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Asian Market Update – Thursday: Ethereum Extends Rally; Asian Stocks down After US Rates Hike

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Janet Yellen

The Big Question: Is ethereum finally catching up with bitcoin?

Bitcoin, ethereum and litecoin were all pointing higher on Thursday morning in Asia, with large gains seen in ethereum, and slight gains in bitcoin and litecoin.

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By midday, ethereum had edged up 5.68 percent to $752. Although a bit more subdued than litecoin, ethereum has also made huge gains over the past a few days. Etheruem is now up about 67 percent over the course of the week.

Litecoin also surged 1.22 percent to $316 as of midday Thursday in Asia, following a correction yesterday that brought the prices on Coinbase and Bitfinex closer together.

Litecoin gained more than 130 percent on Monday and Tuesday, reaching as high as $420 at one point on Coinbase, before falling back. On Wednesday, litecoin dropped about 11 percent on Coinbase while it was up around 1 percent on Bitfinex.

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Bitcoin was also up 0.66 percent to $16,799 at midday on Thursday. The slight gain came after big losses on Wednesday. The virtual currency dropped about 6 percent on Wednesday, after a 16 percent increase over the previous two days.

Outgoing US Fed Chair Janet Yellen voiced criticism against bitcoin on Wednesday, saying the cryptocurrency is a “highly speculative asset” and “not a stable source of value,” according to media reports.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 22,704 -0.24%
China-Shanghai Composite Index 3,296 -0.20%
Hong Kong –Hang Seng 29,216 -0.02%
South Korea-KOSPI 2,503 0.92%
Australia-ASX 200 6,020 -0.02%
S&P 500 E-Mini Futures 2,670 0.06%

Major Asian equities were narrowly down on Thursday morning, following the US Fed delivering a much-anticipated US rate hike, but voicing concern over inflation next year and rate hikes in China and Hong Kong.

In Japan, the Nikkei 225 Index was off 0.24 percent to 22,704 at midday. The loss, though small, came even after fresh data out on Thursday suggested positive signs in the Japanese economy.  The Markit/Nikkei Japan Manufacturing Flash Purchashing Managers Index rose to 54.2 in December, up from 53.6 in November – the highest reading in more than three years.

On the Chinese mainland, the Shanghai Composite Index edged down 0.20 percent at midday on Thursday to 3,296. That came after the People’s Bank of China raised the country’s short- and medium-term interest rate by 5 basis points on Thursday morning, in response to the US rate hike. Though the move was unexpected, the increase was minimal and will likely not make any significant impact.

In Hong Kong, the Hang Seng Index was down 0.02 percent to 29,216 at midday. The Hong Kong Monetary Authority also raised the base rate by 25 basis points on Thursday after the US Fed’s rate hike.

Down under, the ASX 200 was down a slight 0.02 percent to 6,020 after midday in Australian trading.

Stocks in South Korea edged up on Thursday morning. At midday, the Kospi was up 0.92 percent to 2,503 at midday.

The S&P 500 E-Mini Future was up 0.06 percent to 2,670.

The Fed on Wednesday raised interest rates for the third time this year as expected, while maintaining a projection of three more rate hikes in 2018. However, the thing that got the attention of investors was concerns raised by the Fed about the low inflation, downplaying expectations for a tightening in 2018.

Currencies

The Japanese yen lost 0.04 percent against the US dollar at midday Thursday, changing hands at 112.56 per dollar.

The Chinese yuan firmed 0.07 percent against the US dollar to 6.62084 per dollar.

The Australian dollar firmed 0.43 percent on the dollar, changing hands at 1.3035 per dollar at midday.

Commodities

WTI Oil gained 0.09 percent to $56.70 per barrel.

Brent Crude edged up 0.22 percent to $62.79 per barrel.

Gold was up 0.24 percent to $1,258 an ounce.

News across Asia

In China, investment in the real estate sector cooled in November, following a slew of measures from the government to crack down on speculation in overheated real estate markets. New figures out on Thursday showed that property investments grew 4.6 percent in the month, slower than the 5.6 percent growth in October.

Take away: Though the government measures, which include tough mortgage rules and sales regulations, could contain the overheated housing market, it could also very well weigh on the overall economic growth in China.

In Japan, the government is reportedly expected to reduce new bond issuance for the fiscal year 2018. Total bond issuance could fall as much as several hundred billion yen in 2018 from the current 34.37 trillion yen, the Nikkei reported.

Take away: The decision is likely to have been supported by rising tax revenues from the government following a recovery in economic growth in recent months.  

Featured image from Flickr.

Disclaimer: The author owns bitcoin, ethereum and litecoin. He holds investment positions in the coins, but does not engage in short-term trading.

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 28 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: Stocks Pare Losses as U.S. Dollar Hits Three-Month High

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U.S. stocks declined for a third consecutive session Monday, while the dollar jumped to three-month highs as 10-year yields approached 3% for the first time since 2014.

