Equities are trading sideways in the Asia-Pacific region US equity markets continue to show movement in both directions, but we are not seeing this trend in the Asian markets in Thursday trade. Equity markets across the region showed solidity yesterday, refusing to bow to the schizophrenic noise from Wall Street. With the former having taken its medications and returned to the buy-everything trade overnight, it’s probably no surprise that Asia has not fully bought into that move either. Big tech dragged US markets higher overnight, the Nasdaq rising 1.44% with the S&P 500 and Dow Jones both rising around 0.70%. Today, even China mainland markets appear to be in consolidation mode, after gains of over 10.0% over the past week. Data showing stock margin lending … [Read More...]
Gold punches past USD1800, oil drifts
Oil drifts higher as range-trading continues A fall in US gasoline inventories by 4.85 million barrels overnight offset the unexpected rise in official crude inventories by 5.65 million barrels. That limited any negative sentiment and reassured investors that petroleum consumption remains robust in the US, despite the economic hit caused by the increase in Covid-19 cases across the sunbelt states. With sentiment balanced, oil followed equity markets modestly higher. Brent crude rising 0.70% to $43.10 a barrel, and WTI rising 1.0% to $40.85 a barrel. Both contracts are unchanged this morning in Asia, with critical resistance on Brent crude at USD 44.00 a barrel, and on WTI at USD 42.00 a barrel. Only a fall below USD 40.00 a barrel for Brent crude, or USD 37.00 a barrel for WTI, would suggest … [Read More...]
Gold punches past USD 1800, oil drifts
Oil drifts higher as range-trading continues A fall in US gasoline inventories by 4.85 million barrels overnight offset the unexpected rise in official crude inventories by 5.65 million barrels. That limited any negative sentiment and reassured investors that petroleum consumption remains robust in the US, despite the economic hit caused by the increase in Covid-19 cases across the sunbelt states. With sentiment balanced, oil followed equity markets modestly higher. Brent crude rising 0.70% to $43.10 a barrel, and WTI rising 1.0% to $40.85 a barrel. Both contracts are unchanged this morning in Asia, with critical resistance on Brent crude at USD 44.00 a barrel, and on WTI at USD 42.00 a barrel. Only a fall below USD 40.00 a barrel for Brent crude, or USD 37.00 a barrel for WTI, would suggest … [Read More...]
GBP/USD up on mini-Budget, Brexit talks next
With the US dollar continuing to underperform, the British pound has taken advantage and racked up gains of 1.2% this week. Currently, GBP/USD is trading at 1.2649, up 0.32% on the day. This week’s economic data has been mostly of the second-tier variety, so the markets had more time to focus on the UK summer statement, dubbed a “mini-Budget”. Ordinarily, these announcements would not receive widespread news coverage and took over the headlines, but given the severe economic conditions in the wake of Covid-19, the mini-budget was front-page news. Financial markets reacted favorably to the mini-Budget, as GBP/USD rose 0.50% on Wednesday, its strongest gain since July 1. The mini-Budget took aim at high youth unemployment, with new programs … [Read More...]
US Open – Jobless Claims continue to head in right direction, Biden’s Economic Plan, Oil anchored, Gold shines
Risk appetite is struggling as the coronavirus spread is still not under control in most parts of the world and as geopolitical tensions between China and the West intensify. Australia’s decision to suspend the extradition treaty with Hong Kong in response to their new security law shows the US could have international support in dealing with China. In the US, economic activity will require a successful reopening of schools in Autumn and that may hinge on a major reversal on mandating masks. The virus spread is not plateauing as many populous states (Texas and Florida) are still seeing significant increases in hospitalizations. S&P futures are slightly higher, while the Nasdaq continues to benefit from strong demand for mega-cap tech stocks. The dollar is softer across … [Read More...]
USD/CAD dips despite strong housing data
USD/CAD has posted gains in Thursday trade. In the North American session, the pair is trading at 1.3564, up 0.38% on the day. On the release front, Canada Housing Starts improved to 212 thousand, above expectations. In the US, jobless claims fell for a 13th straight week, to 1.31 million. On Friday, Canada will release key employment data and the US publishes PPI data, so it could be a busy end of the week for USD/CAD. Canada housing climbs above 200K There was good news from the construction sector in June. Housing starts jumped to 212 thousand, up nicely from 193 thousand. This easily beat the forecast of 185 thousand. This marked the first read above the 200-thousand threshold in four months. However, the Canadian dollar was unable to take advantage … [Read More...]
