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Asian Market Update – Friday: Asian stocks mixed as the dollar fall continues.

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dollar crisis

The Big Question: With the dollar at its lowest level since the end of 2014, investors are wondering where it will end.

Stock markets across Asia Pacific are mixed on the last trading day of the week, as the US dollar extends losses, dropping another 0.4% against the euro in the early hours of the Asian trading session.

This most recent drop in the dollar came after European Central Bank President Mario Draghi expressed that tapering of monetary stimulus in the Eurozone might begin this fall.

Investors are now beginning to wonder what can stop the falling dollar, as some are seeking to protect themselves against it by buying gold.

In Japan, the Nikkei 225 lost 0.49 percent, trading around the 19,300 level. The index is now near levels where it has found support in the past couple of weeks.

In South Korea, the KOSPI index is down 0.14 percent to 2,343 at midday.

In Australia, the benchmark ASX 200 lost 0.37 percent, trading at 5,668.

In Greater China, the Hang Seng Index in Hong Kong gained a good 0.60 percent in the first half of the trading day, trading at 27,689. The Shanghai Composite was also up by 0.24 percent to 3,373, extending an uptrend that has lasted for months.

This weekend, all eyes are again on North Korea, as the regime is reportedly making preparations for yet another test launch of what is possibly an intercontinental ballistic missile (ICBM), which could happen as early as Saturday.

Should the rogue regime in Pyongyang choose to do this, even more pressure will be added on President Donald Trump to put an end to the provocations. Trump has previously warned about “fire and fury”, and the question is if he is ready to back up those words by actions.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan-Nikkei Stock Average 225 19,300 -0.49%
China-Shanghai Composite Index 3,373 0.24%
Australia-ASX 200 5,668 -0.37%
Hong Kong-Hang Seng 27,689 0.60%
South Korea- KOSPI 2,343 -0.14%

Cryptocurrencies

Digital currencies are still struggling to make gains, but seem to have stabilized somewhat following the Chinese ICO ban.

While bitcoin is nearly unchanged during the Asian trading session, Etherum is down by 1.15 percent, trading at $331. Bitcoin is currently trading at $4,613, despite rumors that the recent tightening in regulations in China is just the beginning.

Currencies

The Japanese yen gained 0.15 percent against the US dollar during the Asian trading session to 108.19 per dollar.

The Chinese yuan is continuing to surge against the US dollar, adding 0.52 percent in the first half of the Asian trading session Friday. The upward trend for the yuan is gaining momentum and now appears very strong, as the CNY/USD is breaking through major resistance levels in the chart.

Chinese yuan breakthroughThe Australian dollar is also surging against the dollar, adding 0.7 percent Friday. The AUS/USD is now trading at 0.81.

Commodities

WTI Oil gained 0.22 percent to $49.21 per barrel.

Brent Crude was up 0.46 percent to $54.74 per barrel.

Gold gained 0.30 percent to $1,353 an ounce.

Business News across Asia

In North Korea, the rogue regime is widely expected to perform yet another intercontinental ballistic missile launch on Saturday. The question now is whether the trajectory will be over Japanese territory again. Simple geography dictates that Japan is the most likely direction for a missile launch, because firing towards China would be extremely foolish, and a more southern trajectory could be perceived as heading towards the US mainland. Another cause of concern is whether the missile will carry a nuclear payload to demonstrate the North’s ability to arm their missiles.

Take away: A missile headed towards the US mainland will likely be perceived as a threat by the US military and could trigger an immediate retaliation. Also, even an unarmed missile heading in any direction will pose a huge threat to civilian aviation and maritime traffic. Expect further losses in the US dollar and global equity markets should this happen.

In Malaysia, criticism is growing against the government after it signed a deal allowing a Chinese company to construct a new railway project called the East Coast Rail Link. Local companies are unhappy about government funds being funneled to China instead of being spent on Malaysian contractors.

Take Away: This is part of a growing trend among South-East Asian countries feeling the pressure from China’s growing influence. On one side, Chinese investments are propping up the economies in many of these countries, but it is often at the expense of local businesses that cannot remain competitive in the face of cheap and fast-working Chinese companies.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.3 stars on average, based on 37 rated postsFredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He closely follows stocks, forex and cryptocurrencies, and is always looking for the next great alternative investment opportunity.




