May 2010

Asian Markets Rise for the First Time in a Week

Asia Session Key Developments

•    Crude Oil Rises for the First Time in Five Days
•    Australian Business Confidence Falls for a Second Straight Month
•    New Zealand House Prices Weaken for a Second Successive Month

Asian Markets Rise for the First Time in a Week

Asia/Pacific shares pushed higher for the first time in a week amid speculation that EU craft of 750 billion euro’s ($962 billion) will prevent contagion from the Euro-zone debt crisis. The breakdown of the plan consists of 250 billion euros from the IMF, 61 billion euros from the EU’s budget, and 440 billion euros from the euro-area governments. Meanwhile, the economic docket in Australia showed that business confidence in April pushed lower for a second straight month as job vacancies fell for the first time since January. In New Zealand, house prices fell for a second consecutive month amid possible changes to property taxes paired with tight credit.  Nevertheless, the Bank of Japan agreed to re-establish a currency swap with the U.S. Federal Reserve in order to stabilize the financial markets after pumping 2 trillion yen ($21.5 billion) into national financial markets Friday.

Nikkei 225                  10,530.70
Japanese equity markets pushed higher on to begin the week, leading the Nikkei 225 to climb 166.11 points (1.60%) and close at 10,530.70 as all ten components rallied on the day. Shares of Softbank jumped 4.49% after the company said that it will sell Apple Inc’s iPad tablet computer in the country from May 28th, while JX HD leap 10.25% subsequent to announcing that they plan to speed up refinery closures and invest in upstream projects to boost profit. Moreover, Nippon Meat Packers increased 2.77% following the company announcing that net income increased more than expected to 15.7 billion yen from 1.66 billion yen a year earlier, whilst Ebara dropped 5.64% as the pumpmaker said that it expects a 5.5% rise in operating profit to 20 billion yen this fiscal year.

Hang Seng                        20,426.64
The Hong Kong equity market pared Friday’s decline, leading the benchmark equity index to rally 506.35 points (2.54%) and close at 20,426.64. Eight out of the nine components pushed higher on the day, with basic materials leading the way, climbing 4.37%, while utilities lost 0.42% to taper the advance. Shares of China Mobile, the country’s largest telecom operator added 2.35% as the company along with Huawei Technologies launched a TD-LTE/SAE trial network for the 2010 Shanghai World Expo Park, while China Petroleum & Chemical jumped 3.07% on the back of higher energy prices. In addition, CLP Holdings retreated 0.73% despite posting a 21% increase in the first-quarter revenue as demand rose in China. Nevertheless, Henderson Land Development added 0.63% as the chairman of the company, Lee-Shau-kee increased his holding to 54.12%.

S&P/ASX 200 Index    4,599.80
Shares in Australia halted Friday’s decline, leading the S&P/ASX 200 to advance 119.10 points (2.66%) and close at 4,599.80 as all ten components pushed higher on the day. Shares of Alumina soared 6.01%, the world’s largest producer of the material after the company stated that demand for the metal may increase 10% in 2010 on the back of stronger consumption in China and India, whereas UGL increased 2.27% after announcing that they are on track to meet their full-year earnings guidance. At the same time, BHP Billiton rose 4.00% as crude oil rose for the first time in five days, while MAP Group tipped 0.33% lower subsequent to the company stating that it believes that an unacceptable foreign ownership situation has occurred and it has started procedures to identify which foreign investors have recently purchased securities to take MAP’s level of foreign ownership above 39.5%.

Written by Michael Wright, Currency Analyst
Questions? Email me at mwright@fxcm.com

Asia/Pacific Markets Continue Southern Voyage

Asia Session Key Developments

•    Australian AiG PMI Construction Expands for a Second Month
•    Japan’s Monetary Base at Highest Reading Since January 2010

Asia/Pacific Markets Continue Southern Voyage

Asia/Pacific shares pushed lower on Friday following a mass sell-off of global equities yesterday as investors concerns grew over fears that Greece’s debt woes may spill over to other euro zone countries. Meanwhile the economic docket showed that Australian AiG PMI construction expanded for the second straight month, while Japan’s monetary base rose to the highest reading since January 2010. Moreover, foreign currency reserves in Hong Kong rose to $259.2B in April from $258.8B in March.

