also revealed loan demand remained flat (brings to mind the ‘pushing on string’ thought).
# The EUR/USD fell ahead of tonight’s ECB meeting on suspicions that, while policy is widely expected to remain on hold at this meet, ECB President Mario Draghi may use the news conference afterwards to hint at future policy easing. From a high of 1.3070 yesterday the EUR resides at 1.2990 this morning. Projections for both growth and inflation in the Eurozone are likely to be on the low side, giving the central bank room to cut rates in the coming months.
# The USDJPY flew north with the market again focussing on an impending central bank meet. Whilst no further immediate easing is expected today’s meeting is the first under the stewardship of new BOJ Governor Kuroda. From yesterday’s low of 92.98 the USDJPY has been as high as 94.13 this morning.
# Copper (Dr Copper) slumped to a 15 week low, after a two-day rebound, weighed by uncertainty about metals demand in China, the world’s top consumer, and economic growth in Europe. The most industrial of metals fell 0.85 % to $7,706 a ton, erasing initial gains that took it above $7,812. Areas of concern for the global economy remain, including the Chinese government’s move to cool the country’s overheated property market, the possible economic impact of U.S. spending cuts and political deadlock in Italy.
# U.S. crude briefly slipped below $90, before settling down 0.4 % at $90.43. The fall was the 4th in 5 days as U.S. crude oil inventories rose more than forecast last week.
Ahead
# Australian AIG Construction Index
# Australian Trade Balance
# Japan Monetary Policy
# BOE Monetary Policy Statement
# ECB Monetary Policy Statement
# U.S Unemployment Claims
# U.S Trade Balance
Regards G.
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2013 February 8 by Graham
Good morning
Overnight
# Global risk sentiment continues to get pared back with a second consecutive night of moderate losses for equities. The EuroStoxx600 ended down 0.22% whilst the S&P500 is down 0.3% at time of writing. Interestingly last night was the fourth trading session of five in February in which the Dow industrials had triple-digit swings intraday. Clearly there are a lot of cross currents right now and may suggest time for a pullback of recent gains.
# Likewise the EUR/USD slid for the second day in a row as the ECB left rates unchanged (+0.75%) and ECB President Mario Draghi voiced concerns about the impact of the currency’s exchange rate on the economy. He said while economic activity in the euro area should recover gradually in 2013, there are more negative risks than positive ones. Draghi also said the euro’s exchange rate was near to its long-term average, going further than many analysts had expected. Draghi said “the exchange rate is not a policy target, but it is important for growth and price stability and we certainly want to see whether the appreciation is sustained.”
# The BOE also left rates unchanged with new Gov. Carney (ex-Bank of Canada chief) eliciting some sharp GBP/USD moves on his keenly watched first press conference. Saying “an absence of a target for the exchange rate does not mean a central bank should be indifferent to exchange rate movements” saw the pound take off, racing a cent higher before settling mid-range.
# The NZD/USD continued to melt, undermined by a combination of poorer global risk appetite and the fallout to yesterday’s absolutely whacky NZ Employment report. Statistics NZ really needs to take a close look at how it mines the data for this series as the results over the last few years have been nothing short of ridiculous. From a post-employment report high of 0.8440 the kiwi has been as low as 0.8297.
# U.S Jobless Claims dropped by 5,000 to a seasonally adjusted 366,000, the Labour Department said. That was enough to pull down a four-week moving average of new claims, a gauge of the trend in layoffs, by 2,250 to 350,500, its lowest since March 2008.
# US Q4 nonfarm productivity fell more than expected at -2.0% vs. -1.4% expected whilst Q4 unit labour costs rose 4.5% vs. 3.0% expected. Not a great mix to be fair.
# UK Industrial Production rose a larger than expected 1.1% in Dec against expectations of a 0.9% rise. Manufacturing Output also rose 1.6% for the month, after falling 0.3% in November. The increases will raise hopes that the economy can avoid another recession.
# Crude Oil fell to the lowest level in two weeks on the Draghi comments that the euro’s strength could hamper an economic recovery, curbing fuel demand. Oil for March delivery slid 79 cents to $95.83 a barrel.
# U.S Soybean supply fell to 48 year lows as dry weather and shipping delays in South America are boosting demand for soybeans from the U.S., the world’s largest grower and exporter.
