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Asian Market Update – Monday: Asian Stocks Fall as Bitcoin Takes a Breather

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Shanghai skyline

The Big Question: How long will the bitcoin consolidation last this time?

Bitcoin Monday morning finally took a breather from the incredible gains of the past few days. Having moved from $5,700 to close to $7,600 in just one week, bitcoin fell back by about 2 percent to $7,200 during the Asian trading session on Monday.

Bitcoin’s younger sibling litecoin was also down slightly during early morning trading on Monday, shredding off 1.1 percent to $53 as of midday in Asia. Despite recent days’ slight losses, litecoin’s longer-term healthy uptrend is still intact, with the price now trading near the lower end of the range, indicating a potentially good buying opportunity.

Ethereum also traded down Monday morning, losing a slight 0.77 percent to $293 at midday in the Asian trading session. The longer-term trend line in ethereum may be due for a test later in the month, thus providing some guidance on further direction of the price.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 22,540 0.00%
China-Shanghai Composite Index 3,367 -0.13%
South Korea-KOSPI 2,538 -0.79%
Hong Kong –Hang Seng 28,437 -0.58%
Australia-ASX 200 5,952 -0.13%
S&P E-mini 2,578 -0.13%

Stocks

Asian stocks were down across the board on the first trading day of the week. Although mostly slight losses were seen, South Korea’s Kospi index lost the most, dropping 0.79 percent to 2,538 shortly after midday on Monday.

In Japan, the stock market was unchanged Monday morning after it was closed for a holiday on Friday. Nikkei 225 was trading at 22,540 shortly after midday in the Japanese trading session.

In China, the Shanghai Composite Index lost 0.13 percent to 3,367 around midday. Shares in Hong Kong’s Hang Seng Index also lost 0.58 percent to 28,437 as of midday in Hong Kong trading.

Down under, the ASX 200 Index lost 0.13 percent on Monday to 5,952 as the trading day was coming to an end in Australia.

S&P e-mini futures also suffered losses Monday, trading down by 0.13 percent to 2,578 shortly after midday in Asian trading.

Currencies

The Japanese yen on Monday lost 0.18 percent against the US dollar, trading at 114.27 per dollar.

The Chinese yuan gained 0.07 percent on the dollar, to 6.6330 per dollar.

The Australian dollar also gained on the US dollar, trading up by 0.1 percent to 1.3061 per US dollar in Australian trading.

Commodities

WTI Oil was up by 0.20 percent to $55.73, marking a three-month high for oil prices.

Brent Crude was up 0.29 percent to $62.25.

Gold was slightly down, losing 0.06 percent to $1,269 an ounce despite several near-term risk factors such as a shakeup in Saudi Arabia’s leadership, the outcome of Trump’s Asia tour, and the ongoing Russia-investigation at home.

Business News across Asia

According to Chinese newspaper Global Times, China-South Korea relations are finally back on track after a long and serious dispute related to the deployment of US-controlled THAAD anti-missile systems in South Korea. According to the piece, both sides have realized the significant benefits of maintaining good ties for business to flourish between the countries.

Take-away: By reading between the lines, one can interpret from the piece that China has conceded that the deployment of the THAAD system in South Korea cannot be stopped given the pace of North Korean provocations. Trade is now expected to flourish between the two countries again, which could mean a solid boost to several South Korean export-oriented industries.

Featured image from Pixabay.

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

Another Volatile Day on Wall Street

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US stock markets had an ugly morning after a bearish overnight session, with the major indices all hitting new correction lows, and with the Russell 2000 confirming the under-the-hood weakness on Wall Street yet again. The afternoon session saw another violent counter-trend rally, led by the Nasdaq that almost erased the 2+% losses accumulated during the first hours of trading.

Dow 30 Futures, 4-Hour Chart Analysis

The most-awaited US earnings releases were a mixed bag today, as although the bottom line of the majority of companies beat estimates, the likes of 3M (MMM) and Caterpillar (CAT) outright crashed due to their disappointing guidance, putting even more pressure on the already shaky stock market.

