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- Varchev Finance: Trading day in one post 21.05.2018
Varchev Finance: Trading day in one post 21.05.2018
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Loading...Asian stock market: Asian markets edged higher on Monday, with weekend developments in U.S.-China talks, regarded as positive by analysts on the whole, in the spotlight. Japan's Nikkei 225 edged up by 0.37 percent on the first trading day of the week. The Topix dipped in and out of negative territory and was last flat, with declines seen in insurers and steelmakers while machinery sector stocks climbed. Over in South Korea, the Kospi reversed early losses to advance 0.37 percent. Greater China markets got a lift following positive trade developments at the weekend. Hong Kong's Hang Seng Index advanced 1.26 percent amid broad-based gains, with utilities and technology leading the climb higher. On the mainland, the Shanghai composite edged up by 0.77 percent and the Shenzhen composite added 1.12 percent. Logistics firms were given a boost as U.S.-China trade concerns abated, with Cosco Shipping Holdings jumping 8.91 percent. Stocks Down Under bucked the trend, with the S&P/ASX 200 slipping 0.05 percent as materials and financials weighed.
FX market: Though the pound has managed to show a lot of strength over the last couple of weeks in the middle of some serious dollar strength and it did manage to hold on to the 1.35 region during this period, the upcoming week is going to be a serious challenge for the bulls with a host of news and data from the UK and the US scheduled to be released in the upcoming week. Looking ahead to the coming week, there is a host of data from the UK with the GDP, retail sales, CPI all lining up to be released on different days along with the inflation report hearings and the speech from the BOE Governor Carney as well. This, along with the FOMC minutes and the speech from the Fed Chief Powell would ensure that there is going to be a lot of volatility in the upcoming week in the GBPUSD pair and unless the incoming data from the UK perks up, it is likely to be a very difficult time for the pound bulls. Last week, we were looking for the euro to find a bit more of a bounce, but said risk was still in favor of lower prices. Follow-through lasted a whole half-a-day Monday before carving out a bearish key reversal bar shy of the 200-day MA and trading off for the remainder of the week. Looking ahead to next week, there is a good amount of support in the vicinity of 11725/670 which could put a larger rebound in place, or at least pause downward momentum for more than a couple of days. Since breaking down last month, wow price reacts to the first big test of sizable support will be critical to the outlook moving forward.
Commodities market: Brent at $80 is a round number that can spur mid-2000s parallels and the late-cycle signal delivered by surging crude. Assuming history rhymes, rather than repeats, equity investors will keep buying stocks -- though they’ll tilt toward energy and commodity companies, as they were doing on Thursday.
European stock market: Following the good example from their Asian counterparts, European benchmarks will open with decent gains. The German DAX has 58 points lead at aroun 13,133; The French CAC records 25 points profit around 5,633; while UKX is with 54 points in green territory. Today, the economic calendar for Europe remains quiet so movements will mainly be driven by speculation about the US-China trade war.
U.S. stock market: Regarding U.S. stocks, Instead of talk about stocks bottoming, there's more chatter recently about new highs, as small caps flirt with their former highs and money is jumping in to tech after this spring's washout. "I think the incremental positive is we broke the string of lower highs that's been in place since January. Our take is the correction that began in January is coming to an end," said Ari Wald, technical analyst with Oppenheimer. A number of analysts say ignoring the "sell in May" phenomena this year should be a good thing. "I think you're seeing leadership reassert. Twenty-five percent of the market cap — tech — is now doing better. The fact we've seen small-cap outperformance is reflective of a market that does seemingly want to take on some risk," said Keith Parker, chief U.S. equity strategist with UBS. Parker also said the market stands to gain going into the summer simply on the sheer power of corporate buybacks. Buyback announcements are up 80 percent this year, and the actual buybacks are up about 50 percent, according to UBS. Corporations should be buying stock back for the next few weeks until the quiet period ahead of earnings in June, he said. The market is not without risks, and those things that have been worrying it — trade wars, higher interest rates, geopolitical tensions — have not gone away. Oil prices could become a brake on market gains at some point, but so far stocks have taken a near four-year high in oil prices in stride. But if Middle East tensions set off an oil price spike, that would be a worry for stocks. Analysts say the fears about trade wars, however, seem to be fading, in part because it appears there will be a new NAFTA agreement. Also, President Donald Trump appears to have eased his stance toward China, after his weekend tweet on ZTE, and there are now signs the two countries are moving toward a deal that could give the company a reprieve from U.S. sanctions.
Economic calendar for the European and U.S. trading sessions:
Tentative USA - OPEC Meeting
15:30 USA - Chicago Fed National Activity
19:15 USA - FOMC Member Bostic Speaks
21:05 USA - FOMC Member Harker Speaks
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