Archive for Financial News – Page 186

13 Sep

Oil prices rose to a 10-month-high. The presentation of the new iPhone 15 lineup did not impress investors

By JustMarkets

At Tuesday’s stock market close, the Dow Jones Index (US30) decreased by 0.05%, while the S&P 500 Index (US500) lost 0.57%. The NASDAQ Technology Index (US100) closed negative by 1.04%. Weakness in technology stocks had a negative impact on the overall market. For example, Oracle closed down more than 13% after reporting lower-than-expected first-quarter earnings due to a slowdown in cloud sales. According to Morgan Stanley, Oracle’s results raise questions about the timing of artificial intelligence (AI) demand turning into revenue for the company. In addition, Apple shares were down more than 1% after introducing the iPhone 15 lineup.

On the positive side, energy stocks rallied after the price of WTI crude oil rose to a near 10-month high. In addition, shares of several regional banks rose after an upbeat outlook at the Barclays Global Financial Services Conference.

The US financial markets are awaiting the release of consumer price data on Wednesday. Economists’ median estimate is that the pace of growth in the consumer price index will accelerate to 3.6% y/y in August, although the core reading, which excludes food and energy costs, will fall to 4.3% y/y. On a month-on-month basis, however, overall CPI is forecast to rise 0.6%, which would be the biggest jump since inflation peaked in June 2022. If the data matches expectations, it will increase the likelihood of a US Fed rate hike at the November meeting and support the USD index. Currently, markets are pricing in a 7% chance of a 25 bps rate hike at the September 20 FOMC meeting and a 42% chance of a 25 bps hike at the November 1 FOMC meeting.

Equity markets in Europe were mostly down yesterday. Germany’s DAX (DE40) decreased by 0.54%, France’s CAC 40 (FR40) fell by 0.11% on Tuesday, Spain’s IBEX 35 (ES35) added 0.27%, and the UK’s FTSE 100 (UK100) closed up by 0.41%

The ECB meeting will take place as early as Thursday, amid much uncertainty, as price pressures in the Eurozone remain elevated and data suggests a sharp slowdown in economic activity. The latest Spanish inflation data showed that consumer prices rose to 2.6% y/y in August, influenced by higher fuel costs, up from a 2.3% y/y reading last month. The probability of the ECB raising interest rates by 25 bps at Thursday’s meeting rose to 52% from 38% a day earlier.

Oil rose to a near 10-month high, and gasoline rose to a 2-week high. Limited global oil supplies helped boost prices on Tuesday after OPEC’s monthly report forecast global crude inventories to fall to a 10-year low. A decline in oil in floating storage is also a bullish factor for prices. On Monday, Vortexa released weekly data showing that the volume of crude oil stored in tankers afloat for at least a week fell by 5.8% from the previous month to 81.02 million barrels as of September 8, the lowest in 9 months.

Asian markets traded flat on Tuesday. Japan’s Nikkei 225 (JP225) jumped by 0.95% yesterday, China’s FTSE China A50 (CHA50) lost 0.32%, Hong Kong’s Hang Seng (HK50) decreased by 0.39%, and Australia’s S&P/ASX 200 (AU200) was positive by 0.20% on Tuesday.

On Monday, natural gas prices received support from a rise in European gas prices to a one-week high. LNG production workers at key Chevron facilities in Australia began a partial strike last week after talks with management failed to reach an agreement. The workers said that if no agreement is reached, they will completely stop work for two weeks starting this Thursday.

Sentiment towards China remains largely negative as a raft of economic indicators for August painted a weak picture of Asia’s largest economy. Added to this was Beijing’s slow rollout of additional stimulus measures.

Bank of Japan (BoJ) watchers shifted their forecasts for an end to negative interest rates after Bank Governor Kazuo Ueda touched on the possibility in an interview published over the weekend. Most economists believe that the BoJ will stick to its previous policy at next week’s BoJ board meeting, with the authorities predicted to abandon negative interest rates by the end of June next year.

