Daily Market Review - 31 Dec 2014

Brent Oil Prices Fall on Demand Concerns

On Wednesday, Brent crude prices edged towards $57 a barrel. This came in response to weak Chinese manufacturing data as well as demand concerns. According to the final report, the HSBC/Markit Purchasing Managers’ Index (PMI) came in at 49.6 for December. While this final reading was higher than a “flash” reading of 49.5, it was still down from the final 50.0 in November. The 50.0 mark separates growth from contraction. Since China is the world’s 2nd largest oil consumer, a contraction in its factory sector could have a big impact on demand. As a result, Brent for February delivery fell 44 cents to $57.46 as of 0350 GMT. This came after falling earlier as low as $57.18. Meanwhile, U.S. crude for February delivery was down 34 cents to $53.78. Prices were also pressured by an unexpected build in U.S. crude stocks. According to the industry group the American Petroleum Institute, U.S. crude inventories rose by 760,000 barrels last week to 387.3 million. Analysts were expecting a decreased of around 100,000 barrels. Meanwhile on Tuesday, the Obama administration bowed to months of growing pressure over a 40-year-old ban on exports of most domestic crude. This step is expected to unleash a wave of ultra-light shale oil onto global markets.

Oil Falls - 31 Dec 2014

The USD Pushes Lower

On Tuesday, the U.S. dollar (USD) traded lower against the other major currencies. This came in response to the release of lower-than-expected U.S. consumer confidence data while investors also used the opportunity to lock in profits from the greenback’s recent rally to nine-year highs. According to the Conference Board report, the U.S. consumer confidence index (CCI) rose to 92.6 this month from 91.0 in November. This number missed analysts’ expectations for the index to rise to 93.2 in December. Despite this weak data, the greenback remained supported by the positive GDP data from last week that showed that the U.S. gross domestic product rose 5.0% in the third quarter. The EUR/USD edged up 0.11% to 1.2168, off two-year lows of 1.2124 hit earlier in the session. Meanwhile, the British pound edged higher against the USD, with GBP/USD up 0.21% to 1.5553. Elsewhere, USD/JPY tumbled 1.17% to 119.23, while the Swiss franc eased off two-year lows, with USD/CHF down 0.11% to 0.9886. The U.S. dollar index, which measures the greenback against a basket of six major currencies, was down 0.35% to 90.22, not far from the nine-year high of 90.66 hit overnight.

Global Currencies - 31 Dec 2014

The Dow Slips Under the 18,000 Mark

On Tuesday, U.S. stocks closed with moderate losses. The Dow Jones Industrial Average (DJIA) moved down below the 18,000 for the first time in about a week after reaching above this level on the 23rd of December 2014. At the close of U.S. trading, the DJIA shed 55.16 points, or 0.3%, to 17,983.07. Also on the downside was the S&P 500 index (SPX) which declined 10.22 points, or 0.5%, to finish at 2,080.35. This came a day after the index scored its 53rd record close of the year. Following the downward trend was the Nasdaq Composite Index (COMP) which lost 29.47 points, or 0.6%, to end at 4,777.44. All three main indexes endured their biggest drops in two weeks. The S&P is on pace for a yearly gain of 12.6% while the Dow is showing an 8.5% advance and the Nasdaq a 14.4% rise. On Wednesday, the U.S. markets will be open for a full trading day.

Dow Jones - 31 Dec 2014

In the Spotlight – When Are Markets Closing Over New Year’s?

We are almost closing 2014 and getting ready to start 2015 with a bang. So what happens to the global markets on New Year’s Eve? Well, virtually all major markets around the world will be closed on New Year’s Day as follows:

USA

Both the Nasdaq and the New York Stock Exchange will observe regular trading hours on Wednesday, closing at 4 p.m. Eastern. On Thursday, the 1st of January 2015, the markets will be closed. Regular trade will resume on Friday, the 2nd of January 2015.

For bond traders, the market will close earlier with Sifma, the securities industry trade group, closing at 2 p.m. Eastern on Wednesday. Meanwhile, in the futures markets, the CME Group will close Chicago floor trading in foreign-exchange and interest-rate futures early, at 1 p.m. Eastern on Wednesday. Also in New York, NYMEX energy futures will close an hour early as well at 1:30 p.m. Eastern while Comex gold and other metals futures will end trading at 12:30 Eastern, also an hour early.

ASIA

In Asia, markets in Hong Kong and Australia will trade for a half-day on New Year’s Eve. Meanwhile, the markets in Thailand, Japan, South Korea, Indonesia and the Philippines will be closed.

EUROPE

In Europe on New Year’s Eve, London equity trading will close early at 12:30 p.m. local time, or 8 a.m. Eastern Time. Trading in France and Spain will close at 2 p.m. local time or 1 p.m. London time. In Germany and Italy, the last day of 2014 trading was Tuesday, 30 December 2014.

Happy New Year 2015 - 31 Dec 2014

Daily Market Review - 30 December 2014

USD/CAD Not Far From 5-Year Highs

On Monday, the U.S. dollar (USD) traded almost unchanged against the Canadian dollar (CAD). The currency pair hovered close to its five-year high. This came in response to expectations for a U.S. rate hike by the Federal Reserve which continued to support the greenback. During early U.S. trading, the USD/CAD currency hit 1.1642. This marked the pair’s highest rate since the 24th of December 24. The currency the pair subsequently consolidated at 1.1629, inching up 0.03%. As a result of positive data out of the U.S. last week, the USD remained broadly supported. Data showed that the U.S. gross domestic product (GDP) rose 5.0% in the third quarter. Analysts had expected a growth rate of only 4.3% while the GDP was at 3.9% at the end of the second quarter. Meanwhile, the loonie also found some support after official data last week showed that the country’s economy grew at a 0.3% rate in October. This beat analyst expectations for a growth rate of 0.1% and was down from 0.4% in September. The Canadian dollar also traded lower against the euro, with EUR/CAD edging up 0.20% to 1.4193 while the U.S. dollar index, which measures the greenback against a basket of six major currencies, was steady at 90.32, not far from the nine-year high of 90.38 hit overnight.

