Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Biggest Inflation Threat in 40 Years Looms over Markets - 13th Apr 21
How to Get Rich with the Pareto Distribution - Tesco Example - 13th Apr 21
Litecoin and Bitcoin-Which Is Better? - 13th Apr 21
The Major Advantages Of Getting Your PhD Online - 12th Apr 21
Covid-19 Pandemic Current State for UK, US, Europe, Brazil Vaccinations vs Lockdown's Third Wave - 12th Apr 21
Why These Stock Market Indicators Should Grab Your Full Attention - 12th Apr 21
Rising Debt Means a Weaker US Dollar - 12th Apr 21
Another Gold Stocks Upleg - 12th Apr 21
AMD The ZEN Tech Stock - 12th Apr 21
Overclockers UK Build Quality - Why Glue Fan to CPU Heat sink Instead of Using Supplied Clips? - 12th Apr 21 -
What are the Key Capabilities You Should Look for in Fleet Management Software? - 12th Apr 21
What Is Bitcoin Gold? - 12th Apr 21
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21
The History of Bitcoin Hard Forks - 10th Apr 21
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21
Investing in Google Deep Mind AI 2021 (Alphabet) - 6th Apr 21
Which ETFs Will Benefit As A Stronger US Dollar Reacts To Global Market Concerns - 6th Apr 21
Staying Out of the Red: Financial Tips for Kent Homeowners - 6th Apr 21
Stock Market Pushing Higher - 6th Apr 21
Inflation Fears Rise on Biden’s $3.9 TRILLION in Deficit Spending - 6th Apr 21
Editing and Rendering Videos Whilst Background Crypto Mining Bitcoins with NiceHash, Davinci Resolve - 5th Apr 21
Why the Financial Gurus Are WRONG About Gold - 5th Apr 21
Will Biden’s Infrastructure Plan Rebuild Gold? - 5th Apr 21
Stocks All Time Highs and Gold Double Bottom - 5th Apr 21
All Tech Stocks Revolve Around This Disruptor - 5th Apr 21
Silver $100 Price Ahead - 4th Apr 21
Is Astra Zeneca Vaccine Safe? Risk of Blood Clots and What Side Effects During 8 Days After Jab - 4th Apr 21
Are Premium Bonds A Good Investment in 2021 vs Savings, AI Stocks and Housing Alternatives - 4th Apr 21
Penny Stocks Hit $2 Trillion - The Real Story Behind This "Road to Riches" Scheme - 4th Apr 21
Should Stock Markets Fear Inflation or Deflation? - 4th Apr 21
Dow Stock Market Trend Forecast 2021 - 3rd Apr 21
Gold Price Just Can’t Seem to Breakout - 3rd Apr 21
Stocks, Gold and the Troubling Yields - 3rd Apr 21
What can you buy with cryptocurrencies?- 3rd Apr 21
What a Long and Not so Strange Trip it’s Been for the Gold Mining Stocks - 2nd Apr 21
WD My Book DUO 28tb Unboxing - What Drives Inside the Enclosure, Reds or Blues Review - 2nd Apr 21
Markets, Mayhem and Elliott Waves - 2nd Apr 21
Gold And US Dollar Hegemony - 2nd Apr 21
What Biden’s Big Infrastructure Push Means for Silver Price - 2nd Apr 21
Stock Market Support Near $14,358 On Transportation Index Suggests Rally Will Continue - 2nd Apr 21
Crypto Mine Bitcoin With Your Gaming PC - How Much Profit after 3 Weeks with NiceHash, RTX 3080 GPU - 2nd Apr 21
UK Lockdowns Ending As Europe Continues to Die, Sweet Child O' Mine 2021 Post Pandemic Hope - 2nd Apr 21
A Climbing USDX Means Gold Investors Should Care - 1st Apr 21
How To Spot Market Boom and Bust Cycles - 1st Apr 21
What Could Slay the Stock & Gold Bulls - 1st Apr 21
Precious Metals Mining Stocks Setting Up For A Breakout Rally – Wait For Confirmation - 1st Apr 21
Fed: “We’re Not Going to Take This Punchbowl Away” - 1st Apr 21
Mining Bitcoin On My Desktop PC For 3 Weeks - How Much Crypto Profit Using RTX 3080 on NiceHash - 31st Mar 21
INFLATION - Wage Slaves vs Gold Owners - 31st Mar 21
Why It‘s Reasonable to Be Bullish Stocks and Gold - 31st Mar 21
How To Be Eligible For An E-Transfer Payday Loan? - 31st Mar 21
eXcentral Review – Trade CFDs with a Customer-Centric Broker - 31st Mar 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Rogue Chinese Whispers Denied As Stocks Rally

Stock-Markets / Stock Markets 2010 May 27, 2010 - 09:01 AM GMT

By: PaddyPowerTrader


Best Financial Markets Analysis ArticleFlip flop on another whiplash Wednesday as US stocks fell late in the day, with the Dow closing below 10,000 for the first time since February, as a (seemingly bogus) report that China may review investments in European government bonds spurred concern the credit crisis will worsen. Microsoft tumbled 4.1% after CEO Steve Ballmer said the effects of the debt crisis will not be isolated to Europe.

