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Asian Market Update – Wednesday: Bitcoin hits new record high; Asian stocks stumble on lower risk appetite

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Record high

Epic rally continues for bitcoin

Bitcoin started to dominate financial news headlines across the world again on Wednesday morning, as the cryptocurrency took off to a new record on strong momentum in early Asian trading.

Bitcoin surged from $11,715 around 8 AM Hong Kong time, surpassed the $12,000 mark within two hours and reached $12,251 before falling back slightly. As of midday in Hong Kong, bitcoin was still up 4.19 percent to $12,209.

Less impressive was ethereum. Though the long-term uptrend in ethereum is definitely holding up, shorter term price movements have been choppy. Ethereum is still in consolidation mode after its all-time high of $518 was reached on November 29.  As of midday in Hong Kong Wednesday, ethereum was 0.44 percent higher, trading at $459.

Litecoin was up 1.72 percent to $102.75, not far below the record level of $104 seen on Tuesday.

Main Market Movers – Midday Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 22,419 -0.90%
China-Shanghai Composite Index 3,283 -0.60%
Hong Kong –Hang Seng 28,481 -1.15%
South Korea-KOSPI 2,496 -0.55%
Australia-ASX 200 5,946 -0.42%
S&P 500 E-Mini Futures 2,629 0.04%

Major Asian equity markets stumbled on Wednesday morning, as markets in Hong Kong, Japan and in China saw relatively big losses, tracking declines in the US over greater perceived risks in the market.

In Hong Kong, the Hang Seng Index was down 1.15 percent to 28,481 at midday, on track for another losing week. The Hang Seng has made big gains this year, but has been trading lower since last week.

In Tokyo, the Nikkei 225 Index was down 0.90 percent to 22,419. That’s more than 250 points lower than the level at the same time yesterday.

On the Chinese mainland, the Shanghai Composite Index lost 0.60 percent to 3,283. That loss came even after the private services PMI index out on Tuesday showed that the Chinese services sector is growing at a better-than-expected rate.

In South Korea, the Kospi also lost 0.55 percent to 2,496 at midday. Tensions on the Korean Peninsula are high after South Korean media reported on Wednesday morning that a US bomber is scheduled to fly over the peninsula later in the day in a show of force, which could spark pushbacks from the North.

Down under, the ASX 200 was off by 0.42 percent to 5,946 at midday. The Reserve Bank of Australia on Tuesday decided to keep its interest rates unchanged at 1.5 percent – a record low – and said it expects the Aussie economy to grow around 3 percent a year over the next few years.

The S&P 500 E-Mini Future was up 0.04 percent to 2,629.

The losses in major Asian stock markets on Wednesday morning tracked losses on Wall Street overnight, and with increasing risks seen in tech shares, weak copper prices, and high US Treasury yields.

Currencies

The Japanese yen gained 0.32 percent against the US dollar at midday Wednesday, changing hands at 112.22 per dollar.

The Chinese yuan firmed 0.02 percent against the US dollar to 6.6158 per dollar.

The Australian dollar lost 0.37 percent on the dollar, changing hands at 1.3191 per dollar at midday.

Commodities

WTI Oil was down 0.1 percent to $57.40 per barrel.

Brent Crude was off 0.06 percent to $62.60 per barrel.

Gold was up 0.02 percent to $1,265 an ounce.

News across Asia

In China, the foreground for China’s decades-long “reform and opening up” process – Guangdong Province – continues to be attractive for foreign investments, particularly in tech firms. So far in 2017, the southern province has attracted investments totaling $5.78 billion from 47 Fortune Global 500 companies, most of which are tech companies.

Take away: Capital outflow has been a major issue for the Chinese economy but central and local governments have been ramping up their efforts in attracting more investments to combat the issue.

In Japan, talks of continuing monetary easing are still strong. On Wednesday a board member of the Bank of Japan said that the central bank should stick with its ultra-easy monetary policy, despite recent signs of economic recovery, because uncertainty remains over how fast inflation will rise.

Take away: Though there have been some voices calling for an end to loose monetary policy, current policies in Japan are likely here to stay given the wider consensus and desperate efforts to reignite the economy.

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 (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

Forex Update: Dismal Chinese Data Causes Turmoil in Markets

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Forex Market Snapshot

Asset Current Value Daily Change
EUR/USD 1.1302 -0.47%
GBP/USD 1.2571 -0.68%
USD/JPY 113.35 -0.21%
AUD/USD 0.7179 -0.66%
GOLD 1,243 -0.20%
WTI Crude Oil 51.16 -3.18%
BTC/USD 3,180 -2.54%

We continue to have an unusually active December in traditional financial markets, as the recent bearish shift, the continued Brexit woes and the slowing global economy add up to a very nervous trading environment. Volatility is especially high in stock markets compared to seasonal averages but currencies are also having very active days, with the Dollar clearly being in focus.