World Currencies - 30 Dec 2014

Brent Oil Drops to 5-Year Low           

On Tuesday, Brent oil extended losses into a fourth session with investors concerned about the global supply glut despite concerns regarding output disruptions in Libya. As of 0323 GMT, Brent for February delivery fell 8 cents to $57.80. This came after the commodity fell to $57.37 in the previous session which marked the lowest level since May 2009. Meanwhile, U.S. crude for February delivery fell 3 cents to $53.58. This came after it settled down $1.12 on Monday, when it hit an intraday low of $52.90 which also marked the lowest since May 2009.With the declining oil prices, investors are now turning their attention to the weekly U.S. inventory data. Today, the industry group the American Petroleum Institute is scheduled to release its report, while the U.S. Department of Energy’s Energy Information Administration will release its data on Wednesday. Meanwhile, supply disruptions in Libya supported oil prices. Libya is currently producing 128,000 barrels per day from fields linked to the eastern port of Hariga which after fighting among the factions for control of the country, operations at the key export ports Es Sider and Ras Lanuf were halted. With OPEC’s reluctance to cut their output as well as an increased global supply, oil prices have been hammered this year. As a result, Brent is heading for its biggest annual drop while U.S. crude is set to post its biggest decline since 2008.

OIl Prices - 30 Dec 2014

The S&P 500 Hits Another Record Close

On Monday, the S&P 500 index (SPX) edged up to another record close for the 53rd time while the Dow Jones Industrial Average snapped its seven-session winning streak. At the close of U.S. trading, the SPX rose 1.80 points, or 0.1%, to close at 2,090.57. This benchmark index is now up 13.1% for 2014, with only two trading sessions left in the year. The best performing sector on the S&P this year is Utilities, which also showed the biggest gain among the 10 main sectors on Monday. Meanwhile, the Dow Jones Industrial Average (DJIA) declined 15.48 points, or 0.1%, to end at 18,038.23. For 2014, this blue-chip index is up 8.8% so far. Following the upward trend was the tech-laden Nasdaq Composite index (COMP) which advanced 0.05 points to finish at 4,806.91. According to FactSet, the composite volumes for both the NYSE and Nasdaq were at roughly two-thirds of their 30-day average and trading is expected to be light throughout this holiday-shortened week. Also, the CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 4.97% to 15.22.

World Market Data - 30 Dec 2014

In the Spotlight – What To Watch Out For On Wall Street This Week

After last week’s gains, U.S. stocks took a breather on Monday. Several key developments will remain in focus this week which could impact the market movements.

1. Oil and Gas Are Falling Down

Over the last few months, investors have been focusing on the rapidly declining oil prices due to a global supply glut. Oil prices have declined 45% in the last 6 months. However, natural gas prices are also beginning to follow suit. In the last month, prices of natural gas, which is the main heating fuel used in the U.S., have dropped more than 30% to $3.03 per 1,000 cubic feet from nearly $4.50 in late November. According to Adam Sarhan, founder and chief executive officer of Sarhan Capital, these declining prices in the energy sector are good for the stock market. As Sarhan said, “Remember, energy prices serve as an indirect tax on both consumers and businesses and the fact that energy prices are falling precipitously leaves a lot more disposable income in the pockets of both consumers and businesses. … That money tends to find its way back into the economy — which should provide another ‘boost’ to GDP.”

Wall Street - 30 Dec 2014

2. Political turmoil in Greece

On Monday, the members of the Greek parliament failed to elect a president for the third time which means that a snap election will now take place on the 25th of January. As a result, stock prices declined more than 10% on the Athens Stock Exchange. According to Stephen Guilfoyle, chief economist at Sarge986.com, the pending election will be “unnerving” for the Euro zone. Guilfoyle stated that, “It gives those who would like to see Greece leave the eurozone — and maybe even the EU — a voice. That possibly screws up Greece’s bailout plans, but could very well delay any plans the [European Central Bank] may have to go ahead with a quantitative easing program where they would buy the sovereign bonds of member nations.” After the final vote which took place yesterday, the Greek 10-year bond yield jumped more than 9%. This came as investors fled Greek bonds in favor of safe havens, including U.S. government securities. This capital flow sent the U.S. 10-year Treasury yield down four basis points to 2.22% which is the lowest level in a week.

3. Consumer confidence Boosted by Declining Gas Prices

Due to the shortened holiday week, limited data is expected out of the U.S. On Tuesday, the Case-Shiller home price index, which tracks changes in home prices throughout the U.S., is due to be released, along with the Conference Board’s Consumer Confidence Index. Last month, the Conference Board said its index of consumer attitudes fell to 88.7 from a downwardly revised 94.1 the month before. At that time, consumers were not positive about the existing business conditions and the state of the job market. We could now see a change in consumer confidence after positive GDP data out of the U.S. last week. As Lynn Franco, director of economic indicators at the Conference Board said, “Consumer confidence retreated in November, primarily due to reduced optimism in the short-term outlook. However, income expectations were virtually unchanged and gas prices remain low, which should help boost holiday sales.” In a separate report last week, it was revealed that U.S. consumer sentiment jumped to its highest level in nearly eight years as cheaper gasoline prices boosted consumer optimism. According to the University of Michigan’s final December reading, consumer sentiment rose to 93.6, its highest reading since January 2007.

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Daily Market Review - 29 Dec 2014

Oil Prices Climb on Libyan Unrest

Oil Prices Drop - 29 Dec 2014

On Monday, the price of oil rose. This came after the commodity declined over the last two sessions and the rising prices came in response to escalating clashes in Libya which prompted investor concerns regarding supply from this OPEC member. According to officials, with clashes between the factions who are battling for control of the country, 800,000 barrels of crude oil were destroyed in a fire which occurred in one of Libya’s main export terminals. This translates to more than two days of the country’s output. Earlier in the day, Brent crude hit $60.40 and then settled up 37 cents at $59.82. In the previous session, the benchmark settled down 79 cents in the previous session. Meanwhile on Monday, after rising to a peak of $55.74, U.S. crude was up 57 cents at $55.30. According to Daniel Ang, an analyst with Singapore’s Phillip Futures, Brent oil is expected to stay around $60 a barrel this week while U.S. crude is expected to trade between $55 – 56 a barrel. Meanwhile, oil prices also drew support from plans by China and Japan to boost liquidity. According to the State Information Center in China, the People’s Bank of China plans to loosen loan-to-deposit ratios for banks from next year. As a result, the Chinese economy is expected to grow by 7% in 2015. This is slower than the forecast of 7.3% in 2014. Meanwhile, in Japan, the government approved stimulus spending worth $29 billion on Saturday. The aim is to assist the country’s lagging regions and households with subsidies, merchandise vouchers and other steps, in the hope that it will boost GDP by 0.7%.

