Daily Video Review - 24/03
- Donald Herison
- English
- MARKETS NEWS
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During today’s early trading session, Asian stocks traded lower following weak data from China, however, losses were limited as Japanese shareholders are expected to receive higher returns. China’s HSBC Manufacturing PMI report indicated that the manufacturing economy is declining with a reading of 49.2, below the expected figure of 50.6.
During the European session, the Euro traded higher against a basket of major currencies following positive European data. The German Manufacturing PMI showed a higher than expected reading of 55.3 and the Manufacturing PMI from the Eurozone released a higher reading of 51.9. The British Pound dropped against the Dollar after weak UK data showed that the yearly CPI remained unchanged.
During early U.S. trade, the Dollar rebounded from early morning losses after the U.S. released a number of positive reports. The monthly and yearly core CPI came beat analysts’ expectations growing 0.2% and 1.7%, furthermore, the New Home sales and Manufacturing PMI showed significantly better than expected figures. This positive data adds the possibility the Fed will raise interest rates sooner, rate hikes may lower the price of Gold and keep the Dollar supported.
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Here are 4 tips for today's trading. This will help you decide where you should invest and what to look for:
1. China slowing, Europe recovering
New data shows China's factory activity slumped this month, dropping to its lowest pace in almost a year. The HSBC report is "the latest in a string of disappointing data out of China," according to economist Julian Evans-Pritchard of Capital Economics. It has sparked talk of more stimulus by the Chinese government and central bank.
Similar data from the eurozone shows business activity in the region is growing by the most in nearly four years. Traders reacted by bidding up the euro.
2. Stock market overview
U.S. stock futures are edging higher Tuesday and most major European markets are pushing up in early trading.
Asian markets ended with mixed results. In China, the Shanghai Composite index inched up by 0.1% after taking a knock earlier in the day. In Hong Kong, the Hang Seng dipped by 0.4%.
3. Potential market movers -- Big banks, Facebook
The banking sector has some strength behind it this morning. Shares in Goldman Sachs (GS) and Bank of America (BAC) are pushing forward in premarket trading. Both are up by more than 1%.
Shares in Facebook (FB, Tech30) could be on the move Tuesday after the New York Times reported that the social media giant plans to host news websites' content directly on its pages, allowing users to read stories on Facebook instead of clicking through to external sites.
4. It’s all about inflation
The U.S. Bureau of Labor Statistics will release inflation data for February at 8:30 a.m. ET.
In the U.K., inflation data released Tuesday showed consumer prices were unchanged in February compared to the same time last year.
"U.K. inflation has fallen to zero for the first time on record," said Chris Williamson, chief economist at Markit. "Rather than being a concern, the drop in inflation is a boon to the economy, providing households with greater spending power at a time when pay growth remains frustratingly weak."
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What is it? It's an assessment of conditions in the financial system and potential risks to financial stability - the evidence on strains and imbalances can provide insight into the future of monetary policy.
When? March 24th at 8:30pm Eastern Time.
Trading Tip: If the announcement will hint towards higher interest rates, you can expect the AUD to rise.
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What is it? It checks the difference in value between imported and exported goods during the reported month.
Export demand and currency demand are directly linked because foreigners must buy the domestic currency to pay for the nation's exports. Export demand also impacts production and prices at domestic manufacturers.
When? March 24th at 5:45pm Eastern Time.
Trading Tip: If the actual number is higher than the forecast, you can expect the NZD to rise.
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What is it? It checks the annualized number of new single-family homes that were sold during the previous month.
It's a leading indicator of economic health because the sale of a new home triggers a wide-reaching ripple effect. For example, furniture and appliances are purchased for the home, a mortgage is sold by the financing bank, and brokers are paid to execute the transaction.
When? March 24th at 10:00am Eastern Time.
Trading Tip: If the actual number is higher than the forecast, you can expect the USD to rise.
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What is it? It checks the change in the price of goods and services purchased by consumers, excluding food and energy.
Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.
When? March 24th at 8:30am Eastern Time.
Trading Tip: If the actual number is higher than the forecast, you can expect the USD to rise.
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What is it? It checks the change in the price of goods and services purchased by consumers.
Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.
When? March 24th at 8:30am Eastern Time.
Trading Tip: If the actual number is higher than the forecast, you can expect the USD to rise.
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European markets declined today as Greece came back in the spotlight. Declines came ahead of meeting between Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel in Berlin to discuss Greece’s debt problems. In addition, Draghi was also in focus as he spoke in Brussels. Draghi commented on Greece and stated that the country should benefit from the quantitative easing program and should get normal access to bank funds. The Euro, however, did not react strongly and is trading around $1.0934.
U.S stocks declined on Friday following two dovish speeches from FOMC members Lockhart and Evans. Today, stocks are edging higher as traders react to weaker than expected Home Sales data which came out at 4.88 million and showed a monthly increase of just 1.2%. The data is bullish for stocks as it adds to the argument for a later interest rate hike. A June Interest rate hike remained in focus, however, as St. Louis Federal Reserve President, James Bullard, told CNBC Monday that the dovish statement from last week may have misplaced investor expectations about the first hike. Fed Vice, Stanley Fisher, will be speaking at 4.20PM (GMT). San Francisco Fed President, John Williams, will also speak in Sydney, Australia.