Today we had negative headlines in China with both industrial production and retail sales missing the consensus estimates by a mile, and the history of manufactured economic releases from the country makes that even scarier.

It’s no surprise that the Chinese stock market is leading the way lower globally, while the Chinese Yuan is also among the weakest currencies globally, even amid the improving trade-related sentiment. Risk-on currencies got it hard today, and the Dollar is defying its bearish seasonality, trading very close to its recent lows, confirming the broad risk-off shift.

Technical Analysis

GBP/USD, 4-Hour Chart Analysis

The Great British Pound continues to trade with pronounced relative weakness, and as Prime Minister Theresa May was sent home empty-handed from Brussels, with the leaders of the EU refusing to renegotiate the draft Brexit plan, the currency’s position just got even shakier.

From a technical standpoint, the Cable confirmed the key breakdown with a failed pullback in the past couple of days, and with no major support found above the generational lows near 1.20, long-term odds now favor a test of that zone, and bulls shouldn’t enter positions below the key 1.27 level.

EUR/USD, 4-Hour Chart Analysis

The EUR/USD pair dipped below the 1.13 level after yesterday’s the dovish growth and inflation forecast by the European Central Bank and today’s strong US Retail Sales report. The US economy continues to perform relatively well compared to its global peers, and although we think that the slowdown will eventually reach the US, the fiscal stimulus and the labor momentum could keep the engines going for a while.

That only adds to the buying pressure which is pushing the USD higher, and the troubles in the European financial system are also mounting, which could lead to another leg lower in the common currency next year. The main technical levels to watch are still the 1.12 support and the 1.1440 resistance, and with the broader downtrend clearly being intact in the most traded currency pair.

AUD/USD, 4-Hour Chart Analysis

The AUD/USD pair fell below the bearish wedge pattern on the negative Chinese news as we expected, and it’s now testing the 0.7165 support zone. A move towards the 0.70 level is likely in the coming weeks, should the pair violate the support zone, and the short-term trend change is close to being confirmed, while the broader downtrend is clearly intact, with strong resistance ahead near 0.7250 and 0.74.

WTI Crude Oil, 4-Hour Chart Analysis

Another rally attempt faded away today in crude oil, and the crucial commodity continues to trade in a bearish consolidation range following the series of dead-cat-bounces. The top of the range is found near the $54.25 per barrel price level, while strong support is found in the $49.50-$50 per barrel range.

Given the deeply oversold long-term momentum readings, bulls can open speculative long positions near the bottom of the range, despite the clearly intact long-term downtrend, while bears should wait for a larger scale bounce to reenter the market.

Key Economic Events on Monday

ChartBook

Forex

USD/JPY, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

EUR/JPY, 4-Hour Chart Analysis

AUD/JPY, 4-Hour Chart Analysis

GBP/JPY, 4-Hour Chart Analysis

USD/CHF, 4-Hour Chart Analysis

USD/CNH, 4-Hour Chart Analysis

Commodities

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

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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4.7 stars on average, based on 416 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

Tighten that Belt!!

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Hi Everyone,

Over the last four years, the European Central Bank has managed to inject €2.6 trillion into the banking system in order to maintain economic stability.

To be clear, these cash injections have been one of the only things propping up the economy, and even the Governor of the ECB has now admitted that.

Now, €2.6 trillion may not sound like a lot of money but we need to consider that this money is then multiplied by the fractional reserve banking system with each Euro created then being lent out multiple times. So the actual amount of money that went into the system is much higher.

Here we can see the level of M3 money in the Eurozone going from less than €10 quadrillion to more than €12.27 quadrillion in just four years.

Yesterday, the ECB announced that they will stop injecting new money into the system. In the United States, they are already starting to extract money by allowing the bonds they’d purchased to lapse. In Europe, they’ll be renewing their bonds for now.

So, for those of you reading these daily updates and wondering what monetary tightening is, this is how it works and it is having a massive impact on the markets.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Poor China Data
  • USD Getting Strong
  • Bitcoin Bulls are Still Bullish

Please note: All data, figures & graphs are valid as of December 24th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Stocks declined during the New York session yesterday. There were a bunch of headlines about a possible government shutdown but that’s probably not the catalyst for falling stocks. Just a sideshow distraction.

As we mentioned above tightening monetary policy is the driver here. During most of the year, stock bulls were able to say that the economy is still doing very well, but unfortunately, they don’t even have that leg to stand on anymore.

The US jobs report last week was dismal and the GDP in Q3 was a clip below the national average.