AirAsia Shares Have Biggest Drop in 3 Years       

On Monday, the shares of AirAsia fell 7.8%. This marked the company’s biggest one-day drop in more than three years since September, 2011 and this decline came after one of its aircraft went missing on its way to Singapore from the Indonesian city of Surabaya. According to analysts, the incident, which took place on Sunday, has made travelers wary about flying with the AirAsia group. As a result, it has negatively impacted the company’s prospects to improve yields and bolster its profit in the year ahead. Meanwhile, the Kuala Lumpur-based Hong Leong Investment Bank downgraded AirAsia from a “buy” to a “trading sell” on Monday morning. Since the opening of trade this morning, the stock had dropped as much as 12.9%, compared with a 0.4% decline in Kuala Lumpur’s benchmark index. Despite the decline, the stock has gained more than 20% since the beginning of the year, compared with the index’s 5% fall. Also, over 59.5 million AirAsia shares had been traded which has made it the bourse’s most active stock. Also on the downside were the shares of the Bangkok-listed Asia Aviation which is the holding company for Thai AirAsia in which the AirAsia group holds a 45% stake. On Monday, these shares fell by 3.6%.

AirAsia - 29 Dec 2014

EUR/USD Holds Steady

EUR - USD - 29 Dec 2014

On Monday, the euro (EUR) held steady against the U.S. dollar (USD) with the currency pair, hovering close to two-year lows. This came in response to the political instability in Greece while the demand for the greenback remained broadly supported. During late Asian trade, the EUR/USD currency pair hit 1.2167. This marks the pair’s lowest level since August 2012 while the EUR/USD pair subsequently consolidated at 1.2190.  Meanwhile, the euro was also steady against the British pound, with EUR/GBP dipping 0.06% to 0.7825. Investors are concerned regarding the instability in Greece as Antonis Samaras, the Greek Prime Minister, is set to make a third and final attempt today in order to get his candidacy for president confirmed and avoid an early parliamentary election. In the 2nd vote on the 23rd of December, the prime minister received the backing of 168 lawmakers; eight more than in the first presidential ballot on the 17th of December. Meanwhile, the greenback remained broadly supported after final data last week showed that U.S. GDP (gross domestic product) rose 5.0% in the third quarter. This exceeded expectations for a growth rate of 4.3% and up from 3.9% in the three months to June. This positive data boosted investor sentiment as well as optimism that the U.S. Federal Reserve will hike interest rates next year.

World Currencies - 29 Dec 2014

In the Spotlight – Is Santa Going to Deliver Stock Gains?

Dow Jones - 29 Dec 2014

Over the last 20 years, between Christmas and New Year’s, the Dow Jones Industrial Average (DJIA) has declined by 0.1% whenever its pre-Christmas December performance has been positive.  That is, whenever there has been a strong performance by the index in December, it fails to impress during Christmas and New Year. Most traders also know, that the period between Christmas and New Year is known as the “Santa Claus” rally and it is a time where we often see a boost in stock prices. However, history has shown that since the Dow was created in the late 1800s, the odds that the market will rise over the next week are a lot lower whenever the stock market has risen during the December sessions prior to Christmas. In recent years, this pattern has grown even stronger. That is, over the last 20 years, between Christmas and New Year’s, the Dow has declined by 0.1% whenever its pre-Christmas December performance has been positive. However, there are always exceptions to the rule and in fact, last December, the Dow rose over the period prior to Christmas and between then and New Year’s eve. With the numbers in front of you, don’t be surprised if the stock market’s performance over the coming week is less spectacular than it’s been in recent sessions.

Will the Dow Jones Fall - 29 Dec 2014

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Oil Futures - 26 Dec 2014

Traders Love Apple

According to TD Ameritrade, Apple Inc. was the the biggest U.S. company by stock-market value as well as the one retail that investors most loved to own and to trade this year. This year alone, Apple shares have climbed more than 40%. In June, the company’s 7-to-1 stock split also boosted the stock price as at the time, the price was still under $100. That made it more accessible and affordable for all traders to trade. In the number four spot to buy and hold was Microsoft Corp. Despite this, Microsoft did not make it to the top ten among the customers of TD Ameritrade for the most-traded stocks. TD Ameritrade is one of the largest online discount brokerage firms in the U.S. Meanwhile, the shares of Facebook Inc. made both lists, while Twitter Inc. was highly traded but not widely held. Among the ten most widely traded stocks among Ameritrade clients include momentum stocks such as Tesla Motors Inc., Netflix Inc. and Amazon.com. Other most widely held stocks included General Electric Co. and AT&T Inc. Finally, the three stocks which are among the most-heavily traded by Ameritrade customers which fell during 2014 include Netflix, Twitter and Amazon.com.

Apple Shares - 26 Dec 2014

Sony Shares Expected to Be Active on Friday     

Sony - 26 Dec 2014

On Friday, the shares of Sony Corp. (ADR) (NYSE: SNE) could expect to see active trading. This comes as the company decided to release the movie “The Interview” online. Sony stated that the movie will be available over Microsoft’s Xbox as well as Google’s YouTube. The scheduled widespread release of this movie on Christmas was recently cancelled. This came after hackers threatened violence against theaters showing the movie. North Korea is believed to have hacked Sony’s corporate data systems, apparently in retaliation for the film, which depicts its leader Kim Jong Un unfavorably. Meanwhile, a smaller group of independent movie theaters around the country will be screening the film.

The Interview - 26 Dec 2014

US Futures Indicate Higher Open

Due to the Christmas holiday, the U.S. markets were closed on Thursday. In electronic trade, the stock-index futures for the U.S. were quoted higher. What this means is that it indicates a higher start for the major indices when Wall Street re-opens on Friday. About ten hours before the market opening, the S&P 500 index (SPX) as well as the Dow Jones Industrial Average (DJIA) were both quoted at levels which implied that each index would gain 0.2%. Also displaying an increase were the futures for the Nasdaq 100 which pointed to a 0.3% advance. Meanwhile before the Christmas holidays and the closing of the markets in holiday-shortened trading on Wednesday, the S&P 500 index finished almost flat while the Dow hit its 37th record close for the year. Also, the Nasdaq Composite index (COMP) closed with a 0.2% gain.

US Futures - 26 Dec 2014

In the Spotlight – Brent Crude Oil Gives Up Gains

On Friday, Brent crude oil futures gave up most of its early gains. This decline came in response to an increased supply glut as well as to weak import data out of Japan. Despite the falling price, contracts were able to hold above the $60 a barrel mark after being supported by positive data out of the U.S. earlier in the week. The U.S. Energy Information Administration reported data over Christmas which showed that the there was an increase in the oil supply with crude inventories unexpectedly rising by 7.3 million barrels last week to their highest December level on record. Analysts had expected a seasonal draw. In terms of demand, the picture was mixed since data showed that jobless claims fell while third-quarter economic growth indicated the quickest pace in over a decade.

Oil Futures - 26 Dec 2014

Meanwhile in Japan, data from the Ministry of Economy, Trade and Industry showed that crude imports dropped 17.3% in November from a year earlier to 3.08 million barrels per day. Meanwhile, prices of front-month Brent crude were trading at $60.30 on Friday. This was barely changed since their last settlement but the price did reach an intraday high of $60.62 before declining. Meanwhile, WTI’s front-month contract in the U.S. was up 8 cents at $55.92 a barrel. This was down from $56.23 hit earlier in the session. For the week, Brent is down 1.8% while U.S. crude is down 1%.

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Daily market Review - 25 Dec 2014

FTSE 100 Hits 7th Straight Win

On Wednesday, U.K stocks rose in the half-day trading session due to the holidays. Also on the upside were the shares of Smith & Nephew PLC which logged their best rise in six years on a report of a takeover bid. At the close of U.K. trading, the FTSE 100 (UKX, +0.18%) closed up 0.2% to 6,609.93. This marked the index’s seventh consecutive win while the index’s last seven straight days of wins only last happened in February this year. The shares of Smith & Nephew (PLC SN., +7.71%) topped the FTSE 100 for the day as they climbed 7.7%. This marks the strongest advance since October 2008. This increase added to Tuesday’s more than 4% rise, which followed a Bloomberg report that U.S. surgical-implants maker Stryker Corp. is preparing a bid for the medical-devices maker. Meanwhile, oil shares also ended higher, outperforming a pullback in oil futures. The Brent crude price moved below $61 a barrel while the shares of Royal Dutch Shell added on 0.7%, and the shares of Tullow Oil PLC rose 0.6%. Trading in London closed early for the Christmas and Boxing Day holidays. The market will reopen on Monday.

FTSE 100 - 25 Dec 2014

US Markets Mixed          

On Wednesday, U.S. stocks traded mixed with big losses in the oil & gas, consumer goods and basic materials sectors. Gains were led by the consumer services, utilities and healthcare sectors and the best performers of the session on the Dow Jones Industrial Average were Boeing Company (NYSE: BA) which rose 0.93% or 1.21 points to trade at 131.24 while Visa Inc. (NYSE:V) added 0.89% or 2.37 points to end at 267.63.  At the close of U.S. trading, the Dow Jones Industrial Average (DJIA) hit a new all-time high for the 37th time this year, advancing 6-points to 18,030.21. On Tuesday, the DJIA closed above 18,000 for the first time ever. Over the past five sessions, the Dow industrials have risen 3.9% for their best five-day run before Christmas in since 1991, when the Dow rose 5.1%.  On the downside was the S&P 500 index (SPX) which erased earlier gains and closed down less than a point at 2,081.88 in the Christmas holiday-shortened session. This marked the end of the index’s five-day winning streak. Following the upward trend was the tech-heavy Nasdaq Composite index (COMP) which closed with a gain of 8.05 points, or 0.2%, at 4,773.47. Also, the CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 2.91% to 14.37.

World Market Data - 25 Dec 2014

Gold Prices Slip Below $1,175

On Wednesday, gold prices slipped. This added to the recent selloffs that followed strong U.S. gross domestic product (GDP) data. On the New York Mercantile Exchange, gold for February delivery (GCG5, -0.24%) declined 0.4%, or $4.50, to settle at $1,173.50 an ounce. This contract has declined by 1.9% for the holiday-shortened week following a big selloff on Monday. As Naeem Aslam, chief analyst at Avatrade said, gold “is struggling to stay above the support of $1,180 and there is a constant battle to hold this ground among bulls and bears.” Meanwhile on Tuesday, data showed that the U.S. economy grew 5% on annualized basis in the third quarter. This was above estimates by economists. Despite this, U.S. durable goods orders fell 0.7% in November. This was in contrast to analysts’ expectations for a 3% rise.  In other commodities news, silver for March delivery lost nearly 6 cents, or 0.4%, to settle at $15.71 an ounce, while platinum for January delivery declined 60 cents, or less than 0.1%, to settle at $1,191.10 an ounce. Also on the downside was high grade copper for March delivery which settled down just over a penny lower, or 0.4%, at just over $2.85 a pound.

Gold - 25 Dec 2014

In the Spotlight – Will U.S. Stock Markets Continue to Rally in the New Year?

According to analysts, the recent stock market rally in the U.S. to record highs is normal. That is, for example, the Dow Jones Industrial Average (DJIA) is simply displaying its annual season pattern surging higher as the end of the year approaches. Despite this, analysts have warned investors not to expect this rally in 2014. The stock market’s rally to record highs has come right on schedule, as the Dow Jones Industrial Average continues to track its annual seasonal pattern nearly to a tee. According to Tom McClellan, who is the publisher of the investment newsletter McClellan Market Report, the Dow Jones has displayed a very distinctive pattern each year as per the chart below.

Dow Jones - 25 Dec 2014

On Wednesday, the Dow Jones Industrial average (DJIA) had a sixth straight day of gains as well as its third-straight record closing high. Over the last 6 trading days, the Dow has in fact increased by more than 6% or 1000 points. Over the same time in 2013, this blue-chip index increased in 10 out of the last 12 trading sessions. The DJIA also added 5.3% or 837.23 points during that time. The Dow closed 2013 on a high and it looks like it is heading in the same direction for the end of 2014. Despite this, on the first trading day of 2014, the Dow dropped 135.31 points and then 1,203.68 points, or 7.3% on the 3rd of February before the index started to rally again. Could we expect to see the same pattern at the beginning of 2015?