Ahead
# RBA Minutes of Tuesday’s Rate Review
# China Trade Balance
# China Inflation
# U.S. Trade Balance
Regards and good weekend all
G.
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2013 February 1 by Graham
Good morning from the 7’s capital of the world
Overnight
# European stocks spent the entire session in the red ending down 0.49% however generally better data from the U.S. sees stateside bourses hover around flat at time of writing. The S&P500 is indeed unchanged from yesterdays close.
#U.S.personal income rose 2.6% last month, the biggest increase in eight years. Income growth surged in December as companies rushed to make dividend payments before higher tax rates set in, while buoyant wage growth also gave a lift to households.
# The Chicago PMI reading unexpectedly rose to 55.6 from last month’s downwardly-revised reading of 50.0. The gains were led by production and new orders, which both climbed to 10-month highs. The employment sub-component surged to 58.0 from last month’s reading of 46.8 – the largest gain since February 2002.
# U.S weekly jobless claims bucked the trend with claims again rising. Claims rose to 368k against expectations of 350k.
# German unemployment fell to 6.8% from 6.9%.
# German Retail Sales collapsed in December declining by 1.7 % month-on-month despite usually lucrative pre-Christmas trading. On a 12-month basis, figures were even more alarming, with retail sales dropping by 4.7 % in December, compared with levels achieved in the same month in 2011. The release appears at odds with recent upbeat consumer surveys however statisticians noted that there were two fewer shopping days in December 2012 than in the previous year.
#The recent volatility in NZD/USD continued with the kiwi gaining a full cent against the USD from this time yesterday. The increasingly hawkish undertones apparent in yesterday’s RBNZ OCR release contrasted directly with the U.S. FED’s statement of 45 minutes earlier which continued with its strong easing bias. The NZD/USD has been as high as 0.8422 from yesterday’s early low of 0.8290. Against the AUD, solid inroads have also been made, with trade seen as high as 0.8060 this morning.
Ahead
# Australian AIG Manufacturing Index
# RBNZ Gov. Wheeler speaks – “Improving NZ’s Economic Growth”
# China Manufacturing PMI
# China HSBC Financial Manufacturing PMI
# U.S. Non-Farm Payrolls
# U.S. ISM Manufacturing PMI
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2013 January 31 by Graham
Good morning
Overnight
# European equity markets took a step back on a surprise contraction in U.S. growth, the EuroStoxx600 falling 0.58% by the end of trade. U.S. markets are trading somewhat nearer par, buoyed in part by the U.S. Federal Reserve’s on-going pledge, reaffirmed this morning, to keep highly stimulatory conditions until labour markets improve significantly. Currently the S&P500 is down 0.27%.
# U.S. Q4 GDP growth showed a surprise headline contraction of -0.1% after growing at +3.1% pace in Q3. Many analysts have suggested the economy is not quite as dire as the headline suggests with big one-off declines in defence spending (-22.2%) and inventories responsible for most of the weakness. US consumption growth and business investment actually picked up.
# The U.S employment scene continues to recover with private payrolls provider ADP suggesting non-farm jobs grew by 192,000 in Jan v 185,000 in Dec (165,000 was expected). Whilst month to month the ADP report varies considerably from the official U.S jobs report the smoothed correlation between the reports is very high.
# The European Commission’s Eurozone confidence index rose by 1.4 points from the December level to 89.2 points against a background of easing tensions over the debt crisis.
# The EUR was once again the leading light in currency markets with huge cross buying taking the EUR/USD to nearly 1.3600 (from under 1.35 yesterday) whilst in comparison the NZD/USD declined to 0.83 (from nearly 0.84) on the flows. As a result the NZD/EUR cross fell 1 cent from 0.6220 to 0.6120. To start the year the cross had been at 0.6450. This move is a continuation of the unwind of massive anti Euro bets placed over the last few years.
# There has been more focus on the figures released from the RBNZ yesterday showing an increase in NZD sales by the central bank in December. After selling a net $64mio in Nov the bank sold a further $199mio in Dec. Whilst not in any way an ‘intervention’, the sales clearly show the RBNZ’s thinking although at this stage the amounts are very small with the bank able to take positions in the many billions of dollars size. The current action will be categorized by the bank as ongoing ‘reserve management’, taking a leaf out of very successful programs run by the RBA over the years.
# Spanish GDP undershot expectations coming in at -0.7% v -0.6% expected. The worse than expected contraction means Spain has now suffered six straight quarters of negative growth.