Corrections Are Not Covid-19 Carnage
Equities markets dip overnight Financial markets suffered a bout of nerves overnight, as equities notably, eased inversely to Covid-19 concerns. The continuing spike in cases across the US Sunbelt states, along with a leadership vacuum from Washington D.C., frazzled investor nerves. Putting the falls in context though; the price action merely reflects a minor correction after a five-day winning streak for equity markets globally. Indeed, the price action itself was actually quite limited in scale. US stock markets remain at or near record highs. By my estimates after a quick look at the S&P 500 charts this morning, it could fall 15%-20% from here and still be in a longer-term uptrend. Unfortunately, in this day of instant information dissemination, limited attention spans, a … [Read More...]
Asian equities steady after US correction
Asian equities are remarkably calm this morning US stock markets reported losses overnight, but Asian markets have not fallen suit in Wednesday trade. Stock markets across Asia are remarkably calm after the falls seen on Wall Street overnight, with most regional bourses at or near unchanged for the day. Sentiment has been boosted by a minuscule move higher by the US aftermarket futures contracts. More likely, though, the small gains shown by mainland China and Hong Kong are calming nerves. US exchanges finally had a small corrective move lower overnight, ending a five-day winning streak. The S&P 500 fell 1.10%, the Nasdaq fell 0.86%, and the Dow Jones fell 1.51%. Covid-19 nerves have eroded confidence and caused equity markets to blink, but for now, the move … [Read More...]
Major currencies move back into range trading mode
Chinese yuan gaining ground The fall in equities markets, driven by Covid-19 concerns, nipped the renewed rotation out of US dollars in the bud overnight. The US dollar index rose a modest 0.25% in overnight trading. The EUR/USD retreated back under 1.1300 to 1.1280. The AUD/USD shied away from a test of 0.7000, falling to 0.6940, with the USD/JPY edging higher to 107.65. Looking across the G-20 space, currency markets have renewed their slumber, with the majors anchored within their recent ranges, while FX traders await developments elsewhere. On exception is has been the Chinese yuan. The PBOC fixing was stronger again this morning; USD/CNY was set at 7.0207 today versus 7.0310 yesterday. Both the USD/CNY and USD/CNH are trading at 7.0180 today, well off yesterday’s 7.0000 low, but … [Read More...]
Risk aversion sends gold higher, oil downwards
Oil retreats slightly on risk aversion With one eye on the equity markets overnight, oil markets mirrored the response of currency markets, giving up some of their recent gains and slipping into range trading mode. Brent crude fell slightly by 0.70% to 42.90 a barrel. WTI eased by 0.70% to USD 40.50 a barrel. Both contracts are unchanged this morning in Asia, with critical resistance on Brent crude at USD 44.00 a barrel, and on WTI at USD 42.00 a barrel. Only a fall below USD 40.00 a barrel for Brent crude, or USD 37.00 a barrel for WTI, would suggest that the rally in oil prices has run its course. Oil prices continue to remain balanced between Covid-19 induced growth concerns, and recovery expectations in Asia and Europe. Oil’s downside is … [Read More...]
Mini-Budget delivered, but will it deliver?
Sunak Announces Mini-Budget The COVID-19 pandemic has devastated the British economy, with GDP declining in the second quarter by 2.2%. Manufacturing and services are struggling and millions of workers have lost their jobs or on furlough. Boris Johnson’s government has been under pressure to deliver economic relief to a battered and nervous public, and the government is hoping that the just-released mini-budget (in reality a summer statement) will deliver the goods. If the mini-budget, announced by Chancellor Rishi Sunak on Wednesday afternoon is well received, it could restore confidence in the government and also give a needed boost to the British pound. Job Programs for Unemployed Youth What are the main highlights of the mini-budget? Firstly, the mini-budget offers relief … [Read More...]
Blog post: $QQQ keeps rising, 64th day of $QQQ short term up-trend; but the banks are sinking! And gold is rising; look at these weekly charts of $BAC…
IndicatorsGMI: 6/6GMI-2: 7/8T2108: 46%The number of US banks that are in Weinstein Stage IV declines scares me. This reminds me of 2007 before the financial debacle. What do sinking banks imply for the health of the economy? How long can the rest of the market ignore this? Look at these weekly charts. Maybe this is why gold (GLD) is rising? [Read More...]
USD/CAD Dips After Strong Canada PMI
USD/CAD has posted moderate gains in Wednesday trade. In the North American session, the pair is trading at 1.3550, down 0.40% on the day. On the release front, there are no Canadian events and no major US indicators. On Thursday, Canada releases housing starts, while the US publishes weekly jobless claim figures. Ivey PMI sparkles, but loonie yawns PMI releases are considered reliable gauges of economic activity, and there was excellent news from the Ivey PMI in June. The index climbed to 58.2, up from 39.1 in May. In addition to the impressive jump, the reading was significant because it marked the first time that purchasing activity has expanded in four months. At the height of the coronavirus epidemic in April, the PMI fell to a record low of 22.8. … [Read More...]
Gold – Time to Shine?
OANDA Senior Market Analyst Craig Erlam discusses gold as it tests long term resistance at $1,800 after grinding higher for months. [Read More...]
The sun shines in Shanghai
Chinese equities rally Global equity markets recaptured their reality denial mojo overnight, with Wall Street enjoying a boisterous session and currency markets partially awakening from their slumber. The real star of the show though was China, with both the Shanghai Composite and CSI 300 finishing over 5.0% higher on larger than average volumes. The performances of Big Brother also dragged the Hang Seng higher by 3.80%. The chief reason for the outperformance by mainland China over the past two days lies squarely with their state media. Various state media outlets have suddenly started extolling the benefits of buying equities to share in China’s economic recovery. M&A speculation in the financial sector saw it outperform impressively, even the mainboard rises. Retail investors dominate China’s equity turnover … [Read More...]
Chinese equities outperforms yet again
Stock markets have struggled in Asia this morning despite Wall Street’s powerful session. The S&P 500 rose 1.58%, the Nasdaq rose 2.21%, and the Dow Jones rose 1.78%. Ever eager to ignore reality, US equity investors seized on the increase in Sunbelt Covid-19 cases falling below their 7-day moving average. It has been China leading the way, though, with the government via state-controlled media urging its citizens to go forth and buy. The rise of the Shanghai Composite and CSI 300 has been really quite breath-taking, both higher by over 5.0% yesterday. Weekly gains are equally impressive, with the Shanghai Composite 13.0% higher and the CSI 300 14.0% higher. That trend continues today, with the Shanghai Composite up 1.40% and the CSI 300 up 1.65%, offsetting the … [Read More...]
Chinese Yuan outperforms
The US dollar moved lower overnight, as the outsized rally in Chinese stocks saw both the onshore and offshore Chinese yuans register impressive gains versus the greenback. The onshore CNY rose 500 points, or 0.75%, with USD/CNY falling to 7.0140. In the process, both yuans broke through their 100 and 200-day moving averages, to close at their highs, a bullish technical development. Today, the USD/CNY was fixed at a near 4-month high at 7.0310, versus 7.0663 yesterday. Both yuans flirted with 7.0000 against the dollar before retreating, and this looms as the next major technical support for both USD/CNY and USD/CNH. The yuan is clearly benefiting from inflows associated with its equity performance, and further gains in that space should see both continue to strengthen. Elsewhere, the rotation out … [Read More...]
Gold ticks higher, oil yawns
Opposing forces continue to balance oil prices Oil had another quiet overnight session by its lofty standards. Brent crude and WTI both gained ground, but were unable to consolidate these gains. Brent crude rose by 0.50% to USD 43.10 a barrel but has given up those gains in Asia, falling by the same to USD 42.70 a barrel. WTI also rose by 0.50% overnight to USD 40.80 a barrel. It too has given up those gains, moving lower to USD 40.40 this morning. Oil prices now appear to be balanced by opposing forces, leaving both contracts in range-trading mode. On the one hand, the economic recovery in Asian and Europe shows continued signs of accelerating. On the other, the rapidly increasing pace of Covid-19 across the US sunbelt and other … [Read More...]
Blog post: One half of growth stocks outside of upper 15.2 daily Bollinger Band, suggesting a pause
IndicatorsGMI: 6/6GMI-2: 7/8T2108: 46%One of the indicators I teach my university students to track on all their daily charts is Bollinger Bands (BB, avg=15, 2 sd). By definition, 95% of the time a stock’s prices should fall within the upper and lower bands. (This is introductory statistics and you do not have to really understand it to use it.) Thus when a stock closes above the upper band or below the lower, prices often revert to the average (in this case its 15 day moving average). I like to time my trades based on this indicator. I do not want to buy anything outside its upper band unless it is during a break-out. Rather, I look for bounces off of the lower band to buy. Consider … [Read More...]
US Open – Caught in Two Minds
That Didn’t Last Long Stock markets are back in the red on Tuesday as the summer consolidation continues to play out, the only outlier really being the US NASDAQ which continues to defy gravity, up more than 50% from its March lows. Broadly speaking though, the environment hasn’t reallly changed and this is not a week of major economic releases or central bank announcements. We are heading into second quarter earnings season though which will naturally be a disaster, albeit one that will more than likely get a free pass, as investors focus more on the reopening prospects. Even this isn’t straightforward though, with reopening comes risk as many states in the US are now seeing. Second wave anxiety is putting a downer on … [Read More...]
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