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Analysis

Stocks Surge on Earnings as Saudi Tensions Ease

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US stocks started the session in positive territory following the positive earnings surprises by Goldman Sachs (GS) and Morgan Stanley (MS), and from then on, the floodgates opened and we saw the strongest rally on Wall Street since March. President Trump’s more diplomatic stance towards Saudi Arabia helped the bounce in stocks, together with the stability in Treasury yields, but the most important driver was the huge bearish move of last week in stocks.

The major indices all gained more than 2% amid the furious oversold bounce, with, unsurprisingly, the Nasdaq gaining the most on the day, but last week’s deep correction is still far from being erased, and given the negative market internals, we remain defensive towards equities, even regarding the short-term time-frame.

S&P 500 Index Futures, 4-Hour Chart Analysis

We were expecting a similar move since Thursday when stocks reached deeply oversold short-term momentum readings, and as we noted then, these rallies should be treated as selling opportunities, due to the broad technical weakness in emerging markets, Europe, and now on Wall Street as well.

The S&P 500 all but cleared the oversold short-term readings thanks to today’s surge and the preceding choppy consolidation phase, and now the index is near the levels where we would look for a swing high in the coming week. The Volatility Index (VIX) plunged back below, and its behavior in the coming days will be key in judging the real strength behind today’s move.

Russell 2000, 4-Hour Chart Analysis

In spite of the strong move in small-caps as well, the Russell 2000 continues to look wounded from a technical perspective, and the index is facing very strong resistance levels. According to almost all breadth measures, under-the-hood, things are also ugly, and even if the US bull market has legs, this correction is very unlikely to end with a V-shaped bottom, as a lot of healing would be needed to maintain a sustained rally.

Calm US Session in Currencies Amid Stock Surge

USD/JPY, 4-Hour Chart Analysis

Forex markets also saw corrective price action, although the main safe-haven assets, the Japanese Yen and gold gave back only a small portion of their recent gains. The Dollar finished little changed before tomorrow’s key FOMC meeting minutes, while the Pound pulled back after a positive European session.

We expect a larger move in the Greenback in the coming days, and the consolidation in Treasuries could also come to an end, and another leg higher in Yields could be the trigger that ends the oversold bounce in stocks.

Copper Futures, 4-Hour Chart Analysis

Commodities had a quiet and choppy session, except the still active gold, and although crude oil managed to bounce amid the risk-on shift, copper failed to build on its recent resilience. the industrial metal is still stuck in a bearish consolidation pattern, with all eyes on the $2.75 support and the $2.87 resistance.

The way Chinese assets will react to today’s rally will be crucial for the commodity, as a meaningful bounce could help copper to a new swing high, despite the bearish long-term pressures.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 375 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Market Overview

Market Update: U.S. Stocks Rebound Sharply as Earnings Season Underway; Cryptos Stabilize After Wild Monday

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U.S. stocks rebounded sharply on Tuesday, with the Dow adding more than 500 points as traders set their sights on corporate earnings. Meanwhile, cryptocurrecy prices hovered in a narrow range as trade volumes returned to normal.

Stocks in Recovery Mode

All of Wall Street’s major bourses posted large gains on Tuesday, with the large-cap S&P 500 Index advancing 2.2% to 2,810.05. All 11 primary sectors contributed to the gains, with shares of information technology and the closely related communication services companies leading the rally.

A strong performance in technology sent the Nasdaq Composite Index surging. The tech-laden average jumped 2.9% to close at 7,645.49.

Meanwhile, the Dow Jones Industrial Average rose 547.87 points, or 2.2%, to 25,798.87.

The CBOE Volatility Index, commonly known as the VIX, plunged 17.3% to 17.62 on a scale of 1-100 where 20 normally represents the long-term average. The so-called fear gauge spiked to six-month highs last week during the height of the stock-market selloff.

Corporate Earnings in the Spotlight

Wall Street is gearing up for another high-flying earnings season, with analysts at FactSet forecasting one of the best quarters since 2011. A trio of bank earnings last Friday kicked off the earnings quarter, with Citigroup Inc. (CI), Wells Fargo & Co (WFC) and JPMorgan Chase & Co (JPM) all reporting sound numbers.