Things didn’t get much better in the Asian session either. Chinese investors drank their morning coffee reading headlines like this

To put the numbers into perspective, here is a graph of China’s industrial production since the crisis.


… and here is one for the retails sales. These are the lowest figures in more than a decade. An outright shock for economists whose forecasts were already low.

As you can probably imagine, the entire global stock markets are in risk-off mode by now.

USD Strength

In line with the risk-off mood, it’s likely that many traders are moving to cash. This could be the reason the US Dollar is testing new highs at the moment.

Here’s the graph we’ve been tracking that shows a rather clear ascending triangle for the US Dollar index. Definitely looks like a breakout pattern.

Similar to what we saw in August, the emerging market currencies are getting the biggest wallop. Here we can see the LiraRand, and Peso getting bucked.

At this point, only the Japanese Yen is a bigger safe haven but only slightly.

Bulls Gotta Bull It

To say that I’m bullish on bitcoin is an understatement, but even my extreme optimism is overshadowed by some of the other analysts in the industry.

As much as I respect Mr. Lee and appreciate his view, the above headline did raise a few alarm bells in my head.

In my personal philosophy, the market is never wrong. Fair value is what someone is willing to pay for it. I can understand how using metrics to try and determine what the price of an asset should be can be helpful. However, if nobody is willing to pay that amount, then it isn’t the correct value.

During the interview, Thomas even went as far as trying to reverse engineer his own calculations showing how given the current price of bitcoin, there should be far fewer active wallets. This thinking sounded a bit silly to me as well.

Sure, I believe that bitcoin can grow in value very quickly. After all, there is an extremely limited supply. But for that to happen demand needs to pick up first.

Have an amazing weekend!!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

eToro is a multi-asset platform which offers both investing in stocks and cryptocurrencies, as well as trading CFD assets.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

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 LinkedInMatiGreenspan |Facebook:MatiGreenspa

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 139 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

U.S. Stocks Drift amid China Trade Talks; $133 Million ICO Shuts Down Over Regulation

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U.S. stocks traded mixed on Thursday, as investors carefully monitored ongoing trade negotiations with China following a string of positive developments in recent weeks. Basis, an up-and-coming stablecoin project, has confirmed it will close operations and refund investor accounts over regulatory bottlenecks with the Securities and Exchange Commission.

Rally Loses Steam

After a strong midweek performance, Wall Street’s major indexes struggled to regain momentum on Thursday. The Dow Jones Industrial Average pared much of its 200-point gains. It eventually settled at 24,596.30, having gained 69.03 points, or 0.3%.

The broader S&P 500 Index pared losses to finish flat at 2,6050.53. Five of 11 primary sectors recorded losses, led by materials and financials. On the opposite side of the ledger, defensive plays tied to utilities and consumers outperformed the market.

The technology-focused Nasdaq Composite Index declined 0.4% to finish at 7,070.33.

Trade Talks Take Positive Turn

Progress on a comprehensive trade agreement between the U.S. and China appears to be headed in the right direction after Reuters reported that Chinese state-owned enterprises were loading up on American-made agricultural products. In a report published Wednesday, Reuters said that government-backed companies held 500,000 tons of U.S. soybeans.

Earlier in the week, Hacked confirmed that China was shifting course on an industrial blueprint that prioritized domestic companies over foreign competition. The Made in China 2025 plan will likely get a makeover in the near future to allow greater competition in the domestic market. This means potentially greater access by U.S. companies to vital Chinese industries.

China and the U.S. are in the midst of a 90-day truce, which came out of a face-to-face meeting between leaders of both countries in Buenos Aires earlier this month. China has already lowered tariffs on U.S. autos to 15% from 40% while President Trump has delayed a tariff hike on $200 billion worth of Chinese goods initially scheduled for Jan.1.

Basis Stablecoin Shuts Down

One of the biggest stablecoin projects to come out of the ICO boom confirmed it was closing down Thursday, citing regulatory concerns in the United States. Basis, which raised $133 million via initial coin offering, will begin the process of refunding investors in the coming days.

Nader Al-Naji, CEO of the company behind Basis, Intangible Labs, told Forbes that there was no way his project could avoid security classification – a label many in the industry consider undesirable.

“We met with the SEC to clarify a lot of our thinking,” Al Naji said. “The SEC generally avoids saying that something will definitely be one way or the other. But from that meeting we got the impression that we would not be able to avoid securities classification.”

The U.S. Securities and Exchange Commission has warned cryptocurrency startups that their token offerings are subject to federal oversight and that regulators make no distinction between “utility” assets and securities. The only notable exceptions are bitcoin and Etheruem, which the SEC deems to be “sufficiently decentralized” to be considered securities.

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 698 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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