Ahead
# Japan Manufacturing PMI
# Japan Industrial Production
# Australian New Home Sales
# Australian Private Sector Credit.
# U.S Unemployment Claims
# Chicago PMI
Regards and good trading
G.
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2012 November 9 by Graham
Good Friday morning
Overnight
# Well so much for the presumption that QE3 (QE Infinity) would bolster markets as the previous instalments did. Since the announcement U.S bourses have fallen about 6.5%. Overnight further losses were seen as the markets begin to resemble the dark days of May/June when fears of the Euro crisis were at their height. U.S Treasury Bond yields are once again falling (safe haven), stocks are off and the USD is relatively well bid (again safe haven). Last night saw the EuroStoxx fell 0.17% whilst the S&P500 is currently down 1.0%.
# The overhang of yesterday’s shocking NZ Employment Report continued with the NZD underperforming all-comers. The NZD/USD sits at 0.8150 from a post U.S. election high of 0.8310 whilst the NZD/AUD cross has been murdered (the better Aussie jobs compounding the NZD’s woes) now trading at 0.7835 from 0.7980 earlier in the week.
# There were no surprises from either the ECB or BoE in their latest Monetary Policy decisions. The European Central Bank held its main interest rate at 0.75 %, deferring any cut in borrowing costs while it assesses the extent of the euro zone’s economic downturn and waits for a cue to use its new bond-purchase program.. Meanwhile the BoE opted against pumping more cash into the system as it has been one of the most aggressive central banks in undertaking quantitative easing so far.
# U.S benchmark 10 year treasury bond yield fell again after an auction of 30 year bonds. The yield now sits at 1.63% from 1.85% in late October.
# Spain had no trouble selling its maximum quota of bonds. However, Spanish spreads to German bonds have pushed to their highest level in more than a month. The market speculates the sovereign remains reluctant to apply for assistance via the OMT but will likely need to.
# Gold and Silver fought the tide of USD strength rising considerably. Is this going to be the case as we approach the fiscal cliff? Gold becomes the 3rd currency with EUR under pressure whilst USD fears rise as we approach the Jan 1st deadline.
# The number of Americans seeking unemployment benefits fell last week by 8,000 to a seasonally adjusted 355,000, a possible sign of a healing job market. But officials cautioned that the figures were distorted by Superstorm Sandy.
Ahead
# RBA Monetary Policy Minutes (last meeting)
# China Data Dump – CPI, PPI, Industrial Production and Retail Sales
# University of Michigan Consumer Sentiment
Cheers G.
Overnight Points of Interest
2012 September 12 by Graham
Overnight
# Equity market rallies in response to the German Constitutional Court green light were surprisingly tepid. The EuroStoxx600 eked out a 0.12% gain while the S&P500 fared only slightly better, rising 0.21%.
# The long awaited German Constitutional Court ruling arrived without drama. It confirmed the legality of the ESM and imposed only limited conditions on Germany, including a clause that Germany’s contribution as a percentage of the Eurozone could not rise above the present 27%.
# The German Court move was a huge shot in the arm for the peripheral European countries (confirming that German money is coming to help them) and as such Spanish and Italian 10 year bond yields fell to levels not seen April when the LTRO was announced. The benchmark 10 year yield for Spain now sits much lower at 5.62% from a 7.64% high in July whilst similarly Italian 10 years now sit at 5.03% from a 6.60% high, again seen in July. So the ECB and other monetary authorities have done a really good job getting yields down and reducing costs on the huge deficits but this is only to give time for the politicians to make fundamental changes to how these economies work. Consider Phase 1 of the rescue complete, now the real work begins. Can the politicians put aside self-interest (getting re-elected) to make the tough decisions needed?
# The EUR/USD lead all currencies higher against the USD on the ruling. The EUR/USD rose to 3 month highs of 1.2935 dragging NZD and AUD to 4 week highs.
# European Industrial Production data for July also helped the cause coming in better than expected at +0.6%m/m versus 0.1% expected.
# UK Employment data was mixed with a decline of 15k in jobless claims however the unemployment rate ticked up from 8.0% to 8.1%.
# In corporate news, Apple staged a late-day rally to finish up 1.4%, after unveiling its much-anticipated iPhone 5. The product, which will feature a bigger screen, an improved camera and better battery life, was largely in line with consensus estimates. In other stock movers, Facebook climbed 7.7% after founder and Chief Executive Mark Zuckerberg acknowledged that the stock’s performance had been disappointing but was upbeat about the company’s outlook in the mobile sector.