Shares of Goldman Sachs Group Inc. (GS) rose sharply on Tuesday after the Wall Street mega bank reported better than expected per-share earnings. Morgan Stanley (MS) saw its share price rally after posting a 20% jump in profits on the quarter as revenues also increased. UnitedHealth Group Inc. (UNH), a Dow blue-chip, also posted firm gains after reporting top- and bottom-line results that were higher than expected.

Johnson & Johnson (JNJ), another Dow company, also reported better than expected earnings and revenue for the most recent quarter.

Cryptos Hold Steady

Bitcoin and the wider cryptocurrency market traded within a narrow range on Tuesday, as turnover fell more than 40% from the previous day’s high. In the process, Tether’s USDT stablecoin rose modestly after losing its one-for-one peg with the U.S. dollar.

Since peaking above $221 billion at the start of the week, the cryptocurrency market capitalization has stabilized around the $210-$212 billion range. Bitcoin, the largest crypto by market cap, traded steady at $6,575. The bitcoin price continues to trade at a significant premium on Bitfinex and other digital currency exchanges that facilitate trading of USDT.

As Hacked reported earlier, Tether took $300 million worth of USDT tokens out of circulation last week. One of the transactions, worth $100 million, was carried out on Oct. 9 with the remainder being moved five days later.

USDT plunged by as much as 6% on Monday, which triggered a sharp rise in the value of bitcoin and commensurate gains in the broader market.

The combined value of all cryptocurrencies currently hovers just above $211 billion, according to CoinMarketCap. Daily trade volumes amounted to roughly $12.2 billion.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 647 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Pre-Market Analysis And Chartbook: Stocks Finally Find Footing as Pound Pushes Higher

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Tuesday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,768 0.80%
DAX 30 11,710 0.83%
WTI Crude Oil 71.33 -0.54%
GOLD 1,234 0.30%
Bitcoin 6,441 0.04%
EUR/USD 1.1600 0.18%

Although most of the key global stock benchmarks are still very close to last week’s lows, with some markets even hitting new lows this week, today equities might be in for something more than a dead-cat-bounce. The oversold short-term indicators have been screaming for a relief rally and those conditions still persist, even as the trend in most risk assets is clearly negative.

The US-Saudi tensions look to be slightly easing, with the local stock market staging a strong rebound following yesterday’s plunge, and as Treasury yields are still stable, there is no immediate negative catalyst to drive prices lower.

Shanghai Composite Index CFD, 4-Hour Chart Analysis

The Chinese stock market continues to be in very bad technical shape from a long-term perspective, as trade tensions and the slowdown in the economy are taking their toll. The Shanghai Composite resumed its bear market after the Golden Week, and it continues to hit new 4-year lows, still underperforming its global peers.

FTSE 100 Index CFD, 4-Hour Chart Analysis

European markets are also higher, but the bounce hasn’t even retested the breakdown levels, let alone questioning the downtrend. The FTSE 100 has been relatively weak lately, due to the Pound’s strength, and today it’s among the weaker benchmarks as well, after the releases of the British Employment Report which showed higher than expected wage growth.

Dow 30 Futures, 4-Hour Chart Analysis

The ongoing choppy correction in the US markets still hasn’t retraced more than the initial bounce, and given the still gloomy sentiment, there is plenty of room for correcting without violating the newly established short-term downtrend.

Earnings have been beating the consensus estimates so far across the board, and although expectations have been revised much in recent weeks, the results can still provide some momentum for stocks. Small caps outperformed yesterday, but that relative strength was short-lived, and today, the sector which has been leading the market lower is lagging again, which also confirms the deeper risk-off shift of the recent weeks.

Forex Markets Volatile as Brexit Talks, Dollar in Focus

EUR/GBP, 4-Hour Chart Analysis

The Great British Pound is having a huge day thanks to the wage growth beat and the hopes regarding a breakthrough with regards to the Irish border issues on the Brexit talks. The currency erased much of its recent pullback against the Euro and the Dollar.

The Pound hit multi-month highs compared to its largest peer earlier this month, and it could be starting another leg higher, at least against the weaker Euro, depending on the progress in the negotiations. The Dollar, on the other hand, lost ground once again today, at least in early trading, with only the overbought Yen dipping lower thanks to the improving global sentiment.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Nasdaq 100 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 375 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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