Financial Market Review for January 16 2018 In today’s trading session, European stock markets are struggling with dollar weakness. European stock markets are mostly lower, as markets struggle with the currency the rise in pound and euro against the dollar. The US is on holiday, leaving markets a bit quieter today, and while Asian markets still moved mostly higher, the Hang Seng fell back again in the end and closed -0.23% as investors turn cautious with indices at very high levels amid warnings that markets are increasingly overbought. U.S. stock futures meanwhile are underpinned by the weakness in USD and redemptions in the Eurozone today are adding liquidity and helping Italian MIB and Spanish IBEX to outperform. The FTSE 100 index UKX, -0.02% fell 0.1% to end at 7,769.14 after Friday’s rise of 0.2% to an all-time closing high. The equity gauge last week marked a sixth straight weekly win, the longest win streak since January 2017. The Eurozone posted a trade surplus of EUR 22.5 billion in November, up from EUR 19.0 billion in the previous month, with export growth outpacing import growth in November. The unadjusted surplus for the first eleven months of the year amounted to EUR 213.1 billion, down from EUR 237.7 billion in the corresponding period last year, with exports rising 8%, while nominal imports rose 10.0%. The monthly data shows, however, that short-term trends are improving and consistent with a positive contribution of net exports to overall growth in the last quarter of the year. U.K. stocks closed lower Monday, as investors started the week with news of the collapse of construction and outsourcing heavyweight Carillion PLC, but the blue-chip benchmark kept near a record-high level. Brexit-related developments are likely to pick up with talks between the UK and EU on a transition deal are due to start, although negotiations on a future trading relationship are not due to begin until March. A transition period, which would see the UK remaining in the single market and customs union, but without voting rights, for at least two years after actual Brexit on 29th March 2019, is widely considered as being crucial in maintaining the confidence of businesses with long-term planning horizons, such as airlines. The government still hasn’t made it crystal clear what type of Brexit it wants, whether a soft form like the Norwegian or Swiss models or a hard form with a trade new deal, like Canada, although its language ostensibly points to a hard exit. Both the UK and EU have also been making contingency plans for a scenario where Britain leaves without any deal, which is looking less likely since last month’s show of resolve behind the agreement on divorcing terms. The EU is aiming to have negotiations wrapped up by October, to allow time for ratification ahead of March 2019. Aside from the obvious hurdle of 27 nations ratifying a new deal, the UK parliament will also vote on it. A vote against in the UK’s House of Commons, which some fear would inevitably spark a constitutional crisis that would trigger a new general election or the second referendum on EU membership. In the Asian markets today, Asian shares erased early modest losses and pushed to a fresh record high. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.5 percent, extending record highs set in the previous session. Japan's Nikkei stock index .N225 rallied 1 percent after touching its highest intraday level since November 1991 as the yen's recent surge took a breather, with expectations for strong corporate earnings underpinning sentiment.
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Financial Market Review for January 16 2018 U.S. markets were closed for a public holiday on Monday. In the currency markets, the euro edged up slightly to $1.2280, within sight of its Monday high of $1.2296, its loftiest peak since December 2014. The euro had blipped higher on Monday and German benchmark bond yields hit session highs after European Central Bank rate-setter Ardo Hansson said the central bank could end its bond purchase scheme in one go after September if the economy and inflation develop as expected. Adding to the euro’s ascent, data showed the trade surplus in the 19-country euro area rose to its highest level in eight months, indicating companies were so far weathering the impact of a stronger currency. The dollar index, which gauges the U.S. currency against a basket of six major rivals, wallowed at more than three-year lows. It was last at 90.456 .DXY, after dropping as low as 90.279 on Monday, its deepest nadir since December 2014. Against the yen, the dollar clawed back some lost ground, adding 0.3 percent to 110.82 JPY=. It fell as low as 110.32 yen on Monday, which was its weakest level since Sept. 15. Japanese Finance Minister Taro Aso said on Tuesday that he did not see problems with the dollar weakening to around 110.80 yen, but that big swings in currencies would be problematic. Finally in the commodity markets, Gold prices have been consolidating over the last 24 hours as they near the highs from last year. It is normal for the Bull Run to slow down as it comes close to a region of high selling and it is also likely that some part of the market is beginning to believe that the rally is a bit over extended at this point of time and hence it is likely that there could be a correction lower. That is why the buyers are not committing themselves fully into the Bull Run as yet which is causing the Bull Run to stall at this point of time. If this continues, it is likely that the prices might have to dip lower towards the 1325 region so that it can pick up more buyers which would give a fillip to the Bull Run and push the prices higher in due course of time. The gold prices have gained mainly due to the weakness in the dollar and not due to any special demand or any other fundamental factors. Brent crude oil prices held near $70 a barrel on Tuesday, a level not seen since 2014’s dramatic market slump. Prices have been driven up by production curbs in OPEC nations and Russia, as well by strong demand thanks to healthy economic growth. Brent crude futures LCOc1 dipped 30 cents, or 0.4 percent, to $69.96 per barrel by 0748 GMT on Tuesday from the previous day’s close. But traders said Brent was well supported overall around $70 a barrel. Brent hit $70.37 a barrel on Monday, a December 2014 high, when markets were at the beginning of a three year-long slump.
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Financial Market Review for January 16 2018 U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $64.47 a barrel, up 17 cents, or 0.3 percent from their last settlement. WTI hit a December-2014 peak of $64.89 a barrel in early trading. Oil has been pushed higher by an effort led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to withhold production since January last year. The cuts are set to last through 2018. View our full economic calendar for a daily roundup of major economic events.
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