Markets | 25/11/2014 | Nasdaq Rallies; S&P 500 Closes at Record High

     Euro Rebound as German Business Sentiment Rose. The euro inched up against the dollar after a stronger-than-expected German business survey offered some respite, though it stayed close to a two-year low on bets of more easing in the euro zone. The German Ifo institute’s business climate index, based on a survey of about 7,000 executives, rose to 104.7 in November from 103.2 in October. Economists predicted a decline to 103.0.

         Yen Falls as Central Banks Expand Stimulus. The yen moved toward a seven-year low versus the dollar as central banks worldwide add to monetary stimulus, damping demand for low-yielding haven assets like Japan’s. The People’s Bank of China unexpectedly reduced rates for the first time since 2012 after the close of local trading Nov. 21. The move came as European Central Bank President Mario Draghi bolstered his stimulus pledge.

       Sterling Rose Ahead Inflation Report Hearings. The sterling rose against dollar ahead inflation report hearings from Governor Bank of England on Tuesday. The sterling strengthened further after private data on the U.S. services sector fell short of forecast in early November. Financial data firm Markit said its "flash" services Purchasing Managers Index slipped to 56.3 in November, below expectations 57.3 and the lowest since April. This compared with October's final reading of 57.1.

        Weidmann Warns of 'Legal Limits' on Further Moves by ECB. The European Central Bank could encounter "legal limits" if it pursued additional steps to combat low inflation, the president of Germany's Bundesbank said on Monday, calling for a focus on growth rather than any government bond buying. "Instead of focusing on the purchasing program, we should focus on how you find growth," Jens Weidmann told an audience in Madrid, when asked about the possibility of the ECB buying government bonds, a step known as quantitative easing. He warned that it would be difficult to pursue such steps to tackle low inflation. "Of course there are other measures which are more difficult, because they are untested, because they are less clear ... and of course they hit the legal limits of what you can do," said Weidmann, who sits on the ECB's Governing Council. "This is why discussions are so intense," he added.

     

         China's Rate Cut Lead Asian Shares Higher. Asian share markets were broadly higher on Monday as the an unexpected cut in interest rates from the People's Bank of China and prospect of further policy stimulus in China whetted risk appetites. Sentiment also boosted after European Central Bank President Mario Draghi surprised by declaring his commitment to fighting deflation on last Friday. While Tokyo's market was closed for a holiday on Monday. Meanwhile South Korean stocks tracked Asia-wide gains to touch their highest levels since 7 October 2014 on Monday. Blue-chip majors were mostly higher like Hyundai Motor made gains of 4 percent while the benchmark KOSPI closed to rally 1.06 percent on Monday. Hong Kong shares rose sharply on Monday after China's central bank caught markets off-guard by cutting benchmark lending rates on Friday to shore up the cooling economy. Gains in property and brokerage stocks led benchmark indexes in Hong Kong and mainland China higher as investors anticipated a cut in mortgage rates. The Hang Seng index finished rose 1.95 percent - its biggest percentage change since Sept. 3.

         Europe Shares Higher as German Data Beats. European shares were higher on Monday with sentiment boosted by speculation of more credit easing in the euro zone and better-than-expected data from Germany. A German Ifo business climate index was released in morning trade with the figure showing a rise to 104.7 in November versus a consensus forecast of 103.0. There was also a rally in the banking sector with investors continuing to speculate that more stimulus will be injected in the euro zone economy. French lenders like Credit Agricole and Societe Generale were trading higher by around 2 percent. Spanish lenders also saw strong gains, with Banco Santander, Bankia and Banco Popular all trading over 2 percent higher. The gains come after markets surged on Friday when a China rate cut and dovish words by Mario Draghi, the president of the European Central Bank (ECB), boosted sentiment.

      Nasdaq Rallies; S&P 500 Closes at Record High. U.S. stocks mostly rose on Monday, with retailers including Urban Outfitters gaining as investors bet lower gasoline prices will translate into increased sales as consumers shop for holiday gifts. After wavering on either side of neutral, the Dow Jones Industrial Average ended little moved, with Walt Disney and Intel pacing gains and AT&T and Verizon Communications leading blue-chip losses after Citigroup lowered its rating on Verizon. After coming less than 2 points from its intraday record hit Friday, the S&P 500 climbed 0.3 percent, consumer discretionary and technology leading gains and telecommunications and utilities pacing losses among its 10 major industry groups. Near session highs, the Nasdaq gained 0.9 percent.

        Gold Below 3-Week High, China Rate Cut Lends Support. Gold edged down on Monday, as the dollar strengthened, but prices were still within reach of a three-week high after a surprise rate cut in China raised hopes that demand for bullion in the top consumer would increase. China cut interest rates unexpectedly on Friday, stepping up efforts to support the world's second-biggest economy, and could even be prepared to reduce them again, according to sources. The dollar was unchanged against a basket of leading currencies and still trading close to a four-year high.

     US Crude Settled Lower Amid OPEC Speculation. U.S. oil settled lower as traders and investors speculated OPEC producers might surprise with an output cut above what market players expect when the producer group meets this week. A extension to Iran's nuclear talks, which maintains Western sanctions preventing Tehran from freely exporting its oil, also limited the market's downside, traders said. Last week, oil prices notched their first weekly gain in two months. U.S. crude futures for settled 73 cents lower at around  $75.70

 

         United Tech CEO Steps Down, Replaced by CFO. United Technologies Corp (UTX.N) Chief Executive Officer Louis Chenevert has retired immediately and is being replaced by the company's finance chief, the diversified U.S. manufacturer said on Monday, an abrupt change that caught Wall Street off guard. The maker of Otis elevators, Pratt & Whitney jet engines and Sikorsky helicopters said in a press release that Chenevert, 57, informed the United Tech board of his retirement. It did not provide a reason for Chenevert's retirement, which comes two weeks before he was to present the company's 2015 financial outlook to analysts and investors at a meeting in New York. Taking over as CEO will be Greg Hayes, a 25-year company veteran who has served as United Tech's chief financial officer the past six years. A United Tech spokesman said Chenevert's retirement "is entirely unrelated to the financial performance" of the company, which backed its 2014 earnings and sales forecasts.

         Aviva Falls on Friends Life Merger Plan Doubts. Shares in insurer Aviva fell more than five percent on Monday reflecting uncertainty about the potential benefits of the company's 5.6 billion pound (8.79 billion US dollar) plan to merge with rival Friends Life. The two insurers have agreed outline terms for a possible all-share deal, in which Aviva would offer a 15 percent premium to Friends Life's share price to give those investors a 26 percent stake in the new company. The proposed transaction, first announced on Friday, would create a market leader in British life insurance with a combined market capitalisation of about 20.2 billion pounds. The deal aims to bolster the balance sheet of Aviva, helped by Friends Life's strong cash generation, as well as boosting assets under management and cutting costs.

Technical Outlook

    EUR/USD. The bias is bearish in nearest term but we need a clear break below 1.2380 area to trigger further bearish momentum aiming 1.2340 area or even lower. Immediate resistance is seen around 1.2480 area, another consistent break above that area would bring the price to neutral zone as direction would become unclear in nearest term perhaps retesting 1.2530 region before turning lower.

          GBP/USD. The bias is bearish in nearest term but we need a clear break back below 1.5615 area to trigger further bearish pressure targeting 1.5550 support area or even lower. On the upside, only a consistent break above 1.5725 area would trigger further bullish correction scenario perhaps retesting 1.5780 area in nearest term.

     USD/JPY. The bias is neutral in nearest term with potential trading range seen between 116.60 – 118.50 area. Another consistent break below 116.60 would trigger further bearish correction scenario as price getting overbought aiming at least 116.25 area or even lower. On the upside, only a clear break above 118.50 area would continue the major bullish scenario retesting 119.00 key resistance area.

          USD/CHF. The bias is bullish in nearest term especially if price able to make a clear break above 0.9700 to trigger further bullish momentum aiming at least 0.9760 resistance area. Immediate support is seen around 0.9640 area, another consistent breakdown below that area would bring the price to neutral zone as direction would become unclear in nearest term perhaps retesting 0.9570 region before recovery to the upside.

       AUD/USD. The bias is bearish in nearest term but we need a clear break below 0.8600 area to trigger further bearish momentum aiming 0.8570 area. Immediate resistance is seen around 0.8690 area, another consistent break above that area would bring the price to neutral zone as direction would become unclear in nearest term perhaps retesting 0.8730 region.

       XAU/USD. Bias is sideways in nearest term with potential trading is seen between 1185 - 1210 area, needed to break out one of that area to get further direction. For upside immediate resistance is found at 1210 area, a clear break above that area should strength bullish trend aiming 1220 region. Folevel.

        Hang Seng Futures. The bias is bullish in the nearest term, a clear break above 24000 is needed to trigger further bullish momentum aiming 24260 area. On the down side, immediate support is seen around 23720 area. A consistent break and movement below that area would bring the bias back into neutral, potentially testing 23540 area.

       Nikkei Futures. The bias is bullish in the nearest term potentially retesting 17580 area. A consistent break and movement above that area should trigger further bullish momentum targeting 17670 area. On the down side, a clear break below 17300 area would bring the bias back into neutral, furthermore testing 17160 area.

Markets | 21/11/2014 | Oil Gains First Time in 4 Days as Investors Weigh OPEC

     Weak PMI Data Disappointing Euro. The euro slipped against the dollar on Thursday after purchasing managers' surveys from the euro zone showed business growth was weaker than forecasters expected this month, underpinning expectations that monetary conditions will be eased further in the 18-nation bloc. The euro zone's November flash PMI composite came in at 51.4, below expectations of 52.2. The divergence of a strengthening U.S. economy and continued weakness in Europe also keep the euro under pressured.

         Sterling Helped by Retail Sales Data. Sterling edged higher against the dollar after British retail sales beat expectations in October, offering relief to a currency that has struggled in the past few weeks. British retail sales volumes rose 0.8% after a fall of 0.4% in September, beating expectations of a 0.3% rise. For the year, retail sales rose 4.3%. But political risk before next May's general election is also starting to bear on the pound.

         Policy Divergence Continues to Prop Up The Dollar. The U.S. dollar was near a 7-year high against the yen on Thursday as investors bet that the Federal Reserve was on course to begin raising interest rates next year while the Japanese central bank will maintain highly stimulative policies to boost growth in the country. The greenback also posted brief gains on data that showed that the core CPI, which strips out food and energy prices, rose 0.2% last month. While separate data showed new claims for unemployment benefits fell less than expected last week, but continued to point to strengthening labor market conditions.

         Previously Owned U.S. Home Sales Increase to One-Year High. Purchases of previously owned U.S. homes unexpectedly rose in October to a one-year high as low borrowing costs helped sustain the recovery in residential real estate. Existing homes sold at a 5.26 million annual pace, the strongest since September 2013 and up 1.5 percent from a revised 5.18 million pace in September, the National Association of Realtors reported today in Washington. It was the fifth consecutive month that the sales pace topped 5 million. Prices also climbed, the group said. “This is much healthier than we’ve seen over the last year or so,” said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida, who projected a 5.25 million pace of sales. “We’re still a long way from recovery, but we’re on our way.”

 

         Asian Shares Turned Mixed After China, Japan Data. Asian shares were mixed after declining China manufacturing activity highlight concern about slowing global economy. Nikkei pare gains on profit-taking after recent rally. Kospi edge lower amid continuing worry about South Korea's exporters competitiveness. Hang Seng slide on concern about slowing China's economy after weak China's manufacturing data.

   European Stocks Drop as Manufacturing Slows. European stocks declined as miners fell after manufacturing data missed economists’ estimates for the region and China. The Stoxx Europe 600 Index dropped 0.3 percent to 338.28 at the close of trading. A gauge of mining stocks fell to its lowest level this year, with iron-ore producers BHP Billiton Ltd. and Rio Tinto Group losing more than 2.5 percent. National equity indexes of Spain and Italy dropped the most among 18 western-European markets. “The European economy is still fragile, and the recovery has just run into the sand a little bit,” said William Hobbs, the London-based head of equity strategy at Barclays Plc’s wealth management unit. “It feels difficult to get behind industrial metals. There’s still oversupply, and it doesn’t look like demand will pick up any time soon, particularly as China slows down.”

      Wall Street inches up to New Dow, S&P Records. The U.S. stock market finished Thursday’s mostly subdued trading session slightly higher. The incremental gains on the S&P 500 and the Dow Jones Industrial Average, which came amidst thin trading volumes, were enough to send the indexes deeper into record territory. The S&P 500,closed 4 points, or 0.2%, higher at 2,052.75, the 44th record close this year. The Dow Jones Industrial Average added 33.27 points, or 0.2%, to 17,719.00, logging its 27th record close in 2014.  Kim Forrest, portfolio manager and senior equity analyst at Fort Pitt Capital Group, said that the stock market is very representative of the current economy. “Investors see the latest data as confirmation that the economy is getting better, but not fast enough. At this point, if we see a big rally into the year-end, it will only be at the expense of future gains,” Forrest said

         Gold Rises as Price Drop Tempts Physical Buyers. Gold rose on Thursday on data showing rising U.S. inflation, and after the previous day's 1-percent drop triggered renewed physical interest by price-sensitive Asian buyers. Bullion investors focused on U.S. Labor Department data which showed underlying inflation pressures rose in October, even though that also bolstered expectations of a mid-2015 interest rate hike from the Federal Reserve. The gold market also ignored other data that showed a strengthening U.S. economy, including rising existing home sales and lower weekly jobless claims. U.S. gold futures for December delivery settled down $3 an ounce at $1,190.90.

         Oil Gains First Time in 4 Days as Investors Weigh OPEC. Brent and West Texas Intermediate crude gained for the first time in four days as investors weighed the potential outcome of next week’s OPEC meeting. Leading members of OPEC are resisting calls to reduce output while others including Venezuela seek action to support prices at a Nov. 27 meeting in Vienna. An OPEC production cut looks increasingly likely, Morgan Stanley said in a report yesterday. Brent trading volatility rose to the highest in more than two years. Brent for January settlement gained $1.23, or 1.6 percent, to end at $79.33 a barrel on the London-based ICE Futures Europe exchange. WTI for January delivery, the most-actively traded, rose $1.35, or 1.8 percent, to $75.85 a barrel on the New York Mercantile Exchange. The December contract, which expired today, climbed $1 to $75.58.

        Google Play Allows Chinese Developers to Offer Paid Apps. Google Inc., which closed its Chinese search page in 2010, is making a new effort in the country by allowing domestic developers to sell paid applications in its Play store. The biggest search engine is encouraging app makers in China to join its distribution system and generate sales abroad through in-app purchases and subscriptions, according to a post on the Android Developers Blog. The Google Play online store isn’t available to the nation’s 632 million Internet users. Google is trying to find new ways to tap software development in China and earn revenue in a country where its YouTube service is blocked and its local search page redirects to Hong Kong. Beijing hosts the most software companies created outside the U.S. since 2003 with a value of more than $1 billion, according to venture capital investor Atomico

     VW China Executive Says Carmaker Working to Win Trust. Volkswagen AG, which has been criticized in China by some car owners for its handling of a recall, said it will work hard to gain the trust of customers and treat them with gratitude. “Becoming the most trusted brand of Chinese consumers is more important than sales and market share,” Soh Weiming, executive vice president of Volkswagen China, told reporters at the Guangzhou auto show today. “We should lower ourselves and learn to effectively communicate with consumers with a grateful attitude.” China’s quality regulator this month asked VW to provide technical documents for its recall of almost 600,000 New Sagitar and Beetle vehicles to remedy potential defects with rear suspension axles. The automaker had issued the recall two months after the regulator started an investigation prompted by mounting complaints from owners.

  

Technical Outlook  

       EUR/USD. The bias is neutral in nearest term with potential trading range seen between 1.2470 – 1.2580 area. Another consistent break above that area would trigger further bullish correction scenario retesting 1.2620 resistance area. On the downside, only a clear break back below 1.2470 area would trigger further bearish pressure retesting 1.2425 region.

         GBP/USD. The bias is bearish in nearest term but we need a clear break back below 1.5650 area to trigger further bearish pressure targeting 1.5615 support area or even lower. On the upside, only a consistent break above 1.5770 area would trigger further bullish correction scenario perhaps retesting 1.5840 area in nearest term.

        USD/JPY. The bias is bullish in nearest term especially if price able to make a clear break above 119.30 area to trigger further bullish pressure aiming 119.80 region. On the downside, only a consistent breakdown below 117.60 area would trigger further bearish correction scenario retesting 116.60 support area.

        USD/CHF. The bias is neutral in nearest term with potential trading range seen between 0.9560 – 0.9650 area. Another consistent breakdown below 0.9560 area would trigger further bearish momentum aiming 0.9530 area or even lower. On the upside, only a clear break back above 0.9650 area would trigger major bullish scenario retesting 0.9730 resistance area.

        AUD/USD. The bias is bearish in nearest term but we need a clear break below 0.8560 area to trigger further bearish momentum aiming 0.8530 area. Immediate resistance is seen around 0.8640 area, another consistent break above that area would bring the price to neutral zone as direction would become unclear in nearest term perhaps retesting 0.8710 region.

        XAU/USD. Bias is sideways in nearest term with potential trading is seen between 1175 - 1200 area, needed to break out one of that area to get further direction. For upside immediate resistance is found at 1200 area, a clear break above that area should strength bullish trend aiming 1210 region. For downside, a clear break below 1175 could change bias become bearish targeting 1160 for next support level.

         Hang Seng Futures. The bias is bearish in the nearest term, a clear break below 23150 area is needed to trigger further bearish momentum to test  23000 area. The price could move higher if failed to break below 23150 area as stochastic indicator on daily chart is in oversold region. Immediate resistance is seen around 23400 area, a consistent break above that area would bring the price up to test 23570 area.

         Nikkei Futures. The bias is neutral in the nearest term potentially move lower testing 17080 area. A clear break below that area should trigger bearish pressure testing 16980 area. On the up side, immediate resistance is seen around 17410 area, a consistent break and movement above that area would bring the price up aiming 17560 area.