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Asian Market Update – Monday: Equities Mixed over Hurricane in the US

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Hurricane Harvey

The Big Question: Why EU and US officials kept mum about monetary policy direction in Jackson Hole?

Major equity markets in Asia started the week’s trading off in a mixed mode, as investors are keeping a close eye on the impact of a severe hurricane hitting several US states and looking for policy direction after central bankers refrained from hinting any monetary policy direction.

In the early hours of the Asian trading session on Monday, stock indexes in Japan, Australia and South Korea, which tend to track markets in the US, saw minor losses, while indexes in Greater China gained slightly.

In Japan, the Nikkei 225 was down 0.11 percent, trading at 19,430.65 before midday.

In South Korea, the KOSPI fell 0.38 percent to 2,369.48.

Down under, the ASX 200 dropped 0.72 percent to 5,702.60.

In Greater China, the Shanghai Composite Index gained 0.95 percent to 3,363.21 and the Hong Kong Hang Seng Index was up 0.62 percent, trading at 28,020.48.

Big market-moving news over the weekend was Hurricane Harvey, said to be the largest in over a decade to hit the US, and the silence on monetary policy direction from a gathering of central bankers in Jackson Hole, Wyoming, the US.

Energy markets are feeling on impact of Hurricane Harvey on refineries along the US Gulf Coast. Some major energy companies, including Shell and Petrobras, have already closed refineries in Taxes due to the weather conditions. The moves send US gasoline futures as much as 6 percent higher on Monday.

Investors are also digesting what central bankers said or didn’t say during their meeting late last week in Jackson Hole.

US Fed Chair Janet Yellen kept away from commenting on monetary policy or the strength of the US economy and inflation rates, giving no indication of any potential changes in the US monetary policy. Yellen focused on the positive post-financial crisis reforms of the financial system, in an apparent move to stand up against Republican lawmakers and President Donald Trump, who are arguing the reforms hurt the market.

ECB chief Mario Draghi also stayed mum about monetary policy in the euro zone and the recent rise of the euro.

The silence gave a fresh boost to the euro, as investors are trying to digest the news and weigh in on why the central bankers kept away from giving any hint of monetary policies.

Market-sensitive news to watch this week: Economic data from Japan, the US, Hong Kong and Australia later in the week; NAFTA talks; UK’s Brexit talks with the EU; and talks of tax reform in the US.

And, by the way, North Korea fired three ballistic missiles over the weekend. Though the launches failed, keep an eye on tensions on the Korean Peninsula.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan-Nikkei Stock Average 225 19,430.65 -0.11%
China-Shanghai Composite Index 3,363.21 0.62%
Australia-ASX 200 5,702.60 -0.72%
Hong Kong-Hang Seng 28,020.48 0.62%
South Korea- KOSPI 2,369.48 -0.38%

Cryptocurrencies

Bitcoin saw a serious drop on Monday during Asian trading session. Before midday, bitcoin was trading at $4,200.0, plunging 3.17 percent.

Ethereum also dropped 3.42 percent, trading at $336.59. The steep fall came after ethereum rose to more than $347 over night.

Currencies

The Japanese yen gained a slight 0.14 percent against the US dollar at midday. The USD/JPY rate was at 109.17.

The Chinese yuan strengthened 0.08 percent against the greenback, trading at 6.6413 per dollar. The yuan has continued its climb from Friday, trading at 6.6413 per dollar before midday on Monday.

The Australian dollar lost 0.08 percent against the US dollar. The Australian dollar was trading at 1.2597 per dollar before midday.

Commodities

WTI Oil was down 0.31 percent at $47.68 per barrel

Brent Crude gained 0.46 percent to $52.58 per barrel

Gold was up 0.23 percent to $1,294.04 an ounce

Business News across Asia

In China, one of the richest men and real estate tycoon Wang Jianlin and his Dalian Wanda Group is under pressure after rumors are widely circulated online about the company being under investigation by Chinese authorities. Though the rumors were disputed by Wanda, it has a taken a toll on the company’s Hong Kong-listed shares. On Monday, Wanda Hotel Development Co saw its share prices drop to the daily limit of 10 percent.

Take away: Chinese authorities have taken strict measures to curb what they consider irrational investments in overseas real estate, entertainment companies, etc. So far, officials are silent on the Wanda rumors, but surely the company and its outspoken boss is under some serious pressure.

In Japan, embattled Prime Minister Shinzo Abe’s approval rating is recovering from earlier plunges after a series of scandals and missteps. Abe’s approval rating has reached 46 percent, improving 4 percentage points from earlier this month. The recovery came after a major shake-up in cabinet members, but Abe still faces serious doubts among some Japanese voters, per Nikkei Asian Review.