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Stocks Mostly Lower

Equity markets traded mixed-to-lower at the start of the week, with the S&P 500 Index paring losses in the final moments of trade. The index closed at 2,670.29, where it was little changed for the day.

Five of 11 S&P 500 sectors finished in negative territory, with information technology falling 0.4%. On the opposite side of the spectrum, telecommunications services rose 1.1% and energy added 0.6%.

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Declining tech shares weighed on the Nasdaq Composite Index, which settled down 0.3% at 7,128.60.

Meanwhile, the Dow Jones Industrial Average slipped 14.25 points, or 0.1%, to close at 24,448.69. The blue-chip index was down as much as 134 points earlier in the day.

The decline in stocks appears to have been triggered by a steep rise in bond yields. The 10-year Treasury note peaked at 2.99%, threatening to hit 3% for the first time since January 2014. Yields have been rising as investors offload Treasurys on expectations of rising inflation. A yield at or above 3% may signal a downturn in the stock market.

Dollar Hits Three-Month High

Rising yields drove the U.S. dollar to its highest level since January.

The dollar index (DXY), which measures the greenback’s performance against a basket of six peers, rose 0.7% to 90.93. Monday’s performance allowed the dollar to trim its year-to-date decline to -1.3%. At its lowest point, the dollar was down nearly 4% for 2018.

Against the Japanese yen, the dollar surged 1% to overtake the 108.00 level for the first time since February.

The euro, pound and Canadian dollar all fell versus the greenback.

Currency speculators are calling for the Federal Reserve to raise interest rates three times this year. Analysts at Goldman Sachs believe a fourth interest rate hike is also on the table.

Busy Week for Earnings

Investors are also bracing for the busiest week of the Q1 earnings season, with 170 companies scheduled to report results. Some of the most prominent names include Verizon (VZ), Travelers Cos (TRV) and Visa (V), which are all Dow blue chips.

Google-parent Alphabet (GOOGL) report quarterly earnings Monday, beating analysts’ expectations on both the top and bottom line. The company earned $9.93 per share on revenue of $31.15 billion. Analysts had called for EPS of $9.28 on revenues of $30.29 billion.

Corporate earnings have come in largely ahead of expectations over the past two weeks. According to FactSet, 80% of S&P 500 companies that have reported so far have posted positive earnings surprises. Combined, their blended earnings growth rate foe Q1 2018 is 18.3%.

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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4.5 stars on average, based on 346 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

Curiosity Turns to Action for Amazon & Bitcoin Cash

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Those of you looking to hold stocks that invest in blockchain solutions can now officially add Amazon to the list.

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Amazon dominates many different industries but their most profitable wing is AWS (Amazon Web Services). In 2017, the cloud computing department was responsible for ALL of Amazon’s operating profits.

At the end of last week, AWS added a few new templates that will make it easier for developers to create apps using both the Hyperledger and Ethereum blockchains.

We’ve always known that Bezos’ mega-company has been curious about blockchain, but this is the first step that clearly signals their interest in the sector.

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@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Peak Earnings Season
  • Devaluation of the Japanese Yen
  • What’s Up with Bitcoin Cash?

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

Traditional Markets

The first time Donald Trump met with Emmanuel Macron the two shared a special handshake that will be analyzed by political scientists for years to come. When they met two months later it seemed they simply couldn’t let go of one another.

Though both of the above-linked videos are highly entertaining, the agenda for Macron’s three-day visit to Washington is extremely serious.

The young French philosophy major will attempt to convince the reality star billionaire that trade wars are bad ideas and that Obama’s deal with Iran is good. In short, he has his work cut out for him. In fact, he will be speaking directly with the world’s biggest proponent of a wall.

None of this may actually matter to Wall Street, which is currently at the peak of earning season’s euphoria. This week we’ll get to peek under the hood of some of the biggest corporations in the world.

It’s very rare for stocks to go down during earnings season but with the market action we’ve seen so far this year, it wouldn’t surprise me.

What is for sure is that stock traders are getting picky about what they hold. This chart shows that the famous FAANG stocks, which have been rising in unison for the last few years, have been showing some distinct syncopation since the market rout of February 2nd.

Yen Aggression

Speaking in an exclusive interview last night, the Bank of Japan’s Governor Kuroda-San stated that they “must continue very strong accommodative monetary policy for some time.”

Meaning, they are planning to maintain their aggressive stance towards weakening the Japanese Yen, possibly for years to come.

The BoJ will be holding a meeting and press conference this Friday, which is likely to reiterate their weak Yen policy and maintain their negative interest rates.

With the USDJPY so far below its yearly average (yellow), a move up to 111 may be imminent.

(Remember, an upward move on the chart shows the Dollar getting stronger against the Yen.)

Bitcoin’s Bull Chart

The expectation of a weaker Yen, especially with the BoJ Governor deliberately trying to jawbone the currency, could have direct ramifications for Bitcoin.

