Daily Market Reviews by MAYZUS
MAYZUS Investment Company (formerly United World Capital) is proud to provide daily market reviews by the well-known financial expert – Mr. Arne Treholt, a former Political Secretary to the Minister of Shipping and Foreign Trade, then Deputy Minister of Law of the Sea of the Norwegian Royal Ministry of Foreign Affairs. He also held the position of Counselor for Economic Development and Social Affairs at the Ministry of Foreign Affairs, and was member of the Norwegian Mission to the United Nations, New York. At the moment Mr. Treholt is a Vice President and a Business Development Director of MAYZUS Investment Company.
15 AUGUST 2013: US STOCKS DECLINE ON MACY’S SALES
DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments
The US stock indices fell last night after retailer 'Macy's Inc' quarterly results disappointed. This gave new urgency to investors debates on the timing and pace of reductions in the Federal Reserve’s (FED) bond purchases. The department store operator Macy’s shares fell 4.4 % leading to a loss in S&P. Also Dow Jones and Nasdaq ended in red territory after Macy’s disappointing sales.
In Europe, both France and German economies grew faster than the United States in the second quarter of 2013, pulling the Euro zone out of its longest recession seen in years. The increased pace was primarily driven by renewed business and consumer spending in the two largest economies inside the Euro zone. The Euro zones economy continues, however, to be fragile with countries such as Spain and Italy struggling. The figures published on Wednesday show a 0.3 % growth.
Austria and Finland also presented positive growth figures while the Cyprus economy contracted 1.4 % in the second quarter, after the international bailout in March. Laiki, the second biggest bank, was forced to close and the Bank of Cyprus and Hellenic Bank suffered heavy losses on big deposits. In spite of some positive signs inside the Euro zone, the economic and fiscal problems seen in the periphery and especially in Southern Europe indicate that the Euro zone is in for a bumpy and uneven recovery.
The positive news from France and Germany had little impact on the currencies. EUR/USD traded at 1.3258 after an earlier high of 1.3278. Traders put stop/loss orders on 1.3230. A break could see a slip to 1.3155. The DXY Dollar basket was marginally down after climbing one percent since its low on August 8th. Oil prices fell during yesterday's session, but precious metals, Gold and Silver, demonstrate a clear, positive upward trend.
16 AUGUST 2013: OIL JUMPS ON EGYPT UNREST
DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments
Oil prices jumped on the tense situation in the Middle East where at least 535 people were killed in a security crackdown in Egypt. Brent and NYMEX, New York crude, climbed to a four-month high on Thursday with Brent reaching USD 111 a barrel. The escalating violence in Egypt might affect the Suez Canal and spread all over a middle East already torn by a two year civil war in Syria, disturbing death tolls and unrest in Oil producing Iraq and Libya.
Egypt has declared a state of emergency. Supporters of the deposed President Mursi have, nevertheless, announced new major demonstrations. Oil storages in the US are shrinking faster than expected. Egypt is a minor crude producer, but home of the strategically important Suez Canal and the Sumed pipeline. The deadly violence threatens to choke Oil supply routes and have serious consequences for steady Oil supplies from the Middle East.
The Libyan Deputy Oil Minister stated on Thursday that Libya’s Oil production has been reduced by 600 000 barrels a day. Iraq expects to slash supplies with 600 000 barrels a day in September. US crude inventories fell 2.8 million barrels with stocks at the lowest level seen since 2012. As long as the situation in the Middle Eastern area is kept under some control, Brent doesn’t seem to have a potential to climb higher than to USD 113 – 114. Europe’s top Oil company, Royal Dutch Shell, has temporarily closed its offices in Egypt.
The USD has come under new pressure on continued uncertainty over when the Federal Reserve (FED) might start to taper its bond buying program. Retailer Macy’s department store, delivered disappointing results on Wednesday, leading to new question marks regarding the healthiness and growth of the US economy. EUR/USD is at 1.3299 and USD/JPY trades at 98.15. Precious metals, Gold and Silver, have regained some of their safe-haven status and have steadied on levels not seen in months.
Copyright: MAYZUS Investment Company Ltd
DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments
While equities worldwide struggled against the US federal Reserve (FED) tapering concerns, Oil and Silver rallied at the end of last week. Gold rose to a two-month high on Friday. Silver saw its strongest weekly performance in five years with a 13 percent rise, strongly indicating that the wave of selling in precious metals over the last half year, has come to a temporary halt. Gold rose 50 Dollars during the week to hit a peak of USD 1373 a troy ounce.
Precious metal prices were helped by a weaker Dollar. EUR/USD traded steadily above 1.33 during the week with good news coming from the Euro zone. Both France and Germany presented positive growth figures which, in spite of weak fundamentals, are interpreted as the Euro zone possibly coming out of recession. Data on Thursday showed that investors in Japan and China led large sell-offs in US treasuries, following FED's statements on tapering in June.
China has, over the last half year, strongly increased its Gold holdings seemingly in an effort to diversify its investments in US treasuries. China is seen to have built up Gold reserves to become more independent of both USD and EUR. Both currencies are regarded as vulnerable. With eyes pointing towards the future – 10 – 20 years perspective – China seems interested in building up the Chinese currency as a competitive international reserve currency.
Last week saw the first net inflow into Gold backed exchange traded funds, so called ETF's, sine 2012. ETF's sold 402 tonnes of Gold in the second quarter of 2013, double the Gold production of South Africa. Over the last few weeks, the number of Gold 'short positions' have been reduced. This is combined with a surge in Chinese Gold buying which rose 87 % from 2012 to 386 tonnes. Retail buying in India and central banks buying are also boosting Gold prices. Many traders remain, however, gloomy and ask how long the rally in precious metals will continue.
DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments
The Dollar held steady on Monday as investors refrained from bets on the currency before the publication of the US Federal Reserves (FED) minutes on Wednesday. It is expected that the minutes might give a more clear indication on the pace and timing of FED’s plan to trim its bond buying program. Analyst consensus is that tapering could start in September. The Dollar index, DXY, was flat. EUR/USD trades at 1.3348 and USD/JPY is at 97.97.
Higher yields on Dollar denominated bonds have made the Dollar more attractive over the last few days, but this has been blunted by a promising improvement in the Euro zone and UK economies which have underpinned the Euro and Sterling. Data last week showed that both the German and French economies were growing faster than expected in the second quarter. EU manufacturing and services data are going to be published on Thursday and give a more clear indication as to whether the Euro zone is pulling out of recession.
The data will have an impact on the strength of the Euro, which is expected to falter against the Dollar in the upcoming trading sessions. That could mean that Dollar would start to attract demand against the Euro. The Dollar might also be in for a new test against the Japanese Yen. If the August 15th peak of 98.66 Yen is broken, there might be retest on the August high of 99.955 Yen. Oil and precious metal prices are keeping steady at the high levels seen on Friday. Brent trades at USD 110.55 a barrel and gold stands at USD 1376.
Stock markets in Europe continue to be under pressure with France, Germany, and England indexes trading down. There was a weak start in the equity market in Asia with Asian Pacific index in red territory the first day of the week. The unrest in Egypt continues with new clashes between Mursi-supporters and the police, claiming an unconfirmed 1000 lives taken until now. US politicians claim there has been a halt in the US billion Dollar military help to Egypt.
Copyright: MAYZUS Investment Company Ltd