Take Away: With Abe’s approval rating recovering but still facing serious doubts, the future of his economic policies, dubbed “Abenomics”, is still under a cloud of uncertainty.

In India: McDonald’s is under pressure from its employees, suppliers and mall operators after the US fast-food chain decided to close 169 restaurants across India. McDonald’s is in the middle of a legal battle with Indian partner Vikram Bashi. The closures could result in the layoff of more than 6,000 employees, per Times of India.

Take Away: The episode in one of the largest markets for McDonald’s could have a serious impact on its business operation in the country and its share prices.

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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Market Overview

Market Update: U.S. Stocks Fall as Trump Set to Unveil New China Tariffs; Crypto Selloff Resumes

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U.S. stocks declined on Monday as investors once again weighed the prospects of an all-out trade war between the United States and China. On the cryptocurrency front, Ethereum led a broad decline in afternoon trading.

Stocks Fall

All of Wall Street’s major indexes headed for losses on Monday. The technology-heavy Nasdaq Composite Index was the hardest hit, falling 1.4% to 7,895.79. The large-cap S&P 500 Index fell 0.6% to 2,888.80, with losses mainly concentrated in information technology and consumer discretionary shares. Dow industrials closed down 92.55 points, or 0.4%, to 26,062.12.

The CBOE Volatility Index, commonly known as the VIX, spiked 12.8% to 13.62. The so-called “fear index” had declined in each of the past five sessions. Prior to that, it reached two-month highs as stocks declined following Labor Day.

U.S.-China Trade War

The White House is preparing to unveil a new round of tariffs on China targeting $200 billion in goods, marking the most dramatic escalation in the year-long trade war. According to the Financial Times, Washington’s trade haws are urging President Trump not to back down on tariffs, which are believed to run as high as 25% for certain goods. U.S. officials had previously said they are likely to impose a 10% tariff rate on 40% of Chinese imports.

The Trump administration is escalating its trade war against China amid reports that Beijing was looking to take a more assertive stance on tariffs. That said, China’s Foreign Ministry has once again reiterated that a trade war isn’t in anyone’s interest.

“We have always maintained that the only correct means to resolve the trade dispute is through dialogue and consultation on an equal basis with mutual trust and respect,” ministry spokesman Geng Shuang recent said, as quoted by CNBC.

The new round of tariffs will be announced mere days after both countries signaled their readiness to return to the negotiating table.

Cryptos Decline

The cryptocurrency market was back on the defensive Monday, with Ethereum leading a broad downtrend that included tokens, altcoins and bitcoin. The combined market capitalization of all coins fell to a low of around $193 billion, according to CoinMarketCap.

Ether’s price pivoted lower after regaining more than 30% of lost value. The second-largest cryptocurrency plunged10.5% to $197.50. Among the top-ten ERC-20 tokens by market cap, nine reported losses.

Bitcoin also pulled back sharply after failing to make new highs. BTC was down 3% to $6,311 despite relatively strong technical indicators that pointed to short-term upside.

There was no immediate catalyst for the sudden reversal, a sign that bearish sentiment continues to dictate market trends. In terms of news, Ripple has confirmed that one of Japan’s largest financial institutions will soon launch a payment app using the company’s xCurrent technology. Meanwhile, security issuer XBT has announced plans to launch a new product designed to give investors access to a basket of cryptoassets.

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 600 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: China Bear Market Deepens as Shares Hit 4-Year Lows

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Global stocks and other risk assets started the week with slight losses so far, and the recently weak segments continue to struggle, while US markets are still acting relatively strong, suggesting the continuation of the recent trends. European markets are among the weaker ones again, even after last week’s bounce, with the major benchmarks all being around 10% off their highs, in stark contrast with their US peers.

Shanghai Composite, 4-Hour Chart Analysis

With all eyes on the second round of US tariffs directed to China, it’s no surprise that the pressure on the Shanghai Composite didn’t ease yet, and the benchmark slid to yet another almost 4-year low this morning. The Chinese Yuan is holding on well in the meantime, with the August low being in no danger, as of now.

USD/TRY (Turkish Lira), 4-Hour Chart Analysis

That said, emerging market currencies are back in the crosshairs, with Argentinean Peso, the Brazilian Real, and the Turkish Lira all drifting in early trading.  The Lira, which got a boost from the emergency 6% rate hike by the local central bank last week, is headed towards pre-rate hike levels, and that doesn’t bode well for the coming weeks with regards to Turkish and other emerging market assets.