Caterpillar (CAT), 4-Hour Chart Analysis

Verizon (VZ) and McDonald’s (MCD) performed much better after their earnings beat, but both companies are considered more defensive, and their encouraging results didn’t help the broader market in the gloomy environment. Texas Instruments (TXN) reported after the closing bell and as the semiconductor giant cut his guidance, the stock is down by around 5% lower in after-hours trading.

Treasuries Bounce Hard as Safe-Haven Flows Intensify Again

As for economic news, the German monthly PPI came in much higher than expected, the European Consumer Confidence Index was in line with expectations, while the US Richmond Manufacturing Index came in at 15, well below last month’s reading of 29 and the consensus 25.

XHB, 4-Hour Chart Analysis

Tomorrow we will have the flash manufacturing and services PMIs from Europe and the US together with US new home sales, and the housing market gauge will be in the center of attention. US homebuilders have been plunging lower in recent weeks, and the XHB ETF is deep in a bear market already, as rising yields and mortgage rates hit the sector hard this year.

Today the segment outperformed thanks to the pullback in yields, and a positive surprise in sales could spark a meaningful short-covering move.

10-year US Yield, 4-Hour Chart Analysis

While the swift rise in yields triggered the seep correction, at least on the surface, today the decline in stocks pushed yields lower thanks to strong the strong safe-haven flows, which also helped the Japanese Yen and gold, especially in early trading.

WTI Crude Futures, 4-Hour Chart Analysis

Commodities had a very volatile day even as copper was relatively calm, with the plunge in crude oil and the pump & dump in gold drawing a lot of attention to the segment. While gold simply followed the risk trade, hitting multi-month high in European trading and pulling back in line with the rally on Wall Street, oil was reacting to the news from Saudi Arabia regarding a pledge to increase supply this year.

The WTI contract fell to a $65 per barrel handle, a new 2-month low, shedding almost 5% in one day, and it’s hard not to spot the connection between Donald Trump’s demands regarding lower crude prices, the disastrous Saudi cover-up of the Khashoggi murder, and today’s announcement that could help in easing the tensions between the US and the Kingdom.

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 381 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 Fall Again on Geopolitics, Global Growth Woes; Bakkt Announcement Fails to Inspire Crypto Rally

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U.S. stocks followed their European and Asian counterparts lower on Tuesday, as geopolitical tensions and concerns over global growth dampened investors’ sentiment. Crypto markets were little changed after Intercontinental Exchange (ICE) set a date for the launch of its new digital currency platform.

Stock Selloff Deepens

Wall Street opened with heavy losses following a tumultuous pre-market that saw Dow Jones futures plunge by more than 400 points. By the end of the day, all major U.S. indexes were well off session lows.

The large-cap S&P 500 Index closed down 0.6% at 2,740.69. Eight of 11 primary sectors finished lower, with energy shares plunging 2.5% as a whole. Industrials, materials and financials also experienced heavy losses.

Dow industrials fell 125.98 points, or 0.5%, to finish at 25,191.43. Caterpillar Inc. (CAT) and 3M Co (MMM) were the biggest decliners after announcing negative earnings guidance this year and next.

Meanwhile, the technology-focused Nasdaq Composite Index fell 0.4% to 7,437.54.

The CBOE Volatility Index, also known as the VIX, reached a session high of 24.66 on Tuesday. It would later settle at 20.71 for a gain of 5.5%.

Earnings Optimism Fades

Despite starting off on a solid note, third-quarter earnings season has produced mixed results for Wall Street’s big firms. Companies that missed the mark on their top and bottom lines have faced heavy selling pressure despite strong performances in other sectors.

On Tuesday, Dow blue-chip 3M lowered its earnings outlook for 2018 while Caterpillar acknowledged it will have to raise prices for most of its machines next year. Both companies are facing the burden of President Trump’s tariff war and what appears to be a protracted slowdown in China.