S&P 500 (F)(US500) 4,461.90 −25.56 (−0.57%)

Dow Jones (US30) 34,645.99 −17.73 (−0.051%)

DAX (DE40)  15,715.53 −85.46 (−0.54%)

FTSE 100 (UK100) 7,527.53 +30.66 (+0.41%)

USD Index  104.54 +0.01 (+0.01%)

Important events for today:
  • – Japan Producer Price Index (m/m) at 02:50 (GMT+3);
  • – UK GDP (m/m) at 09:00 (GMT+3);
  • – UK Industrial Production (m/m) at 09:00 (GMT+3);
  • – UK Manufacturing Production (m/m) at 09:00 (GMT+3);
  • – UK Trade Balance (m/m) at 09:00 (GMT+3);
  • – Eurozone Industrial Production (m/m) at 12:00 (GMT+3);
  • – US Consumer Price Index (m/m) at 15:30 (GMT+3);
  • – US Crude Oil Reserves (w/w) at 17:30 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Energy Financial News
12 Sep

“Bear Market Leader”? Here’s a Prime Candidate

This stock market sector has failed to recover since the Dow’s Q1 correction

By Elliott Wave International

As you may know, in every bull or bear market, some stocks or sector lead while others follow. So, the “leadership” in the stock market works both ways — in uptrends and down.

The rally in stocks since last November has been led by a relatively few big cap tech names, like Nvidia, Microsoft, Apple, Alphabet and Meta.

As you may also know, history shows that stocks which lead on the upside often lead on the downside after a market turn occurs. That’s why in our publications we’re keeping a close eye on the tech sector right now.

Another prime candidate as a bear market leader is the banking sector.

Indeed, the August Elliott Wave Theorist, a monthly publication which covers major financial and social trends, shows this chart and says:

Bankers are bullish on investments, but investors are not bullish on banks. Bank stocks turned weak during the Dow’s Q1 correction and have failed to recover with it since. While all the major stock market indexes rose into July-August, bank stocks stayed down on the year.

Besides sinking stock prices, banks are also grappling with an extraordinarily weak commercial real estate market.

As a June headline in The Financial Times noted:

US banks prepare for losses in rush for commercial property exit

As the article notes, some banks plan to sell off property loans at a discount even though borrowers have been making their payments on time. The reason for this is that banks fear more delinquencies in commercial real estate down the road.

U.S. banks hold about $2.9 trillion in commercial real estate loans, which prompted the Wall Street Journal to pose this question in July:

Is the Banking Crisis Over? We Are About to Find Out

As you might imagine, some banks are more vulnerable than others. And Elliott Wave International has emphasized time and again that it’s important for depositors to make sure they do business with only financially sound banks. Because even during a severe economic downturn, some banks will not only survive, but thrive.

As a 2022 Elliott Wave Theorist said:

The first edition of Conquer the Crash noted that depositors would become concerned about bank risks and move their money from weak banks to strong banks, making the weak banks weaker and the strong banks stronger. This is just what happened in 2008-2009.

The next financial crisis may be just around the corner.

Realize that major economic downturns generally follow severe downturns in the stock markets, so it’s important to keep an eye on the Elliott wave structure of the main stock indexes.

If you’re unfamiliar with Elliott wave analysis or simply need a reminder, read the definitive text on the subject, Elliott Wave Principle: Key to Market Behavior, by Frost & Prechter. Here’s a quote from this Wall Street classic:

The primary value of the Wave Principle is that it provides a context for market analysis. This context provides both a basis for disciplined thinking and a perspective on the market’s general position and outlook. At times, its accuracy in identifying, and even anticipating, changes in direction is almost unbelievable.

Know that the online version of this Wall Street classic is available to you free once you sign up for a Club EWI membership. Club EWI is the world’s largest Elliott wave educational community and membership is also free with zero obligations. Members enjoy complimentary access to a wealth of Elliott wave resources on financial markets, trading and investing.

Just follow this link to get started: Elliott Wave Principle: Key to Market Behavior — get free and unlimited access.

This article was syndicated by Elliott Wave International and was originally published under the headline “Bear Market Leader”? Here’s a Prime Candidate. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Financial News Stock Market News
12 Sep

Lithium Deals

Source: Michael Ballanger  (9/11/23)

Michael Ballanger of GGM Advisory Inc. takes a look at the current state of lithium, and one lithium stock he believes is still a “Strong Buy.” 

The popularity of the lithium stocks was concentrated on the Australian deals, with the rush starting in 2015 and slowly gaining momentum throughout the 2020-2022 period, with many billions of dollars raised for and committed to lithium carbonate production.

As can be seen from the graphic posted above, lithium demand is growing so rapidly that a tripling of global production will only just keep markets adequately balanced.