Ahead
# NZ Manufacturing Index
# MI Australian Inflation Expectations
# U.S Producer Price Index
# U.S. Unemployment Claims
# FOMC Statement
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2012 September 9 by Graham
Overnight
# Global equity markets ended the week on a relatively muted note, rising only mildly, when other ‘risk’ instruments flew higher. The EuroStoxx600 rose 0.23% and the S&P500 rose 0.4%.
# The big news of the evening was the monthly U.S. Non-Farms Payroll report. The disappointingly weak report undermined the USD as investors scrambled to price in more easing from Bernanke’s FED. The payrolls report showed 91k new jobs had been created in the month, well below expectations of 130k. The headline unemployment rate actually showed a decrease from 8.3% to 8.1% which on the face of it should be a positive, however the devil is always in the detail, and further analysis showed 368k people had left the labour market, no doubt completely dejected about prospects of finding employment.
# Flying a little under the radar was news of a Chinese stimulus plan where Chinese President Hu approved a US$156b infrastructure plan in an attempt to address the “downward pressure” still facing the Chinese economy.
# ‘Risk’ took off led by the precious metals. The metals complex have been the biggest beneficiaries of past FED money printing programs and the current high expectations for more propelled Silver up 5% and Gold up a bit over 2%. The recently beaten down NZD and AUD also soared after the large Aussie data dump of last week did not confirm recent Aussie Armageddon scenario. Could AUD and NZD now be ready to head to new highs above 1.10 and 0.88 respectively?
# Other commodities also soared on Friday. Copper surged to a four-month high with heavy volumes changing hands in what resulted in a massive 3.65% gain for the day. NYMEX Crude underperformed due to ample supply – but still gained 0.93%. Even the beaten down iron ore contract had a reprieve – rising 2.30% to close at 89.00 up from 87.00 on Thursday.
# U.S treasury yields fell, the 10 year dropping from 1.74 to 1.66% on the FED expectations.
# The Spanish 10-year yield crashed below 6.0% to 5.64% – down from 6.07% late Thursday and down from 7.02% hit on Monday. Falls in the Italian bond yields were equally dramatic with the 10-year Italian yield threatening to move below 5.0% – closing at 5.06% down from 5.32% late Thursday and down from around Monday’s high at 6.0%.
# China had their own data dump over the weekend with all prints relatively close to expectations – CPI 2.0%y/y, PPI -3.5%y/y, industrial production 8.9%y/y, retail sales 13.2%y/y (those last two numbers are still massive aren’t they?).
# UK industrial production surged 2.9%m/m in July, the fastest pace in 25 years and well above the 1.5% consensus forecast.
# German Jul industrial output came in strong at +1.3% m/m versus -0.4% revised previously.
This week ( the more important events in bold)
# 11 September: NZ electronic card transactions; NZ QVNZ house prices; AU NAB business confidence; US trade balance; 12 September: AU dwelling starts; UK employment; EU IP; EU elections in Netherlands, EU German constitutional court rules on legality of ESM; 13 September: NZ RBNZ policy statement; NZ PMI; AU RBA Bulletin; EU SNB meetings; US PPIs; US jobless claims; US FOMC meet; G20 begins; 14 September: Euro group meeting; US CPI; US retail sales; US Michigan consumer confidence.
Today
# NZ Manufacturing Survey
# Japan GDP
# China Trade Balance
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2012 September 6 by Graham
Overnight
# Global equities took great heart from confirmation that the ECB was about to embark on a new bond buying program. Bourses on both sides of the Atlantic soared. The EuroStoxx600 rose 2.33% and the S&P500 finished up a similar 2.04%. In what I suggest is a significant development the S&P500 broke the ‘double top’ I had highlighted earlier this week and now sits at new 4 year highs! Further the Nasdaq saw new 10 year highs at levels not seen since the Dotcom bubble.
# The ECB came forth with yet another new acronym, announcing the implementation of the OMT (Outright Monetary Transactions scheme). The guts of the scheme is to buy stressed sovereign debt (think Spain and Italy) so to keep their borrowing costs down hoping that these countries can muddle through and manage their huge debts (at lower rates) until the politicians get their act together and make fundamental reforms to pensions, labour markets, tariffs etc. The possibility of a 0.25% cut in the main refinancing rate from 0.75% did not eventuate.