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Here are 4 tips for today's trading. This will help you decide where you should invest and what to look for:
1. Blue Monday
Markets are having a case of the Monday Blues. U.S. stock futures are pointing down and most European markets are firmly in negative territory. But it's not all doom and gloom. Many stock markets are only taking a step back after trading near record highs.
Wall Street was an exciting place last week, with the Nasdaq nearing an all-time high.
2. Tire takeover
Shares in Pirelli (PPAMF) are rising by about 2% in Europe after China National Chemical Corporation announced plans to pay nearly $8 billion to acquire the Italian tire maker.
Talk of a takeover had been swirling for a few days.
3. Germany vs. Greece
Greece's new Prime Minister Alexi Tsipras is meeting Germany's Chancellor Angela Merkel Monday to discuss Greece's financial crisis. The results of the talks could influence market movements across Europe.
Tsipras has warned Merkel that it will be "impossible" for Greece to pay its debts in the coming weeks without further financial assistance from Germany and its international partners. Europe wants Greece to deliver on promised reforms before releasing any more funds.
The meeting comes after a video emerged this month showing Greece's outspoken finance minister Yanis Varoufakis making a lewd gesture directed towards Germany. The video was taken in 2013, before Varoufakis was installed in his new job.
4. Economics
The National Realtors Association will report on existing home sales made in February at 10 a.m. ET.
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What is it? It checks the level of a diffusion index based on surveyed purchasing managers in the manufacturing industry.
t's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy.
When? March 23rd at 9:45pm Eastern Time.
Trading Tip: If the actual number is higher than the forecast, you can expect the CNY to rise.
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What is it? Williams is due to speak about the economic outlook and monetary policy at the Australian Business Economists Luncheon in Sydney, via satellite.
Federal Reserve FOMC members vote on where to set the nation's key interest rates and their public engagements are often used to drop subtle clues regarding future monetary policy.
When? March 23rd at 9:15pm Eastern Time.
Trading Tip: If the announcement will hint towards higher interest rates, you can expect the USD to rise.
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What is it? It checks the annualized number of residential buildings that were sold during the previous month, excluding new construction.
It's a leading indicator of economic health because the sale of a home triggers a wide-reaching ripple effect. For example, renovations are done by the new owners, a mortgage is sold by the financing bank, and brokers are paid to execute the transaction.
When? March 23rd at 10:00am Eastern Time.
Trading Tip: If the actual number is higher than the forecast, you can expect the USD to rise.
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What is it? ECB President Draghi is due to testify on monetary policy before the European Parliament's As head of the ECB, which controls short term interest rates, he has more influence over the euro's value than any other person. Traders scrutinize his public engagements as they are often used to drop subtle clues regarding future monetary policy.
When? March 23rd at 10:00am Eastern Time.
Trading Tip: If the announcement will hint towards higher interest rates, you can expect the EUR to rise.
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EUR/USD fell to 1.0655 earlier following the release of the German Producer Price Index (MoM). The index, which measures the change in the price of goods sold by manufacturers, came lower (0.1%) than expectations. Traders should focus on the European Currency Account data and the EU Economic Summit. European officials are to discuss the Greek debt crisis and whether new bailout would be introduced. In the long term, the currency pair could weaken due to the stimulus program introduced by the European Central Bank. The program, which includes massive asset purchases, has a bearish impact on the euro and may weaken the currency pair.
AUD/USD rose to 0.7693 earlier following Reserve Bank of Australia Governor Steven’s speech. Stevens said that the economic recovery in the U.S. has a positive impact on Australia and added that the Australia’s current interest rates do not restrict economic growth. The AUD/USD reached its lowest level since 2009 earlier this month. The currency pair may weaken in the long term due to the looming interest rate hike in the U.S. The Federal Reserve opened the door for interest rate hikes by removing the word “patience” from its policy statement. This could strengthen the U.S. dollar and have a bearish impact on the currency pair. Traders should focus on FOMC Member Dennis Lockhart’s speech later today. Lockhart may indicate when U.S. interest rates would increase.
Oil is traded at 45.30 after having reached its lowest level (42.01) since March 2009 on Thursday. The prospect of an agreement between the West and Iran means that prices could decline in the long run. Such agreement would allow Iran to export approximately a million barrels per day. Also, the price of the commodity could decline due to the massive supplies by OPEC members. U.S. oil production rose significantly while Saudi Arabia oversupplies the market.
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Here are 4 tips for today's trading. This will help you decide where you should invest and what to look for:
1. Bright day?
U.S. stock futures are pushing higher, indicating markets could recover after a relatively down day on Thursday.
Over the last trading session, the Dow Jones industrial average dropped by 117 points and the S&P 500 fell 0.5%. But the Nasdaq edged up by 0.2%.
2. International markets
Across the pond, European markets are moving up in early trading. Asian markets ended with mixed results.
3. Earnings
A handful of companies are reporting earnings ahead of the open, including Tiffany & Co (TIF), Darden Restaurants (DRI) and KB Home (KBH).
Shares in Nike (NKE) are rising after investors welcomed their latest quarterly earnings.
4. Cementing a deal
After a lot of back and forth, Holcim (HCMLY) and Lafarge (LFRGY) have agreed new terms for a mega merger. Nearly a year ago, the two European cement giants announced plans to create the world's biggest construction materials group.
On Monday, the original deal crumbled. Now the companies say the merger is back on, and shares in both firms are rising. Lafarge stock is up by 3.5%. Holcim shares are up by about 1%
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