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Asian Market Update – Thursday: Asian equities mixed on positive economic data from the US, geopolitical tensions

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yen, dollar, euro

The Big Question: What matters more for Asian investors: Events in the region or in the US?

Major equity markets in the Asia Pacific were in a mixed mode on Thursday, with stock indexes in Japan and Australia making gains on better-than-expected economic data out of the US, while stocks in China and South Korea seeing losses over geopolitical tensions, despite positive manufacturing data in China.

In Japan, the Nikkei 225 edged up 0.7 percent or 136.22 points to 19,642.76 before midday.

Down under, the ASX 200 added 0.77 percent or 43.9 points to 5,713.6.

The gain in Japan and Australia, which closely track their counterparts in the US, followed gains on Wall Street, where the S&P 500 gained 0.46 percent and the Dow rose 0.12 percent.

The US reported 3 percent economic growth, beating the expected pace of 2.7 percent. Also, the private sector added 237,000 jobs, well above the expected 185,000 jobs.

However, other factors weighed on markets in South Korea and Greater China.

In South Korea, the KOSPI fell 0.35 percent to 2,364.08 before midday. Tensions in the Korean Peninsula showed sign of escalation again on Wednesday, after US President Donald Trump suggested that the US won’t pursue diplomatic talks with North Korea.

In his first response to the latest missile test by North Korea via Twitter, Trump said: “The US has been talking to North Korea, and paying them extortion money, for 25 years. Talking is not the answer!”

Investors could see that as a sign of the US not actively pursuing a diplomatic solution, and tensions might rise if the US were to pursue tougher actions; however, analysts also suggest investors are quick to adopt to the tension in the Peninsula because it’s been a persistent situation for years.

Meanwhile, in Greater China, despite better-than-expected performance in the country’s manufacturing sector, stocks continued lower. The Shanghai Composite Index was 0.61 percent lower before midday to 3,342.95.

China’s official manufacturing PMI, a closely watched gauge of manufacturing activity, rose 0.3 percentage point in August to 51.7 percent, while non-manufacturing (services) PMI was down 1.1 percentage points to 53.4 percent. Both remained above the 50-point threshold, indicating expansion in activities.

The response from the equity markets to the positive data highlighted once again the question: Is China’s stock market out of touch with economic fundamentals?

In Hong Kong, the Hang Seng also lost 0.64 percent to 27,914.21. Share prices of major mainland banks likely weighed on the benchmark. Despite positive earnings reports, major bank shares in Hong Kong fell, with ICBC, the world’s largest bank by total assets, seeing its shares down as much as 3.32 percent, and Bank of China’s shares down 1.21 percent.

Market-sensitive news this week to watch: More economic data from the US, Japan; NAFTA talks; UK’s Brexit talks with the EU; talks of tax reform in the US.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan-Nikkei Stock Average 225 19,642.76 0.7%
China-Shanghai Composite Index 3,342.95 -0.61%
Australia-ASX 200 5,713.60 0.77%
Hong Kong-Hang Seng 27,914.21 -0.64%
South Korea- KOSPI 2,364.08 -0.35%

Cryptocurrencies

The bitcoin price was up overnight during the Asian trading session, trading between $4,568 and $4,623.

Ethereum was up 0.58 percent, changing hands at $385 after taking a slight drop earlier to $380.

The rally came as more institutions are joining the blockchain revolution. The latest news say HSBC and Barclay are joining a settlement coin using blockchain.

Currencies

The Japanese yen lost 0.29 percent against the US dollar to 110.54 per dollar, after the dollar turned up following better economic data in the US and talks of tax reform.

The economic data also lifted the dollar against the Chinese yuan. The yuan lost 0.07 percent against the greenback, trading at 6.5962 per dollar.

The Australian dollar, which is often sensitive to Chinese economic data, firmed 0.06 percent against the US dollar. The Australian dollar was trading 0.7904 per dollar.

Commodities

WTI Oil was down 0.07 percent at $45.91 per barrel.

Brent Crude gained 0.26 percent to $50.74 per barrel.

Gold was down 0.36 percent to $1,303 an ounce.

Business News across Asia

In China, The BRICS summit kicks off on Thursday in Xiamen, South China’s Fujian Province. BRICS stands for five emerging economies: Brazil, Russia, India, China and South Africa. The bloc holds a meeting each year to talk about intra-cooperation as well as raising their influence in the global economic system. This year Egypt, Kenya and Mexico are also invited to participate at the summit.