Nikkei 225                  10,364.59
Japanese equity markets ended the week on a down beat, leading the Nikkei 225 to plunge 331.10 points (3.10%) and close at 10,364.59 as all ten components tumbled lower for the second straight day. Shares Fast Retailing plunged 5.98% as the company stated that same-store sales in April retreated 12.4%, while Japan Steel lost 3.17% on the back of lower commodity prices. In addition, Mitsui Mining $ Smelting rallied 2.79% as the producer of refined zinc forecasts a 33% increase in profit this fiscal year after net income totaled 13.9 billion. Furthermore, Panasonic lost 2.46% despite the company stating that it aims for annual revenue to climb to 10 trillion yen in approximately three years.

Hang Seng                        19,920.29
The Hong Kong equity market extended its four day decline, leading the benchmark equity index to shed 213.12 (1.06%) and close at 19,920.29. Eight out of the nine components pushed lower on the day, with consumer goods leading the way, down some 4.28%, and was followed by a 2.23% decline in consumer services. Shares of China Overseas Land & Investment pushed 2.73% higher in spite of sales in April falling 9.2% to HK$4.9 billion, whereas Ping An Insurance Group lost 1.85% as the bank completed the purchase of shares in Shenzhen Development Bank. Moreover, Sun Hung Kai Properties edged 0.19% higher as the company announced Mikki, a brand new mall opening in the first quarter of 2011, while Aluminum Corporation of China decreased 0.71% on the back of lower metal prices.

S&P/ASX 200 Index    4,480.70
Shares in Australia retreated for a sixth consecutive day, leading the S&P/ASX 200 to shed 92.50 points (2.02%) and close at 4,480.70 as all ten components pushed lower on the day. Shares of WoolWorths slid 0.81% as U.K. stocks fell to a three month low on the back of Greek woes, while BHP Billiton edged 0.27% lower on the back of lower commodity prices.  At the same time, Karoon Gas Australia jumped 14.14% after saying that it plans a production test at the Kronos-1 well.

Notable Asian Session Event Risk / Economic Releases

Written by Michael Wright
Questions? Email me at mwright@fxcm.com

Dow Could See Losses Slowed By Trend Line Support

The Dow continues to stumble after failing to break above resistance at 11,240-61.8% Fibo of 14,167-6,470; the technical level is near pre-Lehman levels which may require further evidence of a sustainable recovery before an ultimate break above.  A break below a short-term trend line has left longer-term support as the next barrier. A break below the level opens the door or a test of 10,000.

The S&P 500 has also seen its losses accelerate following failure ahead of major resistance at 1,228-61.8% of 1,576-666. The broader index is looking to test a longer-term trend line which could provide support. However, a break below could expose support at 1,050.

The NASDAQ’s has seen losses begin to accelerate after failing to threaten major resistance at 2,549- the June 5, 2008 high. The tech laden index has erased the majority of it’s loses from the credit crisis which could make it more susceptible to a large reversal. We are seeing brief support at 2,400 where we see former consolidation. The 38.2% Fibo of 2,100-2,536 at 2,318 is the next barrier with the longer-term trend line possessing the greatest potential to stop recent losses.

Asia/Pacific Markets Weaken for a Fourth Consecutive Day on the back of Greek Woes

Asia Session Key Developments

•    New Zealand Employment Falls the Most Since at Least 1986
•    Australian Retail Sales Rise for the Third Time in the Past Five Months
•    Japan’s Vehicle Sales Extends Eight Month Advance

Asia/Pacific Markets Weaken for a Fourth Consecutive Day on the back of Greek Woes

Asian stock markets continued their southern descent amid concern that Europe’s government debt crisis is worsening and spreading to its euro-area members. Meanwhile, the economic docket in New Zealand showed that the employment change fell the most since at least 1986, while Australian retail sales rose for the third time in the past five months. In Japan, vehicle sales extended its eight month advance.

Nikkei 225                  10,695.69
Japanese equity markets pushed lower on Thursday after being closed yesterday in observance of Children’s Day, leading the Nikkei 225 to shed 361.71points (3.27%) and close at 10,695.69 as all ten components pushed lower on the day. Shares of Fast Retailing slid 3.48% after it said April sales fell 12.4% from a year earlier, while Sharp retreated 4.32% as the company was downgraded from “buy” to “hold.” At the same time, Daiwa House Industry plunged 3.65% as Nikkei English News reported that the homebuilder may report profit of 19 billion, missing analysts forecast of 24 billion, while  Daiwa Securities Group dropped 5.92% after posting an unexpected fourth quarter loss of 2.798 billion yen.

