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Asian Market Update – Thursday: Asian stocks mixed on corporate earnings, ECB meeting speculations

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ECB

The Big Question: Asian economies remains strong but what should we expect from corporate earnings?

Major stock indexes traded in a mixed mode during the Asian trading session on Thursday, as investors digested quarterly earnings reports from several large companies and markets focused a meeting of the European Central Bank scheduled for later in the day.

In Japan, the Nikkei 225 added 0.11 percent to around 21,731 at midday Thursday – about 100 points lower than the level at the same time yesterday. The Nikkei snapped its 16-day winning streak on Wednesday, after it closed 0.45 percent lower.

In China, markets appeared to be positive about the leadership change in the ruling Communist Party revealed on Wednesday. As of midday Thursday, the Shanghai Composite Index was up 0.46 percent to about 3,412.

However, in Hong Kong, the Hang Seng Index was 0.16 percent off to around 28,257 – nearly 100 points lower compared to the same time yesterday.

In South Korea, the Kospi was down 0.06 percent to around 2,491 shortly before midday – about the same level compared to midday Wednesday. South Korean chipmaker SK Hynix said on Thursday that its third-quarter operating profits rose 415 percent year on year to 3.7 trillion won ($3.3 billion), lower than Reuters’ projection of 3.8 trillion won.

Down Under, the ASX 200 was down 0.07 percent to 5,901. Australia’s ANZ announced Thursday that it’s fiscal year net profit for the year ending on September 30 grew 12 percent to 6.41 billion Australian dollars, lower than a Reuters forecast of $6.87 billion. Airliner Qantas shares fell 7 percent at one point on Thursday after the company said business conditions were expected to be tougher.

Asian markets are also looking at a looming meeting of the ECB scheduled for Thursday. The general expectation of the market is that the central bank will pull back its bound-buying stimulus program, thus taking a significant step in unwinding years of loose monetary policy.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 21,731 0.11%
China-Shanghai Composite Index 3,412 0.46%
South Korea-KOSPI 2,491 -0.06%
Hong Kong –Hang Seng 28,257 -0.16%
Australia-ASX 200 5,901 -0.07%

Cryptocurrencies

Prices of the main cryptocurrencies were also mixed Thursday morning, with bitcoin making minor gains and ethereum and litecoin trading slightly down.

At midday in Asia, bitcoin moved up 0.15 percent to 5,744 at midday Thursday, surging back from about $5,452 at the same time on Wednesday.

The price of ethereum lost a slight 0.06 percent to about $296 before midday. The virtual currency has remained steady around the $295 level since midday Wednesday, after trading down for several days.

Litecoin was down 0.48 percent to about $55.97 as of midday in Asia.

Currencies

The Japanese yen gained 0.20 percent the US dollar at midday Thursday to 113.51 per dollar.

The Chinese yuan gained 0.08 percent against the US dollar at 6.6299 per dollar.

The Australian dollar also gained 0.1 percent on the dollar, changing hands at 1.2965 per dollar at midday.

Commodities

WTI Oil was down 0.15 percent to $52.07 per barrel.

Brent Crude lost 0.2 percent to $58.34 per barrel.

Gold was up 0.27 percent to $1,279 an ounce.

Business News across Asia

In South Korea, economic growth saw the fastest pace in seven years, as GDP grew by 1.4 percent in the third quarter from the same quarter last year, according to preliminary numbers from the Bank of Korea on Thursday. That pace beats a 0.8 percent growth forecast from Reuters.

Take Away: The fast growth shows that South Korea’s economy is largely unaffected by tensions on the Korean Peninsula.

In Japan, an aide to Prime Minister Shinzo Abe’s offered a defense of the Bank of Japan after the central bank failed to achieve its inflation target with ultra-easy monetary policy. The aide said the policy had boosted the economy and created jobs. Japan’s economy grew 2.5 percent in the second quarter but inflation rose just 0.7 percent, well below the BOJ’s 2 percent target.

Take Away: Such comments could mean the BOJ increases the likelihood that Japanese monetary policy will remain loose for the foreseeable future.

Featured image from Max Pixel.

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 Mixed as Dollar Tests Highs Again

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Choppy summer trading conditions continue to dominate traditional financial markets, with low train volumes and relatively narrow intraday ranges in most of the asset classes. Despite the low activity, there is still a clear rising trend in US markets, while the rest of the world tries to gather some bullish momentum despite the widespread technical relative weakness.

Trump’s controversial meeting with Putin still made the most headlines, although stocks largely ignored the story, while trade war fears and the Brexit drama had much stronger impacts, with especially the Pound performing weaker than its peers.

Dow Futures, 4-Hour Chart Analysis

The Nasdaq is still trading just below its all-time high, despite today’s weaker session, while the S&P 500 hit another marginal 5-month high today, with the Dow still lagging behind the rest of the market. The ongoing earnings season also adds to the choppiness of the day-to-day price action, and with the deep global divergences still present, we remain defensive towards equities here.

Shanghai Composite, 4-Hour Chart Analysis

Asian equities experienced a bounce in the last couple of weeks, but China which has been the epicenter of the weakness in June is still struggling to join the move. The trade-war torn Shanghai Composite is still trading near its recent lows, confirming the bear market, while the Yuan hit new 12-month lows compared to the USD in the last couple of days again.

Commodities Mixed as Yuan Tumbles but Dollar Rally Looms

Emerging market currencies are generally under pressure, and the Dollar has been pushing higher against its major peers as well today, with the Great British Pound and the Euro both sliding towards their June lows, and the Yen hitting a new year-to-date low before the afternoon pullback in the Greenback.

Dollar Index, 4-Hour Chart Analysis

The Dollar’s rally, which was boosted by the lower than expected British CPI release in European trading paused somewhat in late trading, after the Dollar index got close to its 1-year high. The US housing market showed a huge drop in activity in July, with Building Permits disappointing and Housing Starts falling off a cliff unexpectedly. The rising yields, which are behind most of the moves this year, are talking a tall on the segment, and that could be a major drag on GDP growth in the coming quarter.

Gold Futures, 4-Hour Chart Analysis

Commodities posted a reversal-like performance today, with gold, oil, and copper all rebounding off their early lows, but for now, the bearish short-term trend remains dominant in the segment. The bounce in gold still left the precious metal below short-term resistance at $1240, while copper is still bouncing around just above long-term support. WTI Crude Oil which lost more than 10% in a matter of days, found support at $66 per barrel, entering a consolidation phase after the rout.

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 295 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 Rally on Banks, Industrials; Fed’s Powell Sees Big Risks in Cryptocurrencies

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U.S. stocks traded in positive territory Wednesday, as earnings tailwinds propelled banks and industrials companies higher while a slump in energy shares subsided.

S&P 500, Dow Rise

The large-cap S&P 500 Index rose 0.2% to 2,815.62, its highest in over five months. Gains were largely concentrated in just two sectors, with financials rising 1.5%. Industrials stocks, which include airlines and railroads, jumped 1.1%.

On the opposite side of the ledger, consumer staples and utilities companies were the biggest drags on growth, falling at least 0.6%.

Dow industrials added 79.40 points, or 0.3%, to finish at 25,199.29.

The technology-heavy Nasdaq Composite Index finished at 7,854.44, virtually flat for the day after reporting only minor upside earlier.

A measure of implied volatility known as the CBOE VIX touched new six-month lows Wednesday. The so-called “fear gauge” bottomed at 11.44 on a scale of 1-100 where 20 reflects the historic mean.

Powell: Cryptocurrencies Lack Intrinsic Value

Federal Reserve Chairman Jerome Powell lashed out against cryptocurrencies Wednesday in round two of his semiannual testimony before Congress. According to Powell, crypto-assets present serious risks to unsophisticated investors who are more likely to react to large fluctuations in market prices.

“There are investor and consumer protection issues as well,” Powell told the House Financial Services Committee before adding that digital assets lack intrinsic value.

Despite heading the most powerful central bank in the world, Powell’s take on cryptocurrency is hardly unique and suffers from the same ‘lack of sophistication’ that he says characterize bitcoin investors. As Hacked recently showed, arguments against crypto’s intrinsic value fail to take into consideration the vast resources required to maintain individual networks such as bitcoin.

Although Congress remains skeptical about digital assets, federal securities regulators are loosening their restrictions on the market. The U.S. Securities and Exchange Commission (SEC) has deemed bitcoin and Ethereum to be non-securities while at the same time opening up new avenues for security tokens to be traded on regulated exchanges.

Cryptocurrency Market Cap Approaches $300 Billion

Cryptocurrency prices continued higher Wednesday, as bitcoin’s sudden rally sparked a wider uptrend in altcoins, resulting in the highest market valuation in over a month.