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Daily Market Review - 24 Dec 2014

The Dow Breaks the 18,000 Mark

Dow Jones - 24 Dec 2014

On Tuesday, U.S. stocks soared and for the first time in U.S. history, the blue-chip Dow Jones Industrial Average (DJIA) broke the psychologically important 18,000 milestone. This increase came after data showed that the U.S. economy grew at its quickest pace in over a decade last quarter boosting positive investor sentiment. At the close of U.S. trading, the Dow Jones Industrial Average (DJIA) added 64.73 points, or 0.4%, to 18,024.17. This index closed at a record level for the 36th time in 2014 with 25 of its 30 components ending higher. Meanwhile, the S&P 500 index (SPX), which tracks the share prices of the nation’s 500 largest publicly traded companies, set an intraday record of 2,086.75 and closed up 3.6 points, or 0.2%, at 2,082.17. While the health-care sector closed with a 2.2% loss, energy and materials stocks led the gains. The top performers on the S&P 500 were Chesapeake Energy Corporation (NYSE:CHK) which rose 10.15% to 20.29 and Walgreen Co (NYSE:WAG) which gained 3.02% to close at 76.51. The poorest performers on the SPX were Celgene Corporation (NASDAQ:CELG) which was down 6.18% to 106.49 in late trade while Alexion Pharmaceuticals Inc. (NASDAQ:ALXN) lost 4.68% to settle at 179.35. Breaking the upward trend was the tech-heavy Nasdaq Composite index (COMP) which finished 16.00 points, or 0.3%, lower at 4,765.42, thanks to a large selloff in biotechnology stocks.

The USD Near Nine-Year Highs          

On Tuesday, the U.S. dollar (USD) traded largely higher against other major currencies, remaining near nine-year highs. This boost came after a string of upbeat U.S. economic reports which sparked further optimism over the strength of the country’s recovery.  The EUR/USD hit fresh two-year lows at 1.2165 before retracing to 1.2186, down 0.35% for the day. Meanwhile, the Swiss franc remained near two-year highs, with USD/CHF up 0.27% at 0.9867. Also the USD/JPY gained 0.48% to 120.65 with the yen reaching fresh two-week lows. On the upside was the Russian ruble which traded higher against the dollar, with USD/RUB down 0.70% at 55.45. The Russian currency remained supported ahead of major month-end tax payments in Russia. Against the currencies in Australia, New Zealand and Canada, the U.S. dollar traded mixed with AUD/USD down 0.32% at 0.8106, NZD/USD down 0.10% at 0.7720, while USD/CAD was down 0.11% at 1.1621. Also, the US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.37% at 90.28, the highest level since December 2005.

Strong US Dollar - 24 Dec 2014

Crude Oil Rallies

On Tuesday, crude oil futures rallied over 1%. While this commodity recovered from the previous session’s sharp drop, crude oil futures still remain vulnerable as comments by Saudi Arabia Oil Minister Ali al-Naimi continued to weigh on investor sentiment. During European early afternoon trade on the New York Mercantile Exchange, U.S. crude oil for delivery in February traded up $0.93 or 1.67% to $56.19 a barrel. On Monday, prices plummeted $1.87 or 3.27% to settle at $55.26. Over the weekend, oil futures remained under pressure after Naimi, along with other officials attending an energy conference in Abu Dhabi over the weekend, reaffirmed the Organization of the Petroleum Exporting Countries’ (OPEC) decision to hold output at current levels. The minister from Saudi also added that the recent drop in oil prices was as a result of a lack of coordination among other non-OPEC producers as well as speculators and misleading information. Elsewhere, on the ICE Futures Exchange in London, Brent oil for February delivery climbed $0.80, or 1.33%, to hit $60.91 a barrel, with the spread between the Brent and the WTI crude contracts stranding at $4.72.

Crude Oil - 24 Dec 2014

In the Spotlight – Are the Markets Open Over the Festive Season?

The festive holiday season is here and while trading volumes have been light this week, most of the markets will be closed for half of the week. To keep you updated, here’s a look at which markets are closed this week and for the New Year holiday.

Timetable

Both the Nasdaq Stock Market and New York Stock Exchange close at 1 p.m. Eastern on Wednesday and will reopen on Friday for a normal trading day. Also, the energy and oil products traded on Globex have an early close at 1:15 p.m. Eastern on Wednesday. Globex trading will be closed on Thursday as well while Friday will be a regular trading day. Meanwhile, European markets also closing early on Wednesday. In the United Kingdom and in France, markets will close by 1 p.m. London time. The German market is closed all day. Markets will not reopen until Monday, the 29th of December.

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Daily Market Review - 23 Dec 2014

Oil Prices Edge Up

On Tuesday, oil prices edged up. This came in response to investor expectations that the U.S. economic data due out today on existing home sales will be positive. Due to a public holiday in Japan, trading was also thin as traders begin closing their 2014 positions ahead of Christmas and the New Year holidays. Front-month U.S. WTI crude futures rose over a dollar to a session high of $56.85 a barrel before dipping back to $56.11 at 0340 GMT. Meanwhile, Brent crude was up 46 cents at $60.57 a barrel. According to analysts, this recent increase is in response to expectations of firm U.S. economic data later in the day. Meanwhile on Monday, oil prices saw volatile price movements. Brent prices first jumped to almost $63 a barrel on the back of strong international market performances before sliding back to not much over $60. This came after Saudi Arabia’s oil minister stated that OPEC would not cut production at any price. Despite OPEC’s decision not to cut output, oil prices could receive some support from declining activity in the U.S. where currently, many drillers are struggling to make any money at the current price levels. As Standard Chartered said in a report, “U.S. oil drilling has begun to fall sharply. We expect this fall to continue apace throughout Q1, unless there is an unexpectedly early move up in oil prices.”