Hang Seng                        20,133.41
The Hong Kong equity market extended its three day decline, leading the benchmark equity index to retreat 194.13 points (0.96%) and close at 20,133.41.  All nine components pushed lower on the day with consumer goods leading the way, tumbling 4.10%, and was followed by a 3.17% drop in technology.  Shares of CNOOC lost 2.42% on the back of lower commodity prices, while Swire Pacific sank 5.32% after it announced that it will not proceed with a plan to spin off its property unit in an initial share sale in Hong Kong. Moreover, China Cosco Pacific dropped 1.23% as the nation’s largest shipping line publicized that it expects “limited benefit” from an industry wide business-tax exemption.

S&P/ASX 200 Index    4,573.20
Shares in Australia retread for a fifth successive day, leading the S&P/ASX 2200 to tumble 100.80 points (2.16%) and close at 4,573.20.  Nine out of the ten components pushed lower overnight as financials lead the way, falling some 3.31%, while health care rallied 0.91% to taper the decline. Shares of Centennial Coal, Thailand’s largest coal producer jumped 18.05% as the company bought a 14.9% stake in centennial, while National Australia Bank lost 3.44% after the bank said fiscal first-half profit tumbled 21%. In addition, Woodside Petroleum decreased 1.50% on the back of lower energy prices, while Brambles dropped 1.66% after the company said that sales in the nine months through March were 1% lower than in the previous period.

Notable Asian Session Event Risk / Economic Releases

Asia/Pacific Markets Weaken for a Third Day Amid Greek Tremors

Asia Session Key Developments

•    Crude Oil Falls To the Lowest Level Since March 29th
•    Australia’s Building Approvals Rise the Most Since 2002

Asia/Pacific Markets Weaken for a Third Day Amid Greek Tremors

Asian stocks continued its southern journey on Wednesday amid concerns that Greece’s debt woes will spread to its euro-area members and derail the global recovery. After global equities recorded its largest decline in three months yesterday, European Central Bank council member Axel Weber said that “there is a threat of grave contagion effects for other member states in the monetary union and increasing negative feedback loop effects on capital markets.” Furthermore, Weber said that Greek insolvency would have Lehman-like effects, and “dramatic consequences.” Nevertheless, the economic docket in Australia showed that building approvals rose the most since 2002, while Hong Kong’s PMI rose to 55.3 in April from 54.9 the previous month.

Nikkei 225                  11,057.40
Closed in Observance of Children’s Day

Hang Seng                        20,327.54
The Hong Kong equity market extended its two day decline, leading the benchmark equity index to plunge 435.51 points (2.10%) and close at 20,327.54. Eight out of the nine components pushed lower on the day, with basic materials leading the way, falling 3.79%, while utilizes added 0.16% to taper the retracement. Shares of China Shenhua Energy, the country’s largest coal producer lost 3.93% as the company said it is considering setting up a coal-fired power plant in New South Wales, Australia, while PetroChina slumped 3.00% as crude oil prices fell the most since March 29th. At the same time, New World Development retreated 3.65% as the joint venture between the company and Wheelock Properties hired three banks to help it borrow as much as HK$9 billion for five years, while Aluminum Corporation of China dived 3.24% on the back of lower metal prices.

S&P/ASX 200 Index    4,674.00
Shares in Australia retreated for a fourth successive day, leading the S&P/ASX 200 to fall 63.10 points (1.33%) and close at 4,674.00. Nine out of the ten components pushed lower on the day, with financials leading the way, declining some 2.59%, and was followed by a 2.10% decrease in industrials. Shares of BHP Billiton edged 0.39% higher as Fitched ratings agency stated that the company nor Rio Tinto Group will have their credit ratings affected by Australia’s proposal to raise taxes on mineral producers, while Alumina added 2.96% as copper gained in London after dropping below $7,000 a metric ton yesterday. Moreover, Qantas Airways sank 2.21% as volcanic activity in Iceland extended across the northern U.K. and Ireland today, whereas Atlas Iron rallied 1.79% following the iron-ore producer stating that it will ship between 180K and 240K tons in the four months from June.

U.S. Stocks Plunge Most Since February on Greece Concerns

U.S. Session Key Developments

•    Investors Flee Risky Assets on Europe Debt Concerns
•    Commodities Sell Off Across the Board
•    U.S. Dollar Index Rises to Highest Level in Twelve Months

U.S. stocks fell today on concerns that fiscal problems in Greece may spread into other European countries.  The fears resulted in the Dow Jones Industrial Average and S&P 500 indexes dropping over 2 percent each, to their lowest closing levels since March.  Investors scaled back their appetite for risk, especially in Europe, driving down equity prices in the region and pushing the yields on risky government bonds higher.  Yields on 10-year Greek bonds surged 89 basis points to 9.37 percent, while yields on 10-year Irish and Portuguese bonds also rose significantly on the day.  The euro fell for a second day against the U.S. dollar, driving the exchange rate below $1.30 for the first time since April 2009.