The Chinese economy expanded 6.5% annually in the third quarter, the weakest since 2009. The U.S. economy is projected to grow 3.9% annually between July and September, according to the Atlanta Fed’s GDP tracker. Economists at the Commerce Department will produce their first batch of Q3 GDP numbers on Friday.

Cryptos Extend Dismal Performance

Digital currencies failed to rally on Tuesday after Intercontinental Exchange announced a date for its new cryptocurrency platform. The global exchange operator announced Monday it will begin settling physical bitcoin futures contracts on Dec. 13. Bakkt, the platform that will facilitate the transactions, has been touted as a potential game changer for luring large sums of institutional capital to the crypto arena.

The cryptocurrency market cap reached a low of $207.6 billion on Tuesday, and was last seen hovering around $209.4 billion. Majors like bitcoin, Ethereum and Litecoin saw little movement compared with 24 hours ago. Meanwhile, XRP fell 1.3%. Bitcoin cash and Cardano and Tron were also down slightly.

Low-volume trading continues to impede on the market’s recovery. On Tuesday, volume across all virtual currency exchanges reached $10.4 billion, according to CoinMarketCap.

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 649 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Market Overview

The Easy Way In

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Hi Everyone

It’s quite natural to think that the news influences markets but in many cases, it simply isn’t true. People move markets.

In traditional markets, we see often how an announcement regarding employment or inflation, or an interest rate decision from a central bank can have a huge impact on prices.

This is mainly due to the vast number of investors who are anticipating these type of events and are ready to deploy a large amount of capital at the drop of a hat.

In crypto, we simply don’t have that just yet. You’d think that news of half a dozen major financial institutions will be opening new options for cryptotrading and cryptoasset solutions would have an effect on prices but they’ve so far remained stable.

So it’s not surprising that LibertyX and Genmega are about to convert 100,000 ATM machines across the USA into user-friendly bitcoin vending machines has had no impact on the price of bitcoin.

What this does do though is builds the infrastructure that will be necessary for mass adoption, so that when people do decide to buy, they’ll have an easy way in.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Asia Rally Over
  • Flight to Safety
  • Crypto Correlation

Please note: All data, figures & graphs are valid as of October 23rd. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Looks like Monday’s massive rally in Asia has been short-lived. By the time the bell rang on Wall Street, the mood had already turned sour and stocks across the board ended up down.

The only exception, oddly enough, was the Faang stocks, which managed to hold up the Nasdaq. As we discussed in yesterday’s update investors are looking to invest, but cautiously. Well, it looks like they found their refuge in the top tier brands.

The exception we can notice above is Netflix which dropped with the rest of the market. Also, it’s worth noting that even the Nasdaq futures are down this morning and the entire market threatens to break lower.

Here we can see the S&P500, which is sitting firmly below its 200 day moving average (blue line).

Perhaps the light at the end of the tunnel here is the upcoming earnings reports that will be closely watched by investment managers.

Flight to Safety

As the stocks turn red, we can see some clear signs that the other markets are looking for some safety. Turkish President Erdogan isn’t helping much either with strong accusations against the Saudi government over the Khashoggi incident.

Some are buying bonds as a way to lower the risk. As well the Japanese Yen is up sharply due to its status as a safe haven currency. This graph shows the greenback bowing to the Yen (this morning in the purple circle).

Of course, the most vulnerable at the moment are the emerging markets currencies, which are performing particularly poorly today.

Another clear sign of safe haven trading is the fact that gold has broken out to the upside making significant stretch into fresh highs and now trading at the highest levels since July.

Crypto Follow?

Though we’ve pointed out recently that crypto assets bear only a very small correlation with the stock market, they still are considered to be a high risk asset.

We have seen several times before where fear in the stocks has managed to spill over into the crypto markets and that might just be what’s happening at the moment.

The declines in crypto are very light today. This could be because, as we mentioned above, the tech sector seems to be mostly shielded from the current sell-off. In any case, there’s no denying that bitcoin and the Nasdaq are moving in tandem today.

Wishing you an excellent 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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4.6 stars on average, based on 133 rated postsSenior Market Analyst at Etoro.com.




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