Oil Prices - 23 Dec 2014

Gold Falls Under the $1,200 Mark      

On Monday, gold futures were unable to hold on to their recent gains and the precious yellow metal dropped below $1,200 an ounce. Gold for February delivery fell $16.20, or 1.4%, to $1,179.8 an ounce. The price of gold initially rose alongside the oil price but then the price reversed before midday while crude oil prices also lost ground. Last week, both gold and silver ended sharply lower, with gold declining 2.2% while silver declined by 6%. According to analysts, these losses were related to the recent slump in oil prices as well as to the U.S. dollar (USD) rising against other major currencies. Metals markets will close early on Christmas Eve and will remain closed on Christmas Day.

Gold Prices Fall - 23 Dec 2014

U.S. Markets Close At Record Highs

On Monday, U.S. stocks closed higher marking a higher close for the fourth straight session. The S&P 500 index as well as the Dow Jones Industrial Average closed at a record high for the 50th and the 35th time in 2014, respectively. According to analysts, this increase was promoted by positive investor sentiment regarding the Federal Reserve’s comments from last week that the central bank will be ‘patient’ regarding the pace and timing of interest rate hikes. At the close of U.S. trading, the S&P 500 index (SPX) gained 7.9 points, or 0.4%, to 2,078.55. This increase was boosted by the increased share price of the social networking giant Facebook whose shares reached all-time intraday high of $81.88, finally closing the session at $81.45 per share, up 1.97%. Meanwhile, the Dow Jones Industrial Average (DJIA) rose 154.64 points, or 0.9%, to 17,959.44, with 27 of its 30 components ending with gains. These gains were also boosted by the 1.58% increase in the shares of Boeing to $128.22 which came in response to a recent deal with Air China which has been valued at over $6 billion. Air China will be purchasing sixty Boeing 737 aircrafts including 737 MAX Airplanes and Boeing’s Next-Generation 737. Also on the upside was the Nasdaq Composite index (COMP) which ended 16 points, or 0.3%, higher at 4,781.42. Meanwhile, the CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 8.19% to 15.14.

World Market Data - 23 Dec 2014

In the Spotlight – Facebook Shares Soar

The shares of the social network giant, Facebook Inc. (FB), rose to a record level on Monday which also boosted the S&P 500 (SPX) to a record high for the 50th time this year. As a result of Facebook’s increased mobile advertising as well as their expanded marketing initiatives such as videos and apps, Facebook shares climbed 2% to trade at $81.45 at the close of trading in New York. To date, this marks the highest price for these shares since their initial public offering (IPO) in May 2012. Furthermore, Facebook shares have more than doubled since their IPO and since the beginning of 2014, the shares have advanced 49% compared with the gains in the S&P 500 index (SPX) of only 12% for the year. Today, Facebook is currently valued at $227.8 billion and according to analysts from Citigroup Inc., the increase in the Facebook share price has been positively impacted by the company’s acquisition of Instagram in 2012. At the time, Instagram was purchased for only $1 billion but it is now worth $35 billion. Also this month, the active users on Instagram increased to 300 million which put them in first place above Twitter Inc. which only had 284 million active users in October 2014. As a result of Facebook’s increased focus on mobile, their ad revenue has now been boosted and while this was only a minor portion at the time of the company’s IPO, ad sales are projected to increase by 46% in the fourth quarter while mobile promotions made up 66% of ad sales already last quarter, according to Bloomberg.

Facebook - 23 Dec 2014

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Daily Market Review - 22 December 2014

USD/CAD Trims Gains on Canadian CPI

On Friday, the U.S. dollar (USD) trimmed gains against the Canadian dollar (CAD). Despite this, the greenback remained supported after data showed that Canadian consumer prices fell more-than-expected last month. Meanwhile, a separate report showed that Canadian retail numbers were flat in October. The USD/CAD pulled away from 1.1630 which was the session high and the hit 1.1601 during early U.S. trade, still up 0.18%. Statistics Canada reported that consumer price inflation (CPI) fell 0.4% in November. This confounded expectations for a 0.1% downtick, after a 0.1% rise in October. Meanwhile, year-on-year, consumer prices rose 2.2% last month. This missed expectations for a 2.5% increase and was down from a rate of 2.4% in October. Core CPI, which excludes the eight most volatile items, slipped 0.2% last month. This disappointed expectations for a 0.1% gain, after a 0.3% rise in October. Meanwhile, a separate report showed that Canadian retail sales were flat in October. This beat expectations for a 0.2% fall, after an increase of 0.8% the previous month. Core retail sales, which exclude automobiles, rose 0.2% in October, compared to expectations for a 0.1% gain, after a flat reading in September. In other currency news, the loonie was also lower against the euro, with EUR/CAD edging up 0.16% to 1.4248.

USDCAD - 22 Dec 2014

Saudi Comments Push Crude Oil Prices Down  

On Monday, crude oil prices fell in early Asian trade. This came after Saudi Arabia said over at the weekend that it would not cut output to prop up the oil markets even if non-OPEC nations did so. As a result, crude oil futures for February delivery traded at $57.01 a barrel, down 1.49%, on the New York Mercantile Exchange. Meanwhile last week, oil prices surged as some traders took profits on short positions after prices hit their lowest since 2009. On Friday, Brent’s front-month settled up $2.11, or 3.4%, at $61.38 a barrel. This came after the commodity closed below the psychological key level of $60 twice this week and then continued to rise as high as $62.66 in post-settlement trade on Friday. WTI’s front-month crude settled up $2.41 at $56.52 a barrel. This closing gain of 4.5% was the largest since August 2012, and came after a similar intraday surge in WTI two days ago. But WTI still ended the week 2% lower, extending a slump that has nearly halved prices since June.

Oil Prices - 22 Dec 2014

U.S. Markets Wrap Up the Week Higher

On Friday, the U.S. stock market ended a turbulent week higher and with the biggest weekly gain since October. These gains were boosted by the collapse of the Russian ruble (RUB), volatility in the oil prices as well as the positive comments out of the U.S. Federal Reserve’s policy meeting which took place last week Wednesday. At the close of U.S. trading, the Nasdaq Composite index (COMP, +0.36%) ended the session up 16.98 points, or 0.4%, at 4,765.80. The tech-heavy index gained 2.4% over the past week. Also on the upside was the Dow Jones Industrial Average (DJIA, +0.15%) which gained 26.65 points, or 0.2%, to 17,804.80. This index rose 3% over the past week with top performers Chevron Corp (CVX, +3.58%) and Exxon Mobil Corp (XOM, +2.72%) advancing the most over the past week, gaining 10% and 8.1% respectively.