Commodities were also a victim of the risk sell-off, as crude oil fell 4 percent to $82.74 a barrel.  COMEX gold futures tumbled over 1 percent to $1169 an ounce, while silver futures tumbled over 5 percent to close under $18.  Investors found a home in the greenback, however, driving the U.S. Dollar Index above the 83 level for the first time since May 2009.

DJIA 30                     10,926.77                      -225.06                       -2.02%
The Dow Jones Industrial Average had its worst day since February, as shares of Caterpillar and Alcoa fell over 4 percent on concerns that fiscal issues in Greece could trigger a global economic slowdown.  Overall, 27 of the 30 Dow stocks closed lower on the day, with Pfizer, Merck, and Walmart the exceptions.

S&P 500                       1,173.60                           -28.66                       -2.38%
The broad-based S&P 500 plunged lower as industrials and basic materials shares fell over 3 percent each.  Fears of weakness in global demand for commodities triggered the sell-off in materials as Titanium Metals and Cliff Resources fell over 6 percent each.  As for industrials, Flowserve, the oil services firm which had gained over 30 percent since February, dropped 5 percent to its lowest close since early April.

NASDAQ                     2,424.25                         -74.49                       -2.98%
Shares on the tech-heavy Nasdaq posted the largest decline among U.S. indices as technology shares fell over 3 percent.  Dell, Broadcom, and Google plunged over 4 percent each, while shares of Cisco, Oracle, and Research In Motion dropped at least 3 percent on the day.

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com

Asia/Pacific Shares Weaken as EU Bets $146 Billion Greek Bailout to Avert Contagion

Asia Session Key Developments

• Gold Trades Near Five-Month High
• Australia’s TD Securities Inflation Extends Five Month Advance
• New Zealand’s ANZ Commodity Prices Rises to Record

Asia/Pacific Shares Weaken as EU Bets $146 Billion Greek Bailout to Avert Contagion

Asia/pacific shares began the week to the downside as Greece accepted the bailout from the IMF and the EU worth $146 billion in order to avert default and prevent the countries debt crisis from spreading through the rest of the bloc. Meanwhile the economic docket in Australia showed that the TD securities inflation rate rose an annualized 2.9%, extending five months of advance, while the region’s house price index increased the most since at least 2003. In New Zealand , the ANZ commodity price index rose the most on record, with figures climbing 4.9%.

Nikkei 225                          11,057.40
Closed in Observance of Continuation Day.

Hang Seng                        20,811.36
The Hong Kong equity market pared Friday’s advance, leading the benchmark equity index to slump 297.23 points (1.41%) and close at 20,811.36. Eight out of the nine components pushed lower on the day, with consumer services leading the way, tumbling 2.62%, and was followed by a 1.85% decrease in basic materials. Shares of Cosco Pacific tumbled 3.00% after the company said its unit Crestway International will purchase a 13.7% stake in Sigma Enterprises, while PetroChina lost 1.32% on the back of fears that Greece’s fiscal woes will spread onto the global economy. Moreover, China Construction Bank dropped 1.56% as the bank said it wanted to raise up to $11 billion.

S&P/ASX 200 Index           4,785.50
Shares in Australia pared Friday’s advance, leading the S&P/ASX 200 to shed 21.90 points (0.46%) and close at 4,785.50. Four out of the ten components pushed lower on the day, with basic materials leading the way, falling 2.75%, while financials rose 0.76% to taper the decline. Shares of BHP Billiton, the world’s largest mining company retreated 2.99% as the company’s and Xstrata expansion and acquisitions plans may stall on Australia’s plan to increase taxes on mining companies whose profits have jumped A$80 billion in the past decade, while Woodside Petroleum rose 0.37% on the back of higher commodity prices. At the same time, Infigen Energy sank 3.06% as clean energy shares took a cold shower as investors worried about the Greek debt crisis, while Aquarius Platinum tipped 0.56% higher after the company said that the fiscal third quarter profit more than tripled on higher output and prices.

Notable Asian Session Event Risk / Economic Releases

Written by Michael Wright
Questions? Comments? Concerns? Email me at mwright@fxcm.com

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