Varchev Finance: Trading day in one post: 07.02.2018

Asian stock market: Most Asian markets advanced on Wednesday, retracing losses made in the last session, after major U.S. indexes finished their Tuesday session higher. Japan's Nikkei 225 jumped 1.35 percent following last session's tumble. Automakers, technology names and financials were broadly higher following broad-based declines seen in the last session: Toyota rose 3.38 percent, Sony gained 2.36 percent and SoftBank Group soared 3.47 percent. South Korea's Kospi reversed early gains to slide 0.63 percent. Heavyweight tech names, which were firmly in positive territory in the morning, traded mixed: Samsung Electronics slid 1.56 percent while rival chipmaker SK Hynix jumped 3.13 percent. The manufacturing sector traded in negative territory, with steelmaker Posco down 1.47 percent. Over in Sydney, the S&P/ASX 200 bounced 0.89 percent as energy and materials stocks led gains. Among major miners, Rio Tinto and BHP tacked on 3.92 percent and 1.88 percent, respectively. Energy-related stocks edged up: Santos advanced 1.11 percent and Beach Energy climbed 4.22 percent. Hong Kong's Hang Seng Index rose 1.26 percent, tracking the move higher stateside. Gains were seen across sectors on Wednesday, with tech giant Tencent jumping 3.41 percent. Heavily weighted financial names also recorded gains: HSBC rose 1.37 percent, China Construction Bank gained 1.32 percent and Bank of China soared 1.37 percent.

FX Market: Against the sell-Off on stock market, currency markets remained relatively calm. Even the JPY, which is characterized as a Safe Haven tool, does not register significant growth. Overall, currency pair volatility remains below 10% in the last 24 hours. The weak reaction of JPY and gold talks about one, the stock adjustment will hardly grow into a crisis. It has now become clear that Sell Off-a was caused by winnings and multiplied by short positions on the part of the robots. With this in mind, our expectations for the stock market remain positive, as in the bottom formation and Price Action signal at appropriate levels, we will use the adjustment to add to long-term long positions.

Commodities market: Gold’s reputation as a haven asset may be taking a hit as concern about the outlook for higher interest rates erodes gains in the metal. Bullion suffered its worst three-day loss in two months, even as global stocks plunged this week from the U.S. to Asia. “These are unusual times,” said George Gero, a New York-based managing director at RBC Wealth Management. “Gold is off the radar. The actual worry is that the Fed may be scheduling additional rate hikes, and that weighs heavily on the decision to postpone a gold purchase until some clarity is issued by the new Fed chair.” Meanwhile, U.S. West Texas Intermediate futures advanced 0.8 percent to trade at $63.90 per barrel after settling lower by more than 1 percent in the last session. Brent crude futures added 0.73 percent to trade at $67.35.

European stock market: Today European markets are expected to open with declines. The German DAX will start with about 110 points down around 12,534; The French CAC will register a 47 point loss at 5,230; while the FTSE 100 is 86 points in negative territory. Investors will remain cautious in their trade today, as it is not yet known whether the market correction is over. Analyzes indicate that investors are withdrawing their money from ETFs following European stocks and indices - so traders will be watching for a sure signal that the sale off is over before they get back into the market.

U.S. stock market: After two huge sell-offs in a row, U.S. stocks were all over the map on Tuesday. Investors blamed the wild moves on a combination of interest-rate fears, computer-driven trading and the obscure volatility funds that use leverage. The Dow Jones industrial average opened with a big whoosh lower, then rallied all the way back. The Dow closed 569 points higher and rose as much as 600.48 points. At its session low it was down by 567 points. It traded in a range of 1,167.49 points. The S&P 500 is 1.8 percent higher with tech as the best-performing sector. The Nasdaq composite gained 2.1 percent. "I thought we were going to see the bottom within five minutes of when we opened. I think that's basically what we're seeing," said Ed Keon, portfolio manager at QMA, the quantitative and dynamic asset allocation business of PGIM. "At these levels, stocks represent pretty good value and we're adding to equity exposure." Keon said it's too early to call a bottom but he expects that the worse is over. The Cboe Volatility index — widely considered the best fear gauge on Wall Street — broke above 50 in early trading Tuesday before sliding down to 30.12. It closed at 37.32 on Monday. The surge in volatility also triggered massive selling in other volatility instruments. Snap Inc. surged in extended trading Tuesday after reporting fourth-quarter revenue that jumped 72 percent, topping estimates for the first time since the company went public almost a year ago. The owner of the Snapchat photo-messaging app was buoyed by momentum in its advertising business and user growth.

Economic calendar for the European and U.S. trading sessions:
09:00 Germany - Industrial Production
10:30 UK - Halifax House Price Index
11:00 Europe - ECB's Lautenschlager Speaks
15:30 USA - Fed's William Dudley Speaks
15:30 Canada - Building Permits
17:15 USA - Fed's Evans Speaks
22:00 USA - Consumer Credit Change

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