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Asian Market Update – Wednesday: Asian Shares Continue to Rally, Near Decade Highs

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Asian stock market rally

Major Asian equity markets traded higher during the Asian trading session on Wednesday, with main indexes rising across the board and the MSCI Asia Pacific Index trading near decade highs.

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In Japan, Nikkei 225 was up 0.22 percent to 20,807 around midday. The Japanese rally was led by tech companies Tokai Carbon and Fuji Electric, which rose 5.75 percent and 4.27 percent by midday. Kobe Steel, which has been under pressure amid a data-falsification scandal, saw its shares tumble nearly 20 percent.

In Greater China, equities were slightly up during the morning session after strong gains on Tuesday. The Shanghai Composite Index was up a slight 0.18 percent to 3,389 before midday, while the Hong Kong Hang Seng index was trading 0.09 percent higher at 28,517.

Chinese automaker Great Wall Motors’ shares in Hong Kong gained more than 13 percent on Wednesday morning, after rumors that Germany’s BMW might form a joint venture with Great Wall.

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In Hong Kong, the territory’s Chief Executive Carrie Lam is giving a closely watched policy speech on Wednesday morning. Markets will pay close attention to Lam’s economic policies to boost the island’s economy and market.

In South Korea, the Kospi gained 0.61 percent to 2,448 before midday, according to Business Korea the recent gains are driven mostly by foreign buying.

Down Under, the ASX 200 also edged up 0.51 percent to 5,767 at midday on Wednesday.

The MSCI Asia Pacific Index was up 0.82 percent to 46.5900 – that, according to Bloomberg, is nearly at a decade high.

Talk of the Day: Minutes from the latest US Fed meeting are due later in the day.

Also in the news: earnings from big banks in the US including JPMorgan Chase, Citigroup and Bank of America are due this week.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 20,807.24 0.22%
China-Shanghai Composite Index 3,389.22 0.18%
South Korea-KOSPI 2,448.69 0.61%
Hong Kong –Hang Seng 28,517.20 0.09%
Australia-ASX 200 5,767.20 0.51%

Cryptocurrencies

Prices of cryptocurrencies were mixed overnight during Asia’s Wednesday morning trading session, with ethereum seeing small gains and bitcoin and litecoin seeing losses.

At midday in Asia, bitcoin was down 0.42 percent to $4,729. Bitcoin has been trading slightly down since yesterday when it reached a high of about $4,876.

The price of ethereum was up 0.67 percent to just above the $300 mark before midday. The virtual currency’s price, after seeing a couple of days of losing, surged back above the $300 level yesterday.

Litecoin also pointed lower on Wednesday morning, having lost 0.75 percent to $50 at midday in Asia.

Currencies

The Japanese yen lost 0.01 percent the US dollar at midday Friday to 112.44 per dollar.

The Chinese yuan also lost 0.15 percent against the US dollar to 6.5816. The yuan depreciation came after China’s central bank set the midpoint exchange rate for the currency at a three-week high.

The Australian dollar gained 0.08 percent on the dollar, changing hands at 1.2842 per dollar at midday.

Commodities

WTI Oil was up 0.28 percent to $51.04 per barrel.

Brent Crude gained 0.23 percent to $56.66 per barrel.

Gold was up 0.07 percent to $1,287 an ounce.

Business News across Asia

In China, the Chinese government has set a date for the implementation of a so-called “dual credit” system that requires car companies to lower fuel consumption and meet minimum quota on sales of new energy cars. The system will be implemented in April 2018.

Take away: This will affect global carmakers including those in Germany and the US that have big presence in the Chinese market. Two things: Firstly, more joint ventures between Chinese and foreign carmakers could be expected; Secondly, shares of battery makers and other related industries and commodities will likely get a boost.

Featured image from USCNPM.org

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Analysis

Daily Analysis: Dollar Falls, Gold Jumps after Yellen’s Final Move

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Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2668 -0.02%
DAX 13125 -0.45%
WTI Crude Oil 56.65 -0.68%
GOLD 1258.00 1.35%
Bitcoin 16,100 -6.32%
EUR/USD 1.1842 0.73%

The Federal Reserve hiked interest rates as expected today, and although the central bank’s monetary statement was slightly more hawkish than expected, the market’s reaction didn’t reflect the much-anticipated move. The worse than expected Core CPI reading that underlined the low-inflation narrative weighed on the recently strong Greenback, while stocks were unchanged after decision and bonds gained ground as yields retreated.

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EUR/USD, 4-Hour Chart Analysis

The major indices are hovering near their all-time highs with the DOW leading the way higher, hitting a new record for the second day in a row. While volatility Is expected to remain low as we approach the end of the year, market internals and valuation levels are still concerning from a long-term perspective, and stocks outside the US are also negatively diverging. The action in crude oil could be slightly more interesting as the commodity is starting to act in a slightly bearish manner after a grinding multi-month rally.

