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Asian Market Update – Monday: Tokyo Gains after Election Landslide, Minor Losses in China, S. Korea

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Tokyo streets

The Big Question: Will a new term help Abe to revive the world’s third-largest economy?

Asian stocks were trading in a mixed mode Monday morning, with nice gains seen in Tokyo after Prime Minister Shinzo Abe’s ruling party got a two-third majority in the election and slight losses in Greater China and South Korea.

In Japan, the Nikkei 225 surged 0.93 percent to about 21,658 right before midday, after opening at around 21,709.

Investors were responding to Sunday’s election results, which gave Abe’s party 312 out of 465 seats in the parliament, effectively securing Abe another term. The solid win for Abe suggested continued fiscal and monetary easing under under his economic policy program dubbed as Abenomics.

Before Sunday’s election, the Nikkei closed higher for a 14th straight day on Friday. Monday’s gain was also supported by a weaker JPY against the USD.

In China, the Shanghai Composite Index was down 0.02 percent to about 3,377 before midday. In Hong Kong, the Hang Seng Index lost 0.66 percent to around 28,298, after opening the session at 28,557.

Fresh data out China on Monday showed that the growth in home prices is cooling, following a barrage of measures from mainly local governments to contain the overheated housing market. Average home prices rose 6.3 percent year-on-year in September, slowing from 8.3 percent in August.

In South Korea, the Kospi was down a slight 0.05 percent to around 2,488 shortly before midday.

Down Under, the ASX 200 gained a minor 0.01 percent to around 5,907, remaining relatively flat from 5,908 at the same time on Friday.

Market focus this week:

In the US, markets are closely watching President Donald Trump’s pick for the Fed chair position. News reports cited Trump as saying over the weekend that Stanford University professor John Taylor and Fed governor Jerome Powell are among the candidates under consideration and a decision is coming shortly.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 21,658 0.93%
China-Shanghai Composite Index 3,377 -0.02%
South Korea-KOSPI 2,488 -0.05%
Hong Kong –Hang Seng 28,298 -0.66%
Australia-ASX 200 5,907 0.01%

Cryptocurrencies

Prices of main cryptocurrencies were pointing lower on Monday during the Asian trading session.

At midday in Asia, bitcoin was down 0.18 percent to $5,958. Bitcoin is now down about $200 from the high of $6,156 reached on Saturday following a strong two-day winning strike on Friday and Saturday.

The price of ethereum lost a slight 0.68 percent to about $292 before midday. Ethereum dropped below the $300 level on Sunday.

Litecoin fell 2.11 percent to about $55.30 at midday. The virtual currency has been trading steadily around the $60 mark since Wednesday. Litecoin is currently in its third day of a losing strike, dropping from $61 on Friday.

Currencies

The Japanese yen lost 0.22 percent the US dollar at midday Monday to 113.76 per dollar.

The Chinese yuan lost 0.19 percent against the US dollar at 6.6311 per dollar.

The Australian dollar also lost 0.13 percent on the dollar, changing hands at 1.2779 per dollar at midday.

Commodities

WTI Oil was up 0.08 percent to $52.07 per barrel.

Brent Crude lost 0.02 percent to $57.86 per barrel.

Gold was down 0.34 percent to $1,276.03 an ounce.

Business News across Asia

In China, focus remains on the ongoing 19th National Congress of the Communist Party, which is expected to produce a new lineup of leadership for the powerful politburo.

Take Away: Markets would be paying attention to the new leadership to search for clues on economic and monetary policies. However, don’t expect anything else than continuation of the current path forward.

In Japan, the government announced that Prime Minister Shinzo Abe, who just emerged from a big win on Sunday’s election, spoke to US President Donald Trump over the phone. The two, once again, agreed to increase pressure on North Korea over the nuclear issue.

Take Away: Tensions on the Korea Peninsula remain high and fragile, with new missile tests from the North expected at any moment now. However, markets are getting used to these provocations so we need more than just the usual missile launch to create panic.

Featured image from Grips.ac.jp

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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Slowly but Surely

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Hi Everyone,

In a country that has seen an estimated 99% devaluation of their currency over the last year, even $1 is seen as a lot of money.