Bitcoin traded above $7,500 on major exchanges while major altcoins like Cardano and Stellar Lumens put up double-digit gains. At the time of writing, the total cryptocurrency market was valued at $288 billion, according to CoinMarketCap. The market’s total value peaked above $297 billion.

The large uptrend has been accompanied by an equally impressive jump in trading volumes. Total market turnover exceeded $21 billion for the first time since May. It’s also a 70% increase from week-ago levels.

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 500 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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Market Overview

DJ King Crypto Banker

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Hi Everyone,

If you’re reading this, you probably agree that the old school financial industry is in need of a shakeup. It seems that Goldman Sachs agrees.

This hit track is a remix of the old Fleetwood Mac song “Don’t Stop Thinking About Tomorrow.” It was created by Goldman’s incoming CEO David Solomon (AKA: DJ D-Sol). Named after two ancient kings and an angel, Solomon will assume the throne on October 1st.

Current CEO Lloyd Blankfein was famously indecisive about cryptocurrencies, yet over the last few months, it’s become clear that the bank is ramping up their cryptotrading activities in a big way.

Solomon has been a lot more clear on crypto and has gone on record saying that Goldman is focused on crypto due to a high level of demand from their clients.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Dollar Climbs – Gold Falls
  • Bitcoin Party Time
  • Double Double Crypto Day

Please note: All data, figures & graphs are valid as of July 18th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

President Trump admitted yesterday to making a mistake. After causing a global stir backing Putin over the FBI at the Helsinki summit, Trump has now walked back his comments and even admitted for the first time that he agrees with the assessment that Russia was indeed behind the meddling in the 2016 elections.

Though many remain unconvinced, the markets remain unfazed and instead the focus from many analysts remains on the possibility of a ramped up trade war with China and on the Fed’s actions.

In his testimony yesterday, Fed Chair Jerome Powell did his best not to be political but did note that the effects of further tariffs would likely be felt throughout the US economy. Today Powell testifies before the House Financial Services committee. We can probably expect further questions from the House regarding the specific reaction the economy might have to said tariffs.

Stocks are rather mixed today but we do have notable moves in the currency market where the US Dollar is gaining strength.

The US Dollar Index is once again bumping up against resistance at 95 points. If this level is passed, it could lead to further gains, especially since the United States seems to be a lot more aggressive than the rest of the world on their plans to raise interest rates.

In line with the stronger Dollar, the metals have continued to decline. Gold is now the cheapest it’s been in over a year.

Bitcoin Surge!!

After more than a month of doing nothing, bitcoin broke out yesterday rising $656 in 40 minutes, bringing life and optimism back into the market.

Here we can see the strong break above the key resistance level of $6,800, clearing quickly past $7,000 then spending a short time above $7,500 before a retracement.

By looking at the volumes, it seems that the cause of the surge was from some fresh money entering the market. This graph from www.cryptocompare.com shows the incredible volume spike at the time of the surge.

This one shows the volumes by currency. The blue circle is the exact time of the surge. Notice the spike in USD volumes?

Lately, we’ve been seeing a trend that Tether (USDT) has been becoming more prominent in overall volumes. Tether volumes generally indicate cryptotraders speculation on the exchanges. The fact that this surge happened on USD and not Tether might indicate that it is due to fresh money coming in.

Double Double Crypto Day

Today the US Congress is set to hold not one, but two separate hearings that relate to cryptocurrencies. This is a clear sign that the US government is taking the crypto industry seriously and it seems that point of both hearings will be to help not harm innovation in the space.

The double-header comes as the SEC’s mailbox is reportedly inundated with letters from citizens urging them to approve VanEck’s Bitcoin backed ETF at their hearing on August 10th.

Shifting over to Wall Street, it seems that the bitcoin monthly futures contracts on both the CME and the CBOE group will expire today. As we’ve stated before, there is nothing to fear from the expiration of these contracts. The chances that any large player is trying to manipulate the markets using them is very slim.

Just to get a picture of the volumes of these markets, I’ve pulled the following graph from the Bloomberg terminal for you. This shows the daily volumes on the CBOE’s XBT futures since inception.

The small white line shows the average daily turnover, which is just under 5,000 BTC.

Even though the volumes on the CME are higher, it’s less significant for this analysis since they are using a more complex index as a reference rate for contract settlement and thus would be much more difficult for anyone to try and manipulate.

As always, let me know if you have any questions, comments, or feedback. I’m always happy to hear them. Let’s have 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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4.7 stars on average, based on 115 rated postsSenior Market Analyst at Etoro.com.




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