Take away: A lot to watch for during the Summit, including their voice in a turbulent global economic system, China-India talks following a lengthy border military stand-off that just ended before the Summit, deals on infrastructure, building a common customs network, etc.

In Japan, UK Prime Minister Theresa May is in Japan to hold talks with her Japanese counterpart Prime Minister Shinzo Abe about a potential bilateral trade agreement following the UK’s exit from the EU. No details of substance have emerged from the talks, which is being held almost simultaneously with divorce talks between British and EU officials in Brussels.

Take Away: May’s intention to expedite talks with Japan is quite telling, coming at a time when British and EU officials are making slow progress in what could be very consequential negotiations. If things are good with Japan, that could improve the UK’s position in the EU talks.

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

Stocks Pull Back From Highs as Pound Plunges

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After yesterday’s record-breaking session, US stocks once again broadly opened at all-time highs, even as the momentum of the global rally waned. Chinese stocks kick-started the day by extending their relief rally off their 4-year lows and Europe also ticked higher, although the major indices couldn’t hold on to their early gains. Since the US open stocks are drifting lower, but with no major events scheduled for today, a calm afternoon session is likely on Wall Street.

GBP/USD, 4-Hour Chart Analysis

The slight weakness came on the heels of the weaker than expected European flash Manufacturing and Services PMIs, while Theresa May’s Brexit ultimatum also weighed on local equities. The Great British Pound fell sharply on the news too, erasing yesterday’s lofty gains and briefly getting close to the 1.30 level, as the Dollar rallied across the board.

NASDAQ 100 Futures, 4-Hour Chart Analysis

The Nasdaq has been lagging the Dow and the S&P 500 from a short-term perspective and the tech benchmark is once again leading the way lower today. The worse than expected guidance by Micron (MU) from yesterday is weighing on the segment and the market-leading tech giants are also weaker than average.

10-year US Treasury Yield, 4-Hour Chart Analysis

All eyes are still on the bond market, as Treasury yields are near multi-year highs concerning almost all maturities, and with the 10-year yield being very close to signal a trend change in the multi-decade structural downtrend.

While next week’s rate hike by the Fed is near certain, the outlook for the next year will likely be crucial, and given the positive US economic trends and the trade wars’ contained impact, the market’s rate hike expectations are rising across the curve.

Futures and Option Expiries Lead to Choppy Trading

Today is an important day for futures and options traders, as the quarterly contracts are expiring across asset classes, and that has a huge effect on stock and commodity markets as well, with high volumes and volatile trading especially around the key strike prices. Strong trends are rare on these sessions and day-traders should be cautious of sudden volatile spikes in even the most traded assets.

Copper, 4-Hour Chart Analysis

Commodities already experienced volatile swings throughout the day, with especially gold being tossed around the $1200 level that has been in the center of attention in the past weeks. Shorts in copper have been squeezed heavily before the end of the week, with the crucial metal surging above key support with the rally in Chinese stocks, while WTI crude oil retreated from a more than two-month high above the $71 per barrel level as the Dollar rallied.

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 350 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

Rapid Delays Bring a Blessing

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Hi Everyone,

For what seems like the first time in forever, crypto prices are on the rise again.

There was some excitement on social media yesterday as the SEC took the expected step to delay the decision on a bitcoin backed ETF.

The decision to delay is actually coming 10 days ahead of schedule, which moves the entire timeframe forward a bit. The next deadline is December 29th, right between Christmas and New Year, which means if they delay again before then, we could be looking at a final decision date of mid-February rather than the second week of March, as was previously expected.

Cryptotrading on Wall Street now seems one giant step closer.

In other news, Brazil’s largest broker has finally buckled to the pressure and will now be offering crypto-assets. This comes as around 3 million Brazilians are holding Bitcoin, compared to just 600,000 who invest in stocks.

Cryptocurrencies are rapidly proving their place as the preferred asset class of the millennial generation.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Enter Weaker Dollar
  • Dash on Weed
  • XRP Flys with the Crows

Please note: All data, figures & graphs are valid as of September 21st. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

The emerging market currency rout that began with the Turkish Lira in early August seems to have lost moment. The US Dollar now seems to have lost momentum.

The trend comes as yields on the US treasury bonds continue to grind higher. Here we can see the US 10-year yield over the last month. Remember, higher yields were largely considered to be the catalyst for the market dip in early February.

However, the above dynamic doesn’t seem to be hampering the stocks at all. Both the Dow Jones and the SPX500 have marked fresh all-time highs yesterday and Asian markets are following their lead this morning.

The Dollar weakness is also allowing some much-needed breathing room for the precious metals, which have been battered badly over the last few weeks.

Here we can see the Platinum and Silver over the last six months suffering from Dollar strength and the comeback over the last few days.

Digital Cash for Marijuana

In light of the recent movements in cannabis-related stocks and the launch of the new eToro @CannabisCare CopyPortfolio, we’ve been talking a lot about the budding marijuana industry and the possible investment opportunities.

Here we can see a map of all the states in the USA and their legalization status. As we can see, the map is now quite green but there’s still a lot more room for growth if other states join the trend and decide to legalize it.

The issue is the Cannabis has yet to be legalized at the federal level in the US making it difficult for vendors and entrepreneurs to open a bank account. Therefore, despite its new legal status in many places the industry is still heavily reliant on cash.

Enter Dash…

Obviously, cash has its pitfalls and no self-respecting businessman really wants to be walking around with bundles of bills. This is why the Dash foundation in partnership with the Alt Thirty Six payment processor aim to make Dash Cryptocurrency the go-to medium of exchange for the cannabis industry.

We know that Dash has been making strong headway in places like Venezuela. To me, it just seems like this reigning crypto industry leader has their hands in several markets with plenty room for growth.

XRP & Everything After

The recent crypto rally can very much be seen in the context of the weakening Dollar trend highlighted above. As we’ve been saying, the reverse correlation between the USD and the crypto market has been striking over the last few months, so it’s no surprise to the latest rally in crypto assets coming on the back of a weaker Greenback.

In this chart, we can see the US Dollar index in purple and Bitcoin in blue.

The surge in XRP however, cannot be explained by this phenomenon though. A surge of nearly 80% in less than four days needs to have a deeper explanation.

Given the nature of these rapid movements, my gut tells me these fluctuations are more than just speculation. Nevertheless, the main chatter surrounding this move is all about the launch of the xRapid software next month, which aims to use XRP for international settlements. As well as Ripple’s Swell Conference on October 1st and 2nd, which will host Bill Clinton as the keynote speaker and bring in the Counting Crows for entertainment.

Wishing you an amazing weekend 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 129 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

Market Update: S&P 500 Joins Dow in Record Territory; XRP Leads Cryptocurrencies to Stability

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Bull pattern

U.S. stocks advanced sharply on Thursday, as pro-growth optimism helped investors set aside fears of a prolonged trade between the world’s biggest superpowers. Meanwhile, the cryptocurrency market held its ground for a second consecutive day as XRP extended its rally following a series of business announcements earlier in the week.

Stocks Notch New Highs

All of Wall Street’s major indexes finished in positive territory, with the Dow Jones Industrial Average notching its second straight record high. The blue-chip average gained 251.22 points, or 1%, to 26,656.98. Nearly all 30 index members finished with gains, led by Intel Corp (INTC) and Wallgreens Boots Alliance Inc. (WBA).

The broader S&P 500 Index added 0.8% to close at 2,930.75, which was also a record high. Shares of consumer staples, technology and materials companies were the best performers percentage-wise.

Big gains in tech lifted the Nasdaq Composite Index sharply higher. The index rose 1% to 8,028.23.

U.S. Economy Humming Along

A strong domestic economy has fueled Wall Street’s stellar third quarter. The momentum streak has continued in September, a historically volatile month for stocks.

The U.S. economy under President Trump is the strongest it has been in years, with unemployment falling to nearly two-decade lows and economic output expanding at the fastest pace since 2014. On Thursday, the Labor Department added to the optimism by announcing that initial jobless claims fell to nearly five-decade lows.

The number of Americans filing for first-time unemployment benefits declined to a seasonally adjusted 201,000 in the latest week. Labor’s most recent nonfarm payrolls report highlighted a tighter jobs market and noticeable pick-up in wages for the month of September.

XRP Boosts Crypto Values

The combined value of all digital currencies held firmly above $200 billion on Thursday after XRP added $2 billion to its market cap. The third-largest cryptocurrency is surging on reports that Ripple, its parent company, is embarking on several commercialization initiatives.

A Ripple executive announced this week that the company will soon launch a cryptocurrency-focused product based on xRapid, the highly touted settlement service. Meanwhile, on Wednesday, American   banking giant PNC announced it had joined a long list of financial institutions to start using Ripple’s payment products.

XRP jumped nearly 20% to $0.388, bringing its total market capitalization to $14.4 billion.

After a volatile Wednesday evening, bitcoin was back in a stable trading range and holding above $6,400. BTC plunged suddenly to $6,100 on Wednesday before quickly recouping its 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 606 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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