These images that recently surfaced on Reddit are reportedly showing a donation of just $230 that has been channeled into Venezuela through a cryptocurrency called Nano.

Of course, it’s incredibly difficult to verify the authenticity of such photographs, but having the username and subreddit written on paper in some of the shots helps things.

As we’ve stated before, the real world adoption of cryptocurrencies is happening now on the ground in places where it’s needed most, and Venezuela is argua bly one of those places. The success story highlighted above is hardly an isolated incident. The group Eat BCH has been doing this since last year.

A quick look at the Local Bitcoins volume there shows another spike in peer to peer transactions over the past week. Notice how volumes peaked in April of 2017, then died down during the peak of the bitcoin hype in November/December but are now rising again steadily.

The last bar on the chart shows a total of 590 BTC, which at today’s prices is $3.8 million, which may not seem like much but in the current economy of Venezuela is actually huge.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Trump Meets Putin
  • China Growing Slowly
  • Quiet Crypto

Please note: All data, figures & graphs are valid as of July 16th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

All eyes on Helsinki this morning as President Trump prepares for his closed-door meeting with Vladimir Putin.

Putin is still beaming after hosting a very successful World Cup and President Trump is coming from a rather controversial European tour. The fact that they’re even having this one on one meeting is emboldening critics who say that the two are in collusion.

One of the things to watch out for is crude oil. Trump has been rather critical of OPEC’s efforts, urging them to do more to push down the price. The price of gas in the United States has been rising lately and it is putting pressure on his base.

Russia has so far maintained that the surge in pricing is due to Trump’s new sanctions on Iran, which have reduced supply in the market.

Last Wednesday, oil slid 4.8% (purple circle) from the top of its massive bull run that has been playing out over the last year.

China Slowly

Markets in Japan are closed today in observance of Marine Day. Perhaps it’s for the best as Asian stocks are taking a hit.

For a change, the narrative isn’t necessarily about the trade war either, at least not on the surface. China’s GDP growth figures announced early this morning highlighted the lackluster economy. Here we can see GDP growth rate since 2003. What’s clear from this graph is that a reading of 6.7% is really on the low end.

However, even though low, the numbers weren’t unexpected. As indicated by the brown bar in the above chart, the numbers were exactly as forecasted. The China50 index is currently 24% off of its peak from January 24th, so today’s action isn’t that much of a hit in the grand scheme of things.

The Nasdaq, on the other hand, hit another new all-time high on Friday, while the precious metals resumed their descent.

Quiet Crypto

Prices in the crypto market have remained stable over the weekend. In fact, the price of bitcoin hasn’t moved much at all since early June.

As we’ve stated before, slow-moving prices are a good thing for cryptocurrencies. The more you can count on a stable exchange rate, the more likely people are to use the asset as a store of value.

The downward sentiment on Bitcoin is also showing signs of abating. As we can see in the graph below, the strongest trendline from this pullback (dotted blue line) was broken in early April, and the second strongest (yellow line) has been broken at the start of July.

Some chartists theorize that we could be in for another leg down towards $5,000 a coin, which wouldn’t surprise me if it does happen but could also be done in a calm manner that would not indicate any further downward pressure.

As always, please feel free to contact me directly with any questions, comments, feedback, or additional insight.

Wishing you an amazing weekend!

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 114 rated postsSenior Market Analyst at Etoro.com.




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Market Update: U.S. Stocks Rise Following Bank Earnings; Nasdaq Ekes Out New Record

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U.S. stocks advanced Friday, with the Nasdaq eking out a fresh record high as earnings optimism kept trade jitters at back.

Stocks Finish Mostly Higher

Equities concluded a positive week in the black with the Dow Jones and S&P 500 recording their sixth gain in seven days.

Dow industrials rose 94.52 points, or 0.4%, to 25,019.41. Wallgreens Boots Alliance Inc. (WBA) led the advance, with shares of United Technologies Corp (UTX) and Walt Disney Co (DIS) following closely.

The broader S&P 500 Index climbed 0.2% to 2,802.56, with five of 11 primary sectors reporting gains. Industrials and consumer staples led the uptrend with gains of 0.6% apiece.

The technology-driven Nasdaq Composite Index gave up virtually all of its gains by the close, but still managed to notch its second consecutive record high. The benchmark closed up 2.06 points at 7,825.98.

A measure of implied volatility known as the CBOE VIX trended in the opposite direction of stocks, reaching a session low of 11.62. The so-called “fear index” settled down 3.1% at 12.19 on a scale of 1-100 where 20 represents the historic average.

Bank Earnings

Wall Street’s earnings season began in earnest Friday after a trio of banks reported second-quarter results.

J.P. Morgan Chase & Co (JPM) earned $2.22 per share on revenue of $26.8 billion, beating both top and bottom line estimates. Citigroup Inc. (C) also reported better than expected results with per-share earnings of $1.63 on $4.5 billion in sales.

Wells Fargo & Co (WFC) was the worst performer relative to Wall Street’s forecasts. The bank earned $0.98 per sare on revenue of $21.6 billion. Analysts had called for an EPS of $1.12.

Bank earnings continue next week, with Bank of America (BAC), Goldman Sachs Group (GS) and Morgan Stanley (MS) scheduled to report between July 16-18.

Cryptocurrencies Edge Higher as Bitcoin Defends $6,000

Bitcoin’s successful defense of the $6,000 support level spurred a modest rally for cryptocurrencies on Friday. The total market cap of all coins reached a high near $251 billion, according to CoinMarketCap. That represents a gain of roughly $6 billion from the previous day.

At the time of writing, the total market was valued at roughly $247 billion.

The bitcoin price reached a session high of $6,310 before backtracking later in the session. BTC/USD is currently valued around $6,193, taking 43.1% of the total market. The largest cryptocurrency by market capitalization has held above $6,000 for the past two weeks, a sign that prices may have bottomed.

Bitcoin cash rose 1.7% to $693. Ethereum Ripple and EOS were little changed compared with 24 hours ago.

The digital currency market remains in limbo with retail traders on the sidelines and institutions waiting for greater regulatory clarity before taking the plunge. Trading volumes continue to fluctuate between $11-$12 billion on Friday.

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 497 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: Dollar Jumps as Chinese Troubles Mount

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Global stock markets are a tad higher today following the US open, with the main US indices lagging behind somewhat after a hectic overnight session. With forex markets stealing the show yet again, equities tried to maintain their bullish momentum from yesterday, but the after-hours gains were mostly erased thanks to the renewed rally in the US Dollar.

S&P 500 Futures, 4-Hour Chart Analysis

With the economic calendar being empty in Europe and the US, all eyes were on some of the big US banks that reported earnings before the bell, kicking off the earnings season. Wells Fargo (WFC) missed expectations, while JP Morgan (JPM) and posted better than expected numbers, but for now, the market’s reaction is muted, and the two giants have already been diverging in line with today’s surprises in recent months. Citigroup (C) also beat the consensus estimates, but the stock opened lower as the guidance disappointed investors.

WFC, 4-Hour Chart Analysis (JPM Comparison)

Reported earnings are set to hit record highs thanks to the tax cuts and the modest growth in the US, but as usual, the market’s reaction will be more important than the actual numbers, especially given the strong global divergences that we have been monitoring in recent months.

Commodities Mixed as Yuan Tumbles but Dollar Rally Looms

The Chinese trade balance release made the biggest waves so far today, as the record high level of the indicators points to a widening momentum difference, with regards to growth between the two largest economies of the planet. The recent trade conflict between the US and China seems to be hurting the latter country more, and if we look at asset prices, the divide is even more apparent.

USD/Yuan, 4-Hour Chart Analysis

The Chinese Yuan got close to its recent lows against the Dollar after the release and the reserve currency gained ground compared to most of its peers, which is another bad news for emerging market currencies, which remain under pressure.

Copper Futures, 4-Hour Chart Analysis

With the Greenback’s strength weighing on commodities, the relative strength of copper is worth noting, as the battered metal remains above the key support zone that we pointed out earlier this week. Despite the bounce, Dr. Copper is still signaling troubles for the global economy, with the Chinese woes especially hurting the global growth narrative. In the meantime, crude oil is virtually unchanged after the recent volatile period, while gold is testing its recent low near $1240, trying to stabilize in the face of the strong Dollar.

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 291 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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