# Amongst the immediate good vibes note must be taken that the ECB cut growth forecasts for 2012 & 2013 with risks to the downside.
# The ECB OMT plan had the desired effect in ‘peripheral’ Europe with Spanish 10-year government bond yields falling below 6% for the first time since June.
# Positive U.S data releases had the opposite effect on U.S. treasury yields with the benchmark 10 year bond yield jumping almost 8bps to 1.67% as the market pared back QE3 expectations.
# The US ADP employment report (a great indicator of the official non-farm payrolls series – on average, over time) showed increased national payrolls of 201k in August, well above the 140k expected.
# US jobless claims were sympathetic with the ADP data showing a decline in claims to 365k vs. 370k expected.
# US ISM non-manufacturing index jumped to 53.7 (from 52.6 in July), well above expectations of 52.5.
# The Bank of England left both its policy rate and asset purchase target unchanged at 0.5% and £375b respectively.
# The ‘risk on’ environment saw the recently beaten down NZD and AUD outperform with this pair gaining against all-comers. Given the depth of negative sentiment surrounding these two recently more short covering appears highly likely. From Thursdays low of 0.7915 the kiwi rose to a high of 0.8030.
Ahead
# Australian Trade Balance
# UK Manufacturing Production and Industrial Output
# U.S. Non-Farm Payrolls
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2012 August 5 by Graham
Overnight
# Global equity markets roared higher on Friday rounding out a fascinating week. Sharp falls in Spanish and Italian borrowing costs lit the initial fire whilst a mixed U.S. jobs reports kept the sentiment fanned. The EuroStoxx600 rose 2.43% (Spain’s Ibex up a whopping 6.0%) and the S&P500 rose 1.9%.
# Spanish bond yields plunged after the Spanish PM suggested Spain may soon apply for aid from the EFSF. It was the front end of the interest rate curve that fell most, the 2-year Spanish yield crashed off to 3.73% from 4.53% late Thursday (it was around 7.0% a little over a week ago!) and likewise the Italian 2-year yield collapsed to 3.27% from 3.78% late Friday.
# The EUR/USD surged notching up impressive gains against all comers. From a recent low of 1.2040 the EUR is now pushing against the 1.2400 barrier. From a recent high of 0.6680 the NZD/EUR has been forced back to 0.6605 on the EUR strength.
# Commodity markets staged a strong relief rally – with NY copper gaining 2.34% while NYMEX Crude gained close to 5.0%. Gold climbed back above 1,600 to close at 1,603 – up from 1,590 late Thursday.
# The U.S Non-Farm Payrolls report generated a fair amount of enthusiasm although the details were not exactly scintillating. Indeed the good vibes may be based on the ‘Goldilocks’ notion of ‘not too hot and not too cold’. That is, whilst the headline number was better than forecast at 163k v 100k , the unemployment rate worsened from 8.2% to 8.3% and the prior months results were revised for the worst. This keeps the market happy in the near term but also keeps a FED easing in the picture as well.
# A poll of 16 US primary dealers (banks the deal directly with the FED) taken after payrolls shows 63% chance of more QE and if the Fed were to act, then 13 dealers say it could happen at Sept meeting.
# Presidential candidate Romney told CNN that the Fed shouldn’t use new stimulus measures
# The UK Telegraph reported that the BOE is poised to sharply downgrade growth and inflation forecasts. It is expected to slash 2012 growth forecast from plus 0.7% to close to zero and growth forecast for 2013 expected to be cut to 1.5% from 2.0% in May statement
The week ahead (major releases in bold)
# : 6 August: AU NSW bank holiday; 7 August: NZ QES & LCI labour market surveys; AU RBA meeting; UK IP; UK manufacturing; EU German factory orders; 8 August: NZ QV house prices; AU loan approvals; JN trade balance; UK BoE inflation report; EU German IP; 9 August: NZ HLFS employment; NZ consumer confidence; AU employment; CH CPI, retail sales, IP, and investment; JN BoJ meeting; US trade balance; US jobless claims; 10 August: NZ card spending; AU RBA Monetary Policy Statement; CH trade balance; JN IP; EU German CPI; UK PPIs;
Today
# FED Chairman Bernanke speaks.
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities