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Asian Market Update – Friday: North Korea rattles Asian markets…again

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Intercontinental Ballistic Missile

The Big Question: What does another North Korea H-bomb test mean for markets?

Major Asian indexes were rattled on Friday morning by a threat from North Korea to conduct another hydrogen bomb test at a larger scale and IN THE PACIFIC OCEAN. In addition, other market sensitive news also weighed in and set the tone for another turn down in equity markets.

In Japan, the Nikkei 225 edged down 0.29 percent to 20,289 at midday on Friday. Japanese investors tend to react quickly to North Korea issues, as regional geopolitical tensions could drive the yen up, which in turn could weigh on export shares. Also, North Korea fired two missiles over Japanese territory this month.

In Greater China, stocks were also down. The Shanghai Composite Index slid 0.45 percent to 3,342 before midday. In Hong Kong, the Hang Seng Index lost 0.69 percent to 27,916. Shares in China also respond to a decision from S&P Global Ratings to downgrade China’s long-term sovereign credit rating on Thursday.

In South Korea, the KOSPI index slipped 0.65 percent to 2,390.84.

Down under, the ASX 200 was up 0.32 percent to 5,673 at midday. The gain came as the head of the Reserve Bank of Australia signaled that Australia will not necessarily follow other countries in raising interest rates.

In responding to tough rhetoric from US President Donald Trump, who threatened to destroy North Korea if forced at the UN General Assembly, and potential new sanctions from the US, North Korea’s foreign minister said his country could conduct a nuclear test on an unprecedented scale in the Pacific Ocean.

Asian investors are also paying close attention to the US Fed’s decision to wind down its $4.5 trillion balance sheet in October. Analysts say the unprecedented move adds another layer of uncertainty for markets, especially those in emerging countries.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan-Nikkei 225 20,289.36 -0.29%
China-Shanghai Composite Index 3,342.78 -0.45%
Hong Kong –Hang Seng 27,916.30 -0.69%
South Korea-KOSPI 2,390.84 -0.65%
Australia-ASX 200 5,673.40 0.32%

Cryptocurrencies

Prices of cryptocurrencies recovered slightly overnight during the Asian trading session on Friday, following a steep fall in the previous day.

At midday in Asia, the bitcoin price was up 1.87 percent to $3,684. The bitcoin price took some heavy losses on Thursday, when it dropped to near the $3,600 level from about $3,900.

The price of ethereum edged up 2.30 percent to $264.20 around midday in Asia. Similar to bitcoin, the etherum price also saw a steep fall on Thursday, from $285 to $256.

In the news, former Commodity Futures Trading Commission head Bart Chilton took aim at the coin, saying there is “artificial inflation” in the bitcoin price and called for regulations.

A lawyer in Nebraska, US, will start to accept cryptocurrency for his practices after asking the state ethics board. That’s a positive move in the acceptance of cryptocurrencies.

Currencies

The Japanese yen gained 0.62 percent against the US dollar at midday Friday to 111.75 per dollar. The Japanese yen is perceived as safe haven, and when geopolitical tensions rise investors turn to the yen and other safe haven assets.

The Chinese yuan lost 0.03 percent against the US dollar to 6.5879.

The Australian dollar also lost 0.09 percent on the dollar, changing hands at 1.2615 per dollar at midday.

Commodities

WTI Oil was down 0.20 percent to $50.59 per barrel.

Brent Crude was down 0.11 percent to $56.37 per barrel.

Gold was up 0.53 percent to $1,297 an ounce.

Business News across Asia

In China, the People’s Bank of China (PBoC), the country’s central bank, has ordered domestic banks to stop doing business with North Korea, according to Reuters, citing unnamed sources. So far no official comment yet, but this is big step if it’s true.

Take away: If China cuts financial ties with North Korea, the North Korean economy would without a doubt plunge. China has been reluctant on such a move because it could chaos in the North and thus causes problems for China.

In India, Prime Minister Narendra Modi’s government is reportedly mulling a massive stimulus package to boost India’s economy, following slow growth in the first half of the year, per Indian media.

Take Away: The package might include measures to boost exports, investments, infrastructure, real estate and other sectors with government spending. However, Indian policymakers haven’t signed off the package yet.

Featured image from AF.mil.

 

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

Pre-Market: Selling Resumes as Dollar Extends Rally

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Global stocks are sharply lower today after the US open, as a bearish Asian session was followed by a lackluster European showing, and the major US indices also opened lower, erasing yesterday’s gains. Emerging markets are still to be blamed for the current selloff, even as the underlying cause is still the global tightening cycle and the Dollar’s rally.

S&P 500, 4-Hour Chart Analysis

The Chinese stock market and the Yuan led the way lower today, with the Shanghai Composite getting close to hitting new bear market lows, and with the currency hitting fresh 13-month lows. European stocks also continued their relatively weak streak, with the DAX trading at the lowest level since the end of June. The undoubtedly leading US benchmarks are all down by more than 1% today, but they are still close to their all-time highs, even as the divergences are just getting deeper and deeper.

Shanghai Composite, 4-Hour Chart Analysis

The Turkish Lira is still in the center of attention, as the battered currency added to yesterday’s gains after the Turkish central bank intervened in the interbank markets. The bank made it harder to short the Lira, which in effect also make it harder to hedge against the decline of the currency, so basically the country started on the road of capital controls.

USD/TRY, Daily Chart Analysis

While preventing a run on the currency is a legitimate goal, by not changing its confrontative stance and not taking steps to clam the market, the risk of a massive capital flight is still very high. The broad rally in the Dollar is just making matters worse for the country, and contagion is far from being dodged by global markets at this point.

With several European markets being closed the large pre-market moves are not a surprise, even as the key economic indicators leaned bullish before the bell. The most awaited US retail sales report was a sizeable beat in both the headline, and the more reliable core figure, although the previous numbers were revised lower. The Empire State Index was also well above the consensus estimate, but US industrial Production missed, similarly to yesterday’s Chinese and European indicators in the segment.

Dollar Break-Out Continues

EUR/USD, 4-Hour Chart Analysis

The US Dollar’s surge is arguably the most important trend globally, and the reserve currency confirmed its break-out to new 13-month highs today, as the EUR/USD pair hit 1.13, the GBP/USD pair trading with a 1.26 handle for the first time in a year, and with commodities suffering heavy losses again.

Copper Futures, 4-Hour Chart Analysis

We have been following copper’s struggle to stay above the key support zone near $2.7, and today’s Asian weakness sealed the faith of the commodity for a while as Dr. Copper hit a new 14-month low itself, signaling that more trouble is ahead for China and the commodity-complex.

Gold is also at levels not seen since early 2017, and crude oil gave up its recent bounce falling to an 8-week low, getting close to $65 per barrel with regards to the WTI contract.

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 317 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

Turkish Coffee Hangover

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Hi Everyone,

Hope you’re having a fine day. Thanks again to everyone sending me their thoughts, opinions and articles. It’s really amazing.

One thing that several people have asked me to comment on already is this story. So here goes.

Indeed, this is an exciting step towards the integration of blockchain technology into traditional finance. It’s nice to see such a reputable institution such as the World Bank using a private Ethereum network to monitor their new bond. However, we’re really just scratching the surface with this one.

In the realm of programmable money, the practical applications of this new tech are limited only to our imagination. So, to use it to manage bonds is nice but it somehow feels like we’re not living up to the full potential with this one.

As one pundit put it… this is almost like when the world celebrated the internet’s groundbreaking ability allowing people to order DVD’s from the comfort of their living room.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Turkish Coffee Hangover
  • Dollar is Strong
  • Crypto Support

Please note: All data, figures & graphs are valid as of August 15th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

The excessive energy that the financial markets received from the “emerging markets currency sell-off” seems to have faded by now. Indeed, the entire debacle felt kind of like a strange rush of exuberance similar to the experience of drinking some very strong coffee. What we’re left with is contained fatigue.

Volatility has now returned to normal and the Lira seems to be in retracement. This despite the fact that neither Trump nor Erdogan seem ready to give any ground. In fact, the Turkish president announced a boycott of American technology yesterday and specifically targeted the iPhone, advocating Samsung instead.

AAPL was notably unaffected.

One thing that might be worth watching is the EEM Emerging Markets ETF that lost significant ground over the last few days and is now testing the lows.

Looking at the stocks today, things do seem to be in the red again. Let’s see how things progress. Precious metals are also down so be careful out there.

Take a look at Copper for example, which is down more than 1000 pips in the last 48 hours.

Dollar is King

As we discussed in yesterday’s update, all these progressions seem to be a direct reaction to the strength in the US Dollar.

A tightening labor market mixed with creeping inflation is causing the Federal Reserve to take aggressive action.

The Dollar’s strength against other major currencies can be seen quite clearly since the start of the month.

As well, the Dollar Index seems to have experienced some sort of breakout in the last few days.

Crypto Support

The crypto market is rebounding today after yesterday’s sizable sell-off. This relief rally has many alternative investors breathing easier, as we have green across the board.

The range we’ve been watching on bitcoin has been holding rather well. Since the beginning of the year, we’ve seen buyers stepping in about halfway through the $5K handle (yellow line), which is approximately what analysts estimate is the cost to mine bitcoin.

On the upper side, resistance is being maintained by the 200-day moving average (blue line). While the stable range should be seen as a positive sign, a breakout in either direction is always a possibility.

Let’s have an awesome day ahead!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,
Mati Greenspan
Senior Market Analyst

Connect with me on….

eToro: @MatiGreenspan | Twitter: @MatiGreenspan | LinkedIn: MatiGreenspan | Facebook:MatiGreenspan

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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4.7 stars on average, based on 122 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

Market Update: U.S. Stocks Rebound as Turkish Lira Rebounds; Cryptocurrencies Plumb 2018 Lows

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U.S. stocks rebounded on Tuesday, as the threat of contagion from Turkey’s Lira crisis showed signs of fading. Meanwhile, the downward spiral in cryptocurrencies intensified amid signs of a large-scale ICO cash-out.

Stocks Return to Strength

All of Wall Street’s major indexes returned to positive territory, with the Dow Jones Industrial Average rising 112.42 points, or 0.5%, to 25,300.12. The broader S&P 500 Index gained 0.6% to 2,839.96, with all 11 primary sectors finishing in positive territory. The technology-focused Nasdaq Composite Index returned 0.7% to finish at 7,870.90.

Gains were evenly distributed across multiple sectors, with consumer discretioanry, financials and industrials shares leading the rally.

The CBOE VIX, also known as the fear index, pulled back sharply from five-week highs as risk-off conditions cooled. VIX closed down 10% at 13.31, on a scale of 1-100 where 20 represents the historic average.

Chinese Growth Figures Miss the Mark

Signs of a sputtering Chinese economy emerged last month with key industrial and consumption metrics missing their mark.

Industrial production and fixed-asset investment grew at their slowest pace in nearly two decades, the National Bureau of Statistics reported Tuesday.

Industrial production rose 6% year-over-year in July, unchanged from the previous month. Fixed-asset investment growth slowed to 5.5% annually from 6% a month earlier. Meanwhile, retail sales grew 8.8% annually in July compared with 9% in June.

China’s cooling economy comes as policymakers look to counter America’s protectionist policies, which have resulted in a tit-for-tat trade war between the world’s two largest superpowers. However, China’s massive trade surplus with the U.S., combined with its reliance on smoke-stack industries, suggest that Beijing can’t counter Washington’s escalating expansive levies.

Last month, U.S. President Donald Trump announced plans to administer levies on an additional $200 billion in Chinese goods. Earlier in the month, the administration implemented tariffs on $50 billion worth of Chinese goods.

Cryptocurrency Downtrend Intensifies

Ethereum was at the center of another crypto crash Tuesday, as the total market capitalization fell to $193 billion, the lowest point of the year. The ether price shed more than 10% to plumb new 14-month lows.

As Hacked reported earlier, ICO burnout appears to be largely responsible for the protracted selloff, leaving bitcoin with a 54.5% share of the total market. The largest digital currency by market capitalization came to within $100 of its yearly low, which would have likely sparked a deeper correction in the broader market.

At one point during the day, 78 of the top-80 altcoins had reported double-digit percentage losses. With the exception of a few obscure names, no major cryptocurrency in the top-100 was spared the losses.

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 546 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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