Dow Futures, 4-Hour Chart Analysis

Economic releases will be few and far between this week compared to last week’s busy calendar, and today, only the Empire State Manufacturing Index made some waves, missing the consensus estimate, and suggesting a slowdown in the recently well-performing US segment. The final CPI in the Eurozone didn’t cause any surprises, coming in at the originally reported 2.0% annualized rate. The Dow, the Nasdaq, and the S&P 500 all opened slight below Friday’s levels after the releases, but the more interesting moves are in Forex markets.

Dollar Declines Against Majors as Commodities Mixed

DXY, 4-Hour Chart Analysis

After Friday’s bounce, the Dollar couldn’t maintain its momentum and today, the reserve currency is lower against most of its global peers, with the Dollar index sliding towards its July lows. With the Fed’s next rate hike just around the corner, the current move is more the product of Mario Draghi’s inflation warning, which is pushing the Euro higher since Thursday’s ECB meeting.

From a longer-term perspective, the Dollar’s strength could be undermined by the Trump administration’s pro-cyclical fiscal expansion, at least against the majors, but until the US economy keeps on booming, we expect bulls to be in control of the Greenback’s market.

Gold, 4-Hour Chart Analysis

Commodities are trading without a clear direction today, with copper following Chinese stocks lower, maintaining the strong correlation, while gold and crude oil are slightly higher. The WTI crude contract is edging towards the $70 per barrel price level again, still trading within a narrowing range, while the main precious metal is also stuck near the $1200 level following a four-month-long decline.

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 346 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

Sleepwalking

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Hi Everyone,

Over the weekend I managed to re-watch one of my favourite movies about the financial crisis of 2008 and couldn’t help but wonder, what’s happening in the world right now that everyone might be missing?

The words of Gordon Brown that we highlighted last week still echo strongly into my head…

For the sake of the world, I do hope he’s wrong and that the next big trend is one of financial success and not failure.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Sleepwalking
  • Trade War: On
  • Silver Surfer
  • Ethereum Getting an Upgrade

Please note: All data, figures & graphs are valid as of September 17th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Signs of complacency abound, two of which I’d like to highlight today.

First is the bond market, which once again seems to be playing out in the background. If you’ll recall, in Q1 we were watching the yields on the US 10 Year bond like a pack of penguins on an iceberg.

The fear that the yield might go above 3% and remain there caused the stocks to drop quite suddenly in early February. However, by the time they did poke above that level in late April, it seems the concerns of such a move had simply dissipated.

Today, the yield is sitting at 2.99% and nobody even seems to care.

The other indicator of extreme complacency is the VIX volatility index.

As you’ll recall, this indicator also spiked in Q1 as the stocks were dropping. At the time the move was welcome as it was coming off the all-time lows for the 30-year-old indicator, which were reached recently (yellow circle).

Looking at the action at the action of the last few months, it certainly does look like the stocks are in sleepwalking territory.

Trade War: On

Even the big news of the day seems to be losing its potency. It seems that every trading day the trade war is switched on or off like a light. Today the headlines say on…

Sure, some stocks have been hit, especially in Asia, but on the face of it a 1.44% decline in the Hang Seng Index doesn’t seem like much of an impact at all.

Even the headlines pointing out that Shanghai stocks are at multi-year lows don’t seem too drastic at the moment. Even though the milestone seems big, the actual percentage movement that brought us here is quite small.

Silver Surfer

Another thing that I just can’t seem to keep out of my mind, or portfolio, are the precious metals. It boggles the brain to see them as low as they are, especially when many analyst calls at the beginning of the year were fairly bullish.

Silver is now sitting above $14 an ounce, toying with this psychological support level over the last few days…

One thing that may have contributed to the decline is cost cutting on behalf of the miners. This article that was written in June speaks about how prices could easily be sustained as low as $17 per ounce.

We’re well below that now.

Ethereum Upgrade Coming

As we know, the Ethereum Blockchain is currently the world’s leading network for the development of decentralized applications. However, it does seem that the EOS network is hot on its heels.

According to data from dappradar.com, there are a total of 13 dApps that have seen more than 300 users in the last 24 hours. 6 of them on Ethereum and 7 on EOS.

Ethereum Top dApps

EOS Top dApps

We’re still in the early stages of decentralized computing and the future is far from certain. Ethereum is currently the most widely used blockchain in the world by transaction rate and is second only to bitcoin in many other aspects.

However, concerns about how to grow the network have emerged in many investors minds. Well, recently there’s been a sign that the path to scalability is once again moving forward.

The long-awaited Constantinople upgrade will reportedly be launched on the Ethereum test net as soon as next month.

Here we can see all four platforms that are competing for market share in the dApp industry over the last week.

It seems that after months of being battered, at least as far as price, Ether is finally ahead of the pack.

Let’s have an amazing week 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 128 rated postsSenior Market Analyst at Etoro.com.




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