Furthermore, despite new discoveries in Canada and Australia, the 6-15 year development time means that companies that can meet demand quickly will be the prime beneficiaries of such demand, which rules out the “miners” but which quickly and dynamically includes the “briners.”

Within that category, those with immediate access to oilfield brines, where infrastructure is already in place, will be the first group to seize the spoils of the supply-demand imbalance, whereas the hard-rock pegmatite developers carry the risk of time in their feasibility studies.

Since stock charts can be quite revealing as to investment trends and prevailing sentiment, look at the chart of hard-rock pegmatite discoverer Patriot Battery Metals Inc. (PMET:CA) whose Corvette Property contains the largest lithium pegmatite deposit in the Americas and the 8th largest globally.

The stock price peaked in June at CA$17.74 and has since declined over 34% as the weight of a CA$1.8 billion market cap met face-to-face with a 6-15-year development window. In other words, no cash flow or similar return to shareholders would be seen until almost 2030 and possibly 2040. PMET is arguably the leader in the field for hard-rock lithium “miners,” and the stock chart suggests that it has peaked, at least on a near-term basis.

The leader in the oilfield brine extractors (“Direct Lithium Extraction” or “DLE”) is Canadian-based E3 Lithium Ltd. (ETL:TSXV;EEMMF:US), whose share price has seen a substantial leap since the July correction before peaking at CA$5.24 this morning in what appears to be a classic blow-off. However, the stock is the poster child for the “briners” and reached a market cap this morning at almost CA$400 million.

The major question regarding pricing revolves around the proximity to cash flow. Any of the “briners” will be able to produce lithium far more rapidly than will the “miners,” so when comparing the current CA$1.64 billion market cap for PMET to the CA$400 million market cap for ETL, do you assign a greater value on resource size than proximity to cash flow?

As was stated in the Goldman Sachs report, big money has seen how fast a spiking commodity price can attract new supply and how quickly that new supply can derail even the strongest of momentum stories. This, I believe, is why money is rotating out of the “miners” and into the “briners,” so looking at market caps of some of the Aussie lithium deals (all in the A$ billions) against market caps in North America, there is little surprise that money flow is shifting to the “briners.”

I was unable to pick off the lithium story until quite late in the global run in these stocks, so when I discovered that the former Allied Copper Corp. had joined forces with Volt Lithium Corp. (VLT:TSV;VLTLF:US), I was at once both delighted and fearful, as being late to a specific commodity-driven stock party always turns out in disaster.

I know more than a few stock players that got roasted in 2001 with internet stocks and, more recently, in 2018 with the cannabis craze.

Aurora Cannabis Inc. (ACB:NYSE; ACB:TSX) peaked in mid-2018 at nearly CA$200/share before falling out of favor (off the peak of Mt. Everest) today residing at a mere CA$0.71.

So, when I view the market cap of VLT/VLTLF at CAD $64 million versus ETL/EMMFF at CAD $400 million versus PMET at $1.64 billion, I am overwhelmed by the opportunity in front of us.

Could Volt see a market cap comparable to Patriot Battery Metals?

The company has a target of 20,000 tonnes of lithium hydroxide production by mid-2027, carrying a gross revenue (assuming CA$43,000/tonne Li) of CA$860 million against costs of CA$70 million. Pre-tax earnings of CA$790 million on a share count of 200,000,000 of CA$3.95 per share. Assume a 30 multiple, and you arrive at CA$118.50 per share. With 200m shares issued, the market cap would be CA$23.7 billion.

Now, could my projections be based upon either natural-born optimism or hope or well-aimed prayers at the deity of my choosing?

To a degree, yes, but I am also a realist and a trained finance major who understands the elasticity of valuations based on cash flow generation. Most of the more speculative deals I have done in my career have been a Getchell-type analysis where the in-ground metal value of the resource takes precedence over cash flow proximity. In the case of both PMET and ETL, they are promoting resource size over cash flow proximity. In the case of Volt, it is precisely its proximity to cash flow generation that sets it apart.

The stock went out at CA$0.375 tonight, which was up 41.5% from the weekly lows and remains up 172.73% year-to-date.

Volt Lithium Corp. remains a “Strong Buy” despite the “overbought” readings and based upon the relatively low comparative market capitalization.

 

Important Disclosures:

  1. Volt Lithium Corp. has a consulting relationship with an affiliate of Streetwise Reports, and pays a monthly consulting fee between US$8,000