Varchev Finance: Trading day in one post 26.01.2018

Asian stock market: Asian markets were subdued on Friday as the dollar wobbled after gaining overnight following comments from President Donald Trump. Tokyo's benchmark Nikkei 225 index rose 0.19 percent. Major exporters traded mixed as the dollar slipped while financial names were largely in negative territory. Automakers were a mixed picture. Toyota rose 0.61 percent and Honda tacked on 0.38 percent. Suzuki Motor fell 2.53 percent after Maruti Suzuki India announced quarterly profit that was below expectations, according to Reuters. Over in Seoul, the Kospi reversed slight losses to trade higher by 0.04 percent, having hit a fresh record high in the previous session. Tech stocks traded mixed: Samsung Electronics rose 0.32 percent while SK Hynix slid 1.06 percent, giving up some of the gains made after it announced record-high quarterly profit on Thursday. Greater China markets traded mixed. Hong Kong's Hang Seng Index edged up 0.55 percent after snapping a seven-day winning streak on Thursday. Large cap financials were higher in the morning, with China Construction Bank gaining 2.1 percent. Tech heavyweight Tencent rose 2.36 percent. Mainland markets saw slight gains. The Shanghai composite edged up 0.06 percent and the Shenzhen composite inched higher by 0.04 percent.

FX market: JPY fell 0.1% to 109.47 per dollar. The euro rose 0.2% to $1.2421. The Bloomberg Dollar Spot Index fell 0.1%. President Donald Trump said the U.S. dollar will strengthen over time under his leadership and that recent remarks made by Treasury Secretary Steven Mnuchin about the greenback were misinterpreted. "The dollar is going to get stronger and stronger and ultimately I want to see a strong dollar," Trump told CNBC in an exclusive interview from the World Economic Forum in Davos, Switzerland. "Our country is becoming so economically strong again and strong in other ways, too." Trump's latest remarks about the U.S. currency diverge somewhat from past comments he has made. Last April, Trump said he was worried the dollar was "getting too strong." On Wednesday, Mnuchin said he welcomed a weaker U.S. dollar, adding it would benefit the country in terms of trade. On Thursday, Mnuchin said this is not a "shift in my position on the dollar at all. It is perhaps slightly different than previous Treasury secretaries who in recent times have just commented on the strong dollar." Trump said Mnuchin's comments "were taken out of context," adding "read his exact statement." The EURUSD has fallen sharply on the back of comments from Trump that he/the US ultimately wants stronger dollar.

Commodities market: WTI crude fell 0.1% to $65.45 a barrel. Gold rose 0.3% to $1,352.08 an ounce. As the price of West Texas Intermediate crude raced through $66 a barrel with hedge funds holding record net-long positions on the U.S. benchmark, oil market volatility surged to the highest level in eight weeks. “Volatility is going to get extreme,” Thomas Finlon, director of Energy Analytics Group LLC in Wellington, Florida, said. “And the correction, when it occurs and it always occurs, will be profound.” Gold may reach levels reached for the last time in 2013, if the dollar continues to decline, and stock markets go into short-term retracement or even narrow range at the top. Stephen Innes, Head of Asia Trading at Oanda, said $1400 in the next two months is a fully achievable price. Dollar Index dropped to record low levels, after the comments of the State Secretary of Finance at the World Economic Forum in Davos were supporting the weak dollar. Gold rose by more than 10 percent since mid-December, driven largely by the hedge of long positions on the stock market, the US dollar and low global inflation. Taking into account all the available signals, we expect a weak dollar in 2018, and a macro-level short-term stock market adjustment, but after 2018, And about gold in the next few months, the price of $ 1400 is quite possible.

European stock market: European markets will follow Asia's cautious tone and will open without any changes. The French CAC will start with a 2 point increase at 5,495; The German DAX will start the session 23 points up, and the FTSE 100 is unchanged. The euro surged Thursday afternoon to a new three-year high as doubts grew over the future of the European Central Bank's (ECB) stimulus program. The currency hit the $1.25 level against the U.S. dollar around 2:00 p.m. London time and was on track for its biggest weekly rise since May of last year. Traders noted that, despite comments from ECB President Mario Draghi on Thursday afternoon, they remain convinced that easy monetary policy in the region is coming to an end. "Draghi failed to surprise the market," Jane Foley, head of foreign exchange strategy at Rabobank, told CNBC over the phone. "The economic data is too strong," she said, adding that investors are therefore convinced that the central bank will have to tighten its policy, despite giving the opposite message on Thursday. The euro has been on an upward trend against other currencies, including the U.S. dollar, for the past few weeks as the region's economy keeps improving and political risks dissipate. However, a stronger euro could hurt European exports and affect inflation in the euro zone — which the central bank has tried to support in the last few years — potentially prompting a change in its policy.

U.S. stock market: The Dow Jones industrial average closed at a record on Thursday on the back of stronger-than-expected quarterly results from Caterpillar and 3M. The 30-stock index gained 140 points. The Dow rose as much as 206 points but came off its highs after President Donald Trump told CNBC the dollar will get "stronger and stronger" under his leadership. (Click here for the full story on Trump's comments.) The dollar index reversed losses and traded higher by 0.1 percent. The S&P 500 pared most of its gains and closed 0.1 percent higher. The Nasdaq composite gave up its gains and closed 0.1 percent lower. Earlier, the S&P 500 and Nasdaq followed the Dow higher as a strong earnings season rolled on. "The numbers companies are releasing, along with the upbeat views from executives, is helping analysts lift their estimates and that's helping stocks advance," said Mark Luschini, chief investment strategist at Janney. "You [also] have strong U.S. and overseas economic growth, and that is supportive for stocks." Shares of Caterpillar rose as much as 2.8 percent before finishing 0.6 percent higher, while 3M gained 1.9 percent. Celgene and McCormick also reported better-than-forecast quarterly earnings and sales. "This is going to be earnings-driven for the next couple of weeks," said Tim Dreiling, regional investment director at U.S. Bank Wealth Management. "Thus far, it's been terrific news." Calendar fourth-quarter earnings and sales have mostly beat analyst expectations thus far. Of the companies that have reported quarterly results, 78 percent have beaten earnings expectations, while 82 percent have surpassed revenue estimates.

Economic calendar for the European and U.S. trading sessions:
11:00 Europe - Private Sector Loans
11:30 UK - Gross Domestic Product
15:30 USA - Gross Domestic Product
15:30 USA - Durable Goods Orders
15:30 Canada - CPI
20:00 USA - Baker Hughes Oil Rig Count
22:30 USA - CFTC Speculative Net Positions

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