Japanese savers are not very happy with the fact that their holdings in Yen are being marked for devaluation and with the cryptomarket’s recent bounce off the lows, they may now be looking at some viable alternatives.

Here we can see Bitcoin’s strong push off the long-term support of $6,500 and the subsequent rise. At the moment we can see some strong resistance at $9,000, a significant psychological barrier.

The yellow line here represents a classic ascending wedge, which is often called a breakout pattern. Let’s hope it plays out.

What’s even more impressive though is the rise in Bitcoin Cash…

Bitcoin Cash is up 81% in the last 7 days!!

This one slightly more difficult to explain but it does make some sense in the crypto-crazy world we live in.

First, let’s talk about the fork. Bitcoin Cash is moving towards a hard-fork on May 15th. The planned fork that will increase the maximum block size from 8 MB to 32 MB and will also remove the SegWit protocol.

However, those looking to get a new coin or “dividend” out of this fork may be disappointed. If all goes smoothly, the new coin that is created from the fork will completely replace the old coin. Though there may be some who try to keep the old BCH alive, they will very likely be the minority. That said, there will be no free lunch, and no chain split unless things go terribly wrong.

For clients holding BCH in eToro, barring any unforeseen circumstances, your coins will move smoothly to the new 32 MB blockchain.

Still, many cryptotraders have the last few bitcoin forks permanently etched in their minds and associate hard forks with rising price and so the momentum is snowballing at the moment, especially in markets such as Japan and South Korea.

We can see a distinct spike in volumes for BCH on exchanges in both Japanese Yen…

… and Korean Won…

… whereas volumes in BTC have remained constant over the last few weeks. Japan is responsible for 60% of all Bitcoin transactions and the spikes shown above simply indicate a sudden rise in interest.

The proportional BCH volumes of both countries are still relatively small. As we can see, Japanese Yen makes up less than 1% of all BCH transactions.

Also, there seem to be some interesting updates coming out of India, which does indicate that the “crypto-ban” put in place by the RBI and finance ministry may end up being shot down by the high court. More on this in future updates.

Many thanks to everyone who is sending me great intel and excellent feedback. Keep up the great work!

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

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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Market Overview

Is the VIX Being Manipulated?

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A conspicuous rise in the CBOE VIX last Wednesday has reignited a long-standing debate over the soundness of the Wall Street fear index. Now, traders are asking whether the VIX is just plain broken or being gamed by holders of derivatives.

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VIX Spikes

The CBOE Volatility Index measures how much traders are willing to pay for options that are used to hedge against future stock-market declines. The so-called “fear index” normally trades inversely with the S&P 500 Index, which means it rises when stocks fall or vice versa.

On Apr. 18, the VIX spiked 12% in the first 30 minutes of trading, marking the biggest move since 2010, according to data gathered by Macro Risk Advisors and The Wall Street Journal.

The following chart, courtesy of WSJ, illustrates the dramatic surge between 9:00 a.m. and 9:30 a.m. The only comparable move after the opening bell occurred on Feb. 14, when the index dropped nearly 14%.

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Since the VIX cannot be traded outright, investors use VIX-linked products to trade volatility, including options, futures and exchange-traded notes. VIX futures normally trade in a state known as contango, where the futures price is above the cash price and later contracts are incrementally more expensive than earlier ones.

An illustration of the structure of VIX futures contracts is presented below based on Friday’s closing prices. Contango is observed for the first six futures months.

Concerns Over Manipulation

While VIX’s sudden spike was supposedly tied to large orders for S&P 500 put options, concerns over market manipulation have been on the front burner for some time. Since February alone, at least nine lawsuits have been filed by plaintiffs arguing that the VIX is being gamed.

CBOE President Chris Concannon, who recently testified before Congress over cryptocurrency regulation, has said the allegations have impacted the monthly auctions process. He also said that CBOE is boosting its technical infrastructure to resolve these long-standing issues.

Concerns over CBOE’s options settlement process emerged last December after the exchange fined a trading firm over allegations of improper bids related to volatility auctions. The markets in question were tied to both stocks and oil. For its part, CBOE has denied that manipulation exists, with exchange officials arguing that the VIX settlement process offers a transparent auction.

Analysts warn that the VIX, while growing in popularity, is dominated by speculators betting large sums of money on how chaotic stock prices will be 30 days from now.

Volatility returned with a vengeance in early January and hasn’t left the market ever since. The fear index spiked so heavily in February that products shorting volatility were put out of commission. Credit Suisse pulled the plug on XIV,  a popular inverse volatility product, on Feb. 20 after assets under management plunged from nearly $1.9 billion to $110 million in just six days.

Prior to the decline, XIV had performed extremely well during the bull market, with gains accelerating thanks to Donald Trump’s election.

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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4.5 stars on average, based on 346 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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