Varchev Finance: Trading day in one post - 30.01.2018

Asian stock market: Asian indexes traded lower Tuesday, tracking declines seen on Wall Street in the previous session. Tokyo's benchmark Nikkei 225 index fell 1.55 percent in the afternoon. Early gains seen in automaker stocks were erased as the session wore on: Toyota was off by 0.33 percent percent and Honda declined 0.66 percent. Technology names were mostly lower, with heavyweight SoftBank Group falling 1.74 percent and Sony losing 1.78 percent. Trading houses and energy-related names also traded in negative territory, although several manufacturing names proved to be bright spots: Komatsu and Hitachi Construction Machinery were up 2.22 percent and 5.46 percent, respectively. Over in Seoul, the Kospi declined 1.07 percent after rising nearly 1 percent to notch a record close in the previous session. Technology stocks traded mostly lower, weighing on the broader index. Blue chip Samsung Electronics sank 2.23 percent ahead of its earnings report due Wednesday and SK Hynix declined 2.79 percent. Down Under, the S&P/ASX 200 was lower by 0.9 percent on broad-based weakness across sectors. The heavily-weighted financials sector was in negative territory and mining names were mostly lower. Greater China markets also traded lower after sliding in the afternoon in the previous session on profit taking. Hong Kong's Hang Seng Index slid 0.83 percent, with gains in some property developers offset by losses in energy-linked stocks and tech names. Financials were mostly lower: HSBC slipped 0.65 percent, but insurer AIA rose 1.07 percent. On the mainland, the Shanghai composite edged down by 0.74 percent and the Shenzhen composite slipped 0.42 percent.

FX Market: The dollar was steady against a basket currencies after moving higher following the rise in bond yields overnight. The dollar index stood at 89.379 at 12:32 p.m. HK/SIN. Against the yen, the U.S. currency traded at 108.76 after earlier climbing as high as 109.20. On Friday, Trump said on the Davos podium that the dollar is still going to get stronger. Adding the Fed's desire to raise the country's benchmark interest rate at least three times in 2018. the probability of a USD reversal becomes significant. During the week, we expect a significant drop in the dollar's volatility until all the major currency news is passed - a FED decision on the base rate and Non Farm Payrolls.

Commodities market: On the commodities front, oil prices declined further after settling lower on Monday on the firmer dollar. U.S. West Texas Intermediate crude slipped 0.75 percent to trade at $65.07 per barrel. Brent crude futures shed 0.5 percent to trade at $69.11. U.S. oil production is nearing an all-time high as rising West Texas Intermediat crude prices make explorers eager to drill more. Rigs targeting oil in the U.S. surged by 12 to 759 last week, the highest level since September, Baker Hughes data show. The U.S. is set to exceed 10 million barrels per day in 2018 and challenge Saudi Arabia and Russia for the crown of biggest oil producer.

European stock market: Negative moods from Asia and the United States will cast a shadow on European markets today. The German DAX will open with about 90 points lower at 13,214; The French CAC is separated with 39 points and will start the session at 5,482; while the FTSE 100 is 36 points in negative territory, opening at 7,615. Economic news will be the main driver of the short-term trends of the indices today, with investors expecting GDP data in the region at 12:00. Then, at 15:00, traders will track the CPI data in Germany, showing how much inflation is moving in the world's fourth-largest economy. A little later in the afternoon, Bank of England Governor Mark Carney will make a statement, with market participants looking for indications pointing to the future of interest rates in the country.

U.S. stock market: U.S. stocks posted the biggest drop of this young year after the 10-year treasury yield shot higher, raising concerns higher interest rates would snuff out the bull market. The S&P 500 declined 0.7 percent, only its fifth down day of the year and by far its biggest. The Dow Jones industrial average fell 158 points and was also on track for its biggest decline of 2018. The Nasdaq composite pulled back 0.6 percent. The benchmark 10-year yield broke above 2.7 percent to reach its highest level since April 2014. Fears of higher inflation are sparking the sharp rise in bond rates this year. "It is not just interest rates that continue to rise; inflation expectations are rising with them," said Peter Boockvar, chief investment officer at Bleakley Advisory Group, in a note. He also said 2.8 percent is the next key level to watch on the 10-year. The Cboe Volatility index (Vix), widely considered the best gauge of fear in the market, rose 20.8 percent, or 2.30, to 13.38. Utilities, telecommunications and real estate were among the worst-performing sectors on Monday. These sectors are negatively affected by higher interest rates. Meanwhile, shares of Goldman Sachs and Bank of America, two stocks that benefit from higher interest rates, traded 1.7 percent and 0.2 percent, respectively. Stocks are off to a strong start for 2018. But a strategist at Goldman Sachs said there is a "high probability" the stock market experiences a correction in the coming months. Peter Oppenheimer, chief global equity strategist at Goldman Sachs, noted Monday that "correction signals are flashing" and is advising clients to prepare for a pullback.

Economic calendar for the European and U.S. trading sessions
11:30 UK - Consumer Credit
12:00 Europe - Gross Domestic Product
15:00 Germany - CPI
17:30 UK - BoE Gov. Carney Speaks
18:30 Europe - ECB's Mersch Speaks
23:30 USA - API Weekly Crude Oil Stock

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