Exxon Mobil - 22 Dec 2014

 

Following the upward trend was the S&P 500 index (SPX, +0.46%) which ended the day up 9.42 points, or 0.5%, at 2,070.65, gaining 3.4% over the past week. On Friday, the energy and materials sectors led gains as investors were betting that the bottom in oil prices might be in sight. Energy sector stocks in particular jumped nearly 10% over the past week, while materials gained 5%.

Nasdaq - 22 Dec 2014

In the Spotlight – U.S. Stocks Expected To Rise This Week

According to analysts, U.S. stocks are likely climb higher in the traditionally low-volume Christmas-foreshortened trading week. This will follow last week’s big boost after the dovish comments from the Federal Reserve which saw stocks having their best two days in a row in years. As a result, the Dow Jones Industrial Average and the S&P 500 Index both closed the week up more than 3% while the Nasdaq Composite Index rose 2.4%. According to Randy Frederick, managing director of trading and derivatives at Charles Schwab, based on the tendency of strong Decembers to continue into January, coupled with the low trading volumes that tend to cap the year, stocks may very well end the year at record highs. Frederick stated that over the past 36 years, December has been a strong month for stocks 28 times. Of those years, the strong December has led into a strong January 20 times, or about 70% of the time. A key exception to this trend was this year, when stocks fell in January after a strong December. Frederick also pointed out that since the beginning of 2013, there have been nine times where the S&P 500 Index has dipped below its 100-day moving average. Out of those times, the S&P 500 has bounced back within a few days every time except this past October with the outbreak of Ebola. Once the fear subsided, stocks went back to new record highs. Trading volumes last week were 12% to 25% above the December average of 7.58 billion shares and volume is expected to drop off considerably in the holiday week. According to Frederick, these lower volumes will likely benefit a higher increase for stocks.

Trading Volumes - 22 Dec 2014

This week, November existing home sales comes out Tuesday and on Wednesday, GDP data, December consumer sentiment figures and November new home sales data comes out.

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Daily Market Review - 19 Dec 2014

USD/JPY Continues To Rise

USDJPY - 19 Dec 2014

On Friday, the U.S. dollar (USD) continued to climb against the Japanese yen (JPY). This came after the Bank of Japan (BoJ) maintained the level of its stimulus program and as Thursday’s U.S. jobless claims data continued to support the greenback. The USD/JPY hit 119.47 during late Asian trade. This marked the pair’s highest since December 10 and the pair subsequently consolidated at 119.24, gaining 0.33%. The yen came under pressure after the BoJ said it will boost its monetary base at an annual pace of ¥80 trillion. The traditional safe haven JPY rallied earlier in the week as oil prices continued to fall, adding to fears over the global economic outlook and the impact of oil’s drop on weakening emerging market economies and their currencies. Meanwhile, the dollar remained supported after the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending December 12 fell by 6,000 to 289,000 from the previous week’s revised total of 295,000. Economist had forecast an increase of 1,000. Also, the yen was lower against the euro, with EUR/JPY climbing 0.40% to 146.49.

Global Currencies - 19 Dec 2014

NYMEX Crude Rebounds

On Friday, crude oil prices rebounded solidly in Asia. This came as investors focused on the extent of a fall since June that pushed prices overnight down to levels last seen in 2009. On the New York Mercantile Exchange, West Texas Intermediate crude oil futures for delivery in February traded at $55.18 a barrel, up 1.50%. This came after hitting an overnight session low of $54.58 a barrel and off a high of $59.01 a barrel. Meanwhile on Thursday, the global Brent crude contract ended down $1.91, or 3.1%, at $59.27 a barrel. Both contracts ended at the lowest price since May 2009. On Wednesday, oil prices rallied due to short covering and on U.S. supply data. The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories fell by 0.847 million barrels in the week ending December 12. The draw fell short of expectations for a decline of 2.36 million barrels, though oil prices shot up as investors viewed an earlier American Petroleum Institute report revealing an unexpected 1.9 million barrel increase in U.S. oil stockpiles as an anomaly. By Thursday, prices fell anew on concerns of a global supply glut, with investors searching for new support levels.

Crude Oil - 19 Dec 2014

U.S. Markets Surge

On Thursday, the U.S. stock market rallied to its best two-day gains in three years. This rally started on Wednesday after the Federal Reserve Chairwoman Janet Yellen assured the markets that the central bank would be patient about lifting interest rate. As a result, there was all-out bull run late in Thursday trading. The S&P 500 (SPX, +2.40%) jumped 48.34 points, or 2.4%, to 2,061.23. This marked the index’s biggest one-day gain in nearly two years. It is also the first time since Aug 2002 that the benchmark index posted two consecutive days of gains greater than 2%. Also on the upside was the Dow Jones Industrial Average (DJIA, +2.43%) soared 421 points, or 2.4%, to 17,778.15, its biggest one-day gain in three years. It was also the first time in more than six years since the Dow recorded back-to-back days of gains exceeding 200 points. Following the upward trend was the Nasdaq Composite index (COMP, +2.24%) which advance 104 points, or 2.2%, to 4,748, as technology companies recorded big gains.

S&P 500 Index - 19 Dec 2014

In the Spotlight – Will the Bull Market Be Impacted in 2015?

According to market strategists, the S&P 500 index (SPX) is expected to keep climbing in 2015 despite facing the likelihood of the first Federal Reserve rate increase in more than eight years. Strategists have also said that the SPX is likely to end 2015 nearly 10% higher from current levels. This degree of bullishness among strategists varies depending on how much they balance the impending Fed rate hikes and volatility against the role of the stronger dollar (USD), lower energy prices, and economic improvement. Given the recent downturn in stocks, the average predicted gain is slightly higher than the S&P 500’s current year-to-date gain of nearly 9%, and higher than the average forecast rise of 6% seen this time last year before Treasury yields and oil prices surprised to the downside and the dollar rallied.

Bull Run - 19 Dec 2014

According to Jonathan Glionna from Barclays, the SPX is likely to end at 2,100 in 2014. His bearish target is quite surprising since low oil prices have historically resulted in positives for the economy and stocks. In a recent note, Glionna estimates that while lower oil prices could result in a $40 billion reduction in energy-related capital expenditures, consumers will likely save about $70 billion to pour into other areas of the economy. He said, “Declining oil prices will not add to revenue for the S&P 500. Rather, it is a symptom of slow global growth, which remains among our primary concerns.” Meanwhile, Adam Parker from Morgan Stanley believes that the SPX is headed for a level of 2,275 in 2015. Parker believes the U.S. is in the middle of an expansion that could last until 2020. As he said, “Economic factors, like consumer confidence, financial obligations, and delinquencies are all improving, and the consumer may be more insulated than investors think from a backup in yields, given 75% of their financial obligations are in mortgages, close to 90% of all mortgages are fixed, and the mortgage is termed out at the lowest average rate ever.”

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Daily Market Review - 18 Dec 2014

The Russian Ruble Stabilizes

Russian Ruble - 18 Dec 2014

On Wednesday, the ruble (RUB) ended a two-week slide. This came after the Central Bank of Russia loosened restrictions on how much money Russian banks need to hold in reserve, and said that it would not hesitate to sell foreign currency reserves to bolster the ruble when necessary. On Wednesday, the ruble traded at 61 to the dollar. This came after the RUB tumbled on Tuesday to a record low of 80.1 to the dollar, before recovering to around 67.90 in late trade, in one of its most volatile sessions ever. This slide had come as investors worried that the central bank’s decision to hike its interest rate 650 basis points to 17% would not be enough to stop the selloff. Crude-oil prices also stabilized on Wednesday, which also benefitted the ruble, as West Texas Intermediate crude futures finished flat at $56.27. The ruble has lost about 46% of its value against the dollar in 2014, weighed down by falling oil prices and international sanctions stemming from Russia’s invasion of Ukraine.

Asian Shares Rise on Patient Fed Statement

On Thursday, stocks in Japan jumped, leading most of Asia higher. This came after signals that the U.S. is not in a hurry to raise interest rates encouraged investors to take on more risk. In Japan, the Nikkei Stock Average surged 2.5% while Australia’s S&P/ASX 200 gained 1.5%. In Hong Kong, the Hang Seng Index was up 1.0%. These gains tracked a stock rally on Wednesday in the U.S., where the Federal Reserve pledged to keep interest rates low for a “considerable time.” This indication by the U.S. central bank was a relief for Asia, after an emerging-market selloff earlier in the week had investors fleeing the rupee and stocks and bonds in pockets of southeast Asia. A longer timeline for rate increases implies that stocks will continue to be more appealing to investors, including those in riskier emerging markets, compared with the low returns on U.S. bonds. Meanwhile, the Shanghai Composite Index  was off 0.2%, after data showed the decline in Chinese home prices has not run its course. The average price of new homes in 70 Chinese cities continued to fall in November, albeit at a slower pace. The Shanghai market is moderating after a strong run that put stocks up 4.3% in the first three sessions of the week. Elsewhere in the region, Korea’s Kospi was down 0.4%.

World Market Data - 18 Dec 2014

Gold Prices Ease Focus on Demand

On Thursday, gold prices eased in Asian trading. This came as the Federal Reserve’s outlook on rates weighed, though support on holiday demand remained. On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at $1,190.20 a troy ounce, down 0.36%. This came after hitting an overnight session low of $1,191.00 and off a high of $1,203.00. Overnight, gold futures dipped on Wednesday as investors jumped to the sidelines ahead of the Federal Reserve’s statement on monetary policy later in the session. Expectations for more hawkish language supported the greenback, which tends to trade inversely with gold. Meanwhile, investors also shrugged off lackluster inflation data. The Department of Labor reported earlier that the U.S. consumer price index fell 0.3% last month. This outpaced estimates for a decline of 0.1% and down from a flat reading in October. Consumer prices were 1.3% higher on a year-over-year basis, just shy of expectations for a 1.4% reading after a 1.7% increase in October. Core consumer inflation, which strips out volatile food and energy components, was up 0.1% from a month earlier and rose at an annual rate of 1.7%. Economists had forecast a monthly increase of 0.1% and an annual gain of 1.8%.

Gold  18 Dec 2014

In the Spotlight – U.S. Stocks Climb on Dovish Fed Remarks

Janet Yellen - Federal Reserve

On Wednesday, the S&P 500 index (SPX) and the Dow Jones Industrial Average (DJIA) scored their best one-day gains of 2014. The indices shrugged off falling-oil worries and global deflationary concerns, after the Federal Reserve conveyed a more dovish stance at the conclusion of its two-day meeting. Ahead of the meeting, stocks were already solidly higher as currency and commodity markets calmed following two sessions of wild swings. This indices however soared after the Federal Open Market Committee’s statement modified its “considerable time” language saying it “can be patient” about the timing of the first rate hike.

As a result, the S&P 500 index (SPX, +2.04%) closed 40.15 points, or 2%, higher at 2,012.89. The energy sector jumped by 4.2%, as oil prices reversed earlier losses while all 10 main sectors closed with solid gains. Also on the upside was the Dow Jones Industrial Average (DJIA, +1.69%) which had jumped 300 points, shortly after the statement. The index pulled back during Yellen’s comments to close near session highs, gaining 288 points, or 1.7%, to 17,356.87. Among the top gainers were Chevron Corp. (CVX, +4.25%) and Exxon Mobil Corp. (XOM, +3.02%), rising 4.3% and 3% respectively. Meanwhile, the Nasdaq Composite index (COMP, +2.12%) also rose sharply, led by big gains in the technology names. Apple Inc. (AAPL, +2.50%) gained 2.5%.

S&P 500 Index - 18 Dec 2014

During the press conference, Fed chairwoman Janet Yellen sounded upbeat on the economy but noted that there was room for improvement. She stated that inflation is running below the Fed’s 2% target inflation rate but expects to see normalization. She also suggested that the recent slump in oil may be fleeting, referring to crude oil price moves as possibly “transitory.” The Fed modified the “considerable time” language in its statement and replaced it with new language that the U.S. central bank “can be patient in beginning” to tighten monetary policy.

On Thursday, the U.S. is to release data on initial jobless claims and manufacturing activity in the Philadelphia region.

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