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WTI Crude Oil, 4-Hour Chart Analysis

The Brexit process is still in the center of attention in Europe, although volatility took a nosedive on the old continent as well, and it’s unlikely that the Christmas period will be much different, given the predictable drop in volumes and trading activity. The date of the next election in the financially and politically troubled Italy has been set to March 4th next year, and the early date caused some turmoil in the countries assets, which dragged the Euro Stoxx 50 lower today, together with the DAX and the other major indices.

Cryptocurrencies

As the total market cap of the crypto-market crossed the incredible $500 billion mark, Ripple, NEO, and Ethereum made headlines with lofty gains in the face of the severely overbought readings elsewhere in the segment. While XRP and NEO are still not overbought from an investment perspective, Ethereum reached our final target for its break-out and triggered a long-term sell signal.

ETH/USD, 4-Hour Chart Analysis

The previously surging IOTA continued its correction, Litecoin consolidated in a relatively narrow range, while Dash, ETC, and Monero scored marginal new highs before turning lower together with BTC. The most valuable coin that has lost some of its momentum “mojo” in recent days fell back below last week’s highs, and that could mark a failed break-out and a start of the deeper correction that seems more and more likely.

BTC/USD, 4-Hour Chart Analysis

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
11:30 UK Average Earnings 2.5% 2.5% 2.3%
11:30 UK Claimant Count Change 5,900 3,300 6,500
11:30 UK Unemployment Rate 4.3% 4.2% 4.35
15:30 US Core CPI 0.1% 0.2% 0.2%
15:30 US Crude Oil Inventories -5.1 mill -3.6 mill -5.6 mill
21:00 US Fed Rate Decision 1.5% 1.5% 1.25%
21:00 US FOMC Statement

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Market Overview

What’s Behind the Cryptosurge

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If you’re reading this you’re probably aware of the unimaginable gains that have been seen across the crypto market this year. Last night we saw a new and very important milestone that has provoked some interesting commentary.

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The total value of all digital assets as listed on coinmarketcap.com has surpassed $500 Billion for the first time. To think, this number has grown from just $14.5 Billion one year ago today making for an unbelievable percentage growth of 3448%.

These numbers spark a lot of questions. Ethereum’s founder and one of the most notable figures in the crypto-space Vitalik Buterin posted a lot of these questions on his twitter feed this morning.

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Mostly, Vitalik wants to know if this valuation is justified and more importantly how are we changing the world for the better?

What cryptotraders like myself want to know is how long will this current surge last and what is likely to drive the market going forward.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

Fed Day!!

Insane Inflation hits UK

Urgent Crypto Updates

Please note: All data, figures & graphs are valid as of December 13th. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

Though I realize that many of you are here for crypto, there are some huge things happening in the traditional markets that we need to get out of the way first. At the end of the day, I’m a markets man and as such cannot ignore Fed Day.

This evening, the US Federal Reserve Bank who has been the biggest driver of market prices over the last decade will raise their interest rate from 1.25% to 1.5%. In Forex markets this type of move is usually a really big deal as we can see many large players moving their funds into Dollars in order to take advantage of the bigger rate.

However, as the market has already been certain that this move will come over the past month the increase of 0.25% is already priced into the markets. What investors really want to know is how much will they increase rates going forward?

Even though the Fed has boldly lied to us about how fast they will be raising the rates many times in the last few years, somehow what they say still holds meaning and so we must listen.

Overall, the Fed is on an extremely gradual pace to make money more expensive. US Dollars have been cheap and easy since the financial crisis of 2008, a policy that many say is causing some bubbles in the stock markets and imho is a major contributing factor to the current boom in cryptocurrencies.

This graph shows the expectations of 16 Fed members over the next few years. Each one places one dot for each year telling us where they think rates will be at that time. As we can see, even the most aggressive member is still expecting the rates to remain below 4% by 2020. So money is likely to remain extremely cheap.

Hyperinflation Is Happening Already

All this cheap money is extremely unsettling and even dangerous, for some regions more than others. Especially when there is an external event that suddenly changes the picture.

For example, a political crisis in Zimbabwe or Venezuela. But it’s not just the third world anymore. Yesterday the Bank of England announced a shocking inflation report showing that prices are up 3.1% in the last year.

Particularly concerning is the price of specific goods. Fish is up 15%, olive oil 9.3% and butter is up 23% over the past year.

Meanwhile, salaries in the UK have not gone up nearly enough to cover these higher prices. Today the UK will release their Average Earnings Report, which analysts are forecasting has risen just 2.5%.

Forex traders will react directly to the data as it comes out in real time. Though crypto-investors will not be reacting in such a methodical way, they are being affected by the overall trend and certainly feel their pockets getting pinched by the flawed system that increasingly favors the ultra-wealthy at the expense of Mr. Joe Public.

What’s next on this CRYPTO Surge?

It’s been a powerful run in the crypto market, especially over the last few weeks. Traders seem to be taking turns with the different top cryptos buying up one at a time, in many cases doubling or tripling the value within a 48 hour window.

It started with Ether Classic, then Dash, then IOTA, then Litecoin, and last night we saw Ripple nearly double in 12 hours.

Here’s a few important updates that may drive prices going forward…

Internet giant eBay is now considering to add bitcoin!! = Huge news if they do it!!

UBS and several others using Ethereum for MiFID compliance. MiFID 2 is a huge deal right now in the financial world and many large banks have announced a pilot to start storing data on the Ethereum Blockchain.

Emergency Crypto Meeting in South Korea. South Korea is by far the largest buyer of cryptocurrencies. Updates about what will happen in this meeting on Friday are sure to move the markets.

Have an awesome 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.

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Market Overview

Asian Market Update – Wednesday: Coins fall back after strong rally; Asian stocks mixed ahead of Fed decision

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Falling

Litecoin surged 60 percent on Coinbase, but other exchanges are lagging behind

The main cryptocurrencies took a hard hit on Wednesday morning in Asia, after strong gains the day before.

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On Coinbase, bitcoin fell 4.79 percent to $16,880 at midday in Asia. The virtual currency had a nice run on Tuesday before erasing nearly all gains for the day on Wednesday morning.

Though investors are optimistic that bitcoin could hit the $20,000 mark any time soon ahead of more futures markets being launched next week, some government officials in South Korea and Australian appear to be very skeptic about the rise of bitcoin.

In Australia, the head of the country’s central bank, Philip Lowe, said that bitcoin rise is a “speculative mania” and that it was more of a payment method for the black or illegal economy. In South Korea, the government said in a statement on Wednesday that it will consider taxing capital gains from cryptocurrency trades, though this is something many other countries are already practicing.

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Ethereum fell sharply on Wednesday morning, after a solid upswing on Tuesday. At midday in Hong Kong on Wednesday, the cryptocurrency was down 5 percent to $646. On Tuesday, ethereum posted a gain of more than 32 percent to hit a record high of $686.

Litecoin also lost about 6 percent to $325 on Coinbase Wednesday morning. Litecoin made headlines across the crypto world of on Tuesday after an extreme surge on Coinbase of over 60 percent in a single day.

There are now significant price differences between Coinbase and other exchanges on the LTC/USD pair. While litecoin has been gaining across the board, no other exchanges have come close to the prices seen on Coinbase over the past few days.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 22,697 -0.73%
China-Shanghai Composite Index 3,276 -0.12%
Hong Kong –Hang Seng 28,884 0.31%
South Korea-KOSPI 2,478 0.71%
Australia-ASX 200 6,008 -0.08%
S&P 500 E-Mini Futures 2,661 -0.27%

Major Asian equities were in mixed mode on Wednesday morning, as investors were waiting for an interest rate decision from the US Fed later in the day.

Overall, markets were down in Japan, the Chinese mainland and Australia, while indexes were pointing slightly higher in Hong Kong and South Korea.

the S&P 500 E-Mini Futures was off 0.27 percent at 2,661 at midday on Wednesday.

In Hong Kong, the Hang Seng Index edged up 0.31 percent to 28,884 at midday.

In South Korea, the Kospi was 0.71 percent higher to 2,478 at midday. Positive news regarding North Korea came out of Washington on Wednesday, when US Secretary of State Rex Tillerson indicated that the US is ready to talk with North Korea.

In Japan, the Nikkei 225 Index lost 0.73 percent to 22,697 at midday.  A debate on the BOJ’s monetary policy next year is ongoing, but the latest news reports suggest the central bank is likely to keep rates low.

On the Chinese mainland, the Shanghai Composite Index was off 0.12 percent to 3,276.

Down under, the ASX 200 was down 0.08 percent to 6,008 at midday.

The US Fed is scheduled to conclude its two-day policy meeting on Wednesday, and markets are cautiously waiting for any clues of the Fed’s decision on interest rate hikes. If the Fed indicates a more hawkish tone, it would likely put pressure on emerging markets equities and currencies.

Currencies

The Japanese yen firmed 0.26 percent against the US dollar at midday Wednesday, changing hands at 113.26 per dollar.

The Chinese yuan gained 0.04 percent against the US dollar at 6.6183 per dollar.

The Australian dollar firmed 0.29 percent on the dollar, changing hands at 1.3195 per dollar at midday.

Commodities

WTI Oil was up 0.14 percent to $57.51 per barrel.

Brent Crude edged up 0.16 percent to $63.92 per barrel.

Gold was down 0.01 percent to $1,244 an ounce.

News across Asia

In China, Google Inc. announced in Beijing on Wednesday that it would open an artificial intelligence (AI) research center in China, which it said would be the first of its kind in Asia.

Take away: With laser-like focus from the Chinese government on AI, Google is trying to tap into China and get ahead in what could be a game-changing technology that has a wide range of applications.

In Japan, Reuters reported on Wednesday that the Bank of Japan is set to keep an assumed interest rate at a record low of 1.1 percent. The central bank has been keeping its rates low and in turn borrowing costs low, albeit missed inflation targets and signs that the economy is improving.

Take away: There are different voices within the BOJ, where some are pushing for an end to ultra-easy monetary policies, while others are advocating for a continuation of those polices.

Featured image from Pixabay.

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 money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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