Wells Fargo and Goldman Sachs slid more than 1.6% as financial shares in the S&P 500 dramatically reversed. We had a sharp rally in the Dow futures this morning, though of course on these schizophrenic days when we alternate between a frenetic reactive sense of bearishness and bullishness it’s only the final hour of trading that counts. The late-day movement is starting to be a pattern as indexes generally point in one direction for much of the day, and then reverse just before the close. This is not good for the heart.

On a turnaround Thursday the world seems a more contented place. The markets were cheered by the KOSPI and Won ripping higher on the back of press reports that North Korea is to apologize to the South for the ship sinking incident. The markets will also take comfort in the fact that LIBOR-OIS seems to be stabilizing around 31bps. And the Spanish parliament passed a tough new austerity package (even if only just).

As I write the Dow futures have managed to shrug off some disappointing GDP numbers (3% versus the expected 3.4%). Weaker personal consumption figures and a weekly jobless claims number that was 5k worse than consensus expectations.

Today’s Market Moving Stories

•Spain’s parliament has this morning approved a €15bn austerity package (by a single vote 169 to 168). And this austerity bug is contagious as Italy does its homework, too with an expenditure cuts-biased €24bn package for 2011-12.
•European banks are beginning to hoard cash and take fewer short-term loans, the Wall Street Journal reported. Banks are issuing less short-term IOUs in Spain, Portugal and Italy, and many European banks are preferring to move cash to the European Central Bank rather than lend to other banks.
•BBVA, Spain’s second-biggest listed bank, is being squeezed out of the US commercial paper market as a source of funding, in the latest sign of pressure facing eurozone banks. BBVA bank did not renew €1bn in short term funding in the US market, going elsewhere due to rising interest rates.
•US Treasury Secretary Timothy Geithner landed in Europe and reasserted a traditional American role of dispenser of financial advice to the world, telling European governments to get their fiscal houses in order. After two years in which an historic financial crisis seemed to deprive the US of its self-confident global economic leadership, Geithner signalled a newfound willingness to reassert American authority on the future of the world economy.
•The OECD are forecasting higher global growth. I hope they are right, but think their models are more backward looking than a leading indicator. The economy of the OECD’s 30 members will grow 2.7% this year, more than the 1.9% predicted in November.
•Japanese exports rose 2.3% m/m or 40.4% y/y in April – above the consensus forecast for a rise of 38.9%. This was the fifth consecutive increase. Exports to Asia, which account for more than half of Japan’s total exports, rose 45.3% y/y. Shipments to the EU increased 19.8% y/y, slowing from a 26.7% gain in March.
•Portugal’s BES Investment’s CEO warned that banks in Portugal and other European nations faced a liquidity shortage and that the ECB needed to address this issue directly. He called for the ECB to provide liquidity to the market in the same way the Fed did in 2009. He said while BES had its funding covered for this year, the liquidity issues meant that it wouldn’t be able to extend its credit offering any further.
•The peasants are revolting. British Airways cabin crew continue their strike; the CWU union is calling for a 5% pay rise for its BT workers, and is threatening a strike if it is rejected. In Germany, ground staff at Berlin’s two main airports are out today, looking for higher wages. In Finland, steel maker Rautaruukki sees its Raahe plant down, with 400 workers out in protest at staff cuts. And there’s a national day of strikes in France across multiple industries and unions. In Italy the GCIL union has called for a general strike before the end of June and in Romania, joint union decision to call a general strike before the end of June.
•Greek telecommunications engineers cut off the telephone line to the Prime Minister’s house while attempting to disconnect a customer who was behind in payments, the telephone company OTE said.

Chinese Rumours That Spooked The Markets
This is the story that spooked the market last night. According to the FT, China, which boasts the world’s largest forex reserves, is reviewing its holdings of eurozone debt after the crisis that swept the region’s bond markets. Officials with China’s State Administration of Foreign Exchange, or Safe, which manages the reserves, have met foreign bankers in Beijing in recent days to discuss the issue. Safe, which holds an estimated $630bn of eurozone bonds in its reserves, has voiced concern about its exposure to the five so-called peripheral eurozone markets of Greece, Ireland, Italy, Portugal and Spain.

But Bloomberg later carried a story directly contradicting this saying that the head of the Chinese sovereign wealth fund said he plans to keep investments in Europe even after the euro’s decline. The China Investment Corp. had debated whether to lower the percentage of assets it allocates toward the continent, President Gao Xiqing said. The fund will monitor issues regarding the 16-nation currency and regulation to see if a return to previous growth rates is possible, Gao said. The article didn’t specify which issues the Chinese fund would be tracking. Hence the relief rally in equities today.

Hawkish Tones Coming From Fed Mouths
In a speech Wednesday Fed member Lacker said he was less comfortable with the Fed’s extended period language. He said while the inflationary implications of increased bank reserves have been minimal so far, they needed to be watched carefully. Inflation may remain extremely low for another couple of months, but then it’s likely to move back up to trend at around 1.5 to 2%.

This is becoming a more frequent message from the Fed. Hoening has officially dissented from the formal communication a number of times now, while today Fed member Bullard warned that maintaining rates near zero for an extended period carried the risk of creating new bubbles. He said the problem the Fed was running towards was that markets may confuse an extended period of low rates with a rate peg that doesn’t respond to shocks. In fact he said the markets may loose faith in the Fed’s commitment to remove quantitative easing.

Company News

•On the move today in Europe include Daily Mail +1.4% released a solid interim management statement and Maersk, +4%, trading higher after agreeing to sell its UK chain of Netto Stores to Asda for $1.1bn in a move that makes strategic sense given it didn’t have the scale in the UK it has in other countries.
•Insurance names are also bid today with Ageas up 9% after news that it had lightened up its PIIGS bond exposure to the tune of eur 4.8bn and invested the proceeds in “core” Eurozone markets. Aviva is up 6% today and Legal & General is also better by 6%.
•BHP Billiton and Rio Tinto Group rose in London trading after The Australian newspaper said Prime Minister Kevin Rudd’s government proposed changes to a mining profit tax.
•Rumour that the giant Prudential / AIA deal is off. No comment from The Pru and cable and the GBP in general is rallying on the “news”. Neptune Investment Management who owns 20% of the insurer has voted against the deal. The stock is up 5.5% today as it had traded off 15% since announcing the deal on March 1st.
•The big loser Thursday is Tate & Lyle (down nearly 9%) after numbers showed a 77% slump in profits as it was forced to take a £217mm charge after abandoning ambitious plans to open an ethanol plant in the US.
•Stateside US bank shares are trading up nicely pre-market with Citigroup and Bank of America both up 3%+. Pershing Capital’s Bill Ackman, said at a conference that he’d bought 150 million of the shares and a broker report tipped BoA Merrill Lynch shares to reach $27.
•A trader has paid $1.25 million to speculate in the options market that Citigroup will climb 30% by July, a bet with a potential return of more than 300%.
•Apple overtook Microsoft to become the most valuable technology company on optimism it can keep adding customers for its iPhone, Macintosh computer and iPad. Apple’s market value at close yesterday was at $222.1 billion, higher than Microsoft’s $219.2 billion. That made Apple the most valuable technology firm in the world. It’s also the second-largest US stock by market value, behind oil company Exxon Mobil, valued at $278.6 billion.
•ArcelorMittal, the world’s biggest steelmaker, will announce details Thursday of its plans for expansion of a major Brazilian steel plant. Expansion of the Joao Monlevade integrated long-steel products mill in Brazil’s Minas Gerais state will involve building new blast furnace facilities, among other upgrades.
•US stock markets are oversold and may rally strongly over the next few days, said investor Barton Biggs, who runs hedge fund Traxis Partners. “I think they’re going to stabilize in this general area, and then we’re going to have a significant move to the upside”. Biggs recommended buying US stocks last year when benchmark indexes sank to the lowest levels since the 1990s.
•Money manager Eric Sprott is buying gold and betting against stocks. Sprott is betting that governments around the world have run out of ammunition in their attempt to boost economic growth and counter banking losses through stimulus spending and lower interest rates.

And Finally… BP Mocked With Hilariously Accurate Ad

By The Mole

The Mole is a man in the know. I don’t trade for a living, but instead work for a well-known Irish institution, heading a desk that regularly trades over €100 million a day. I aim to provide top quality, up-to-date and relevant market news and data, so that traders can make more informed decisions”.© 2010 Copyright PaddyPowerTrader - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

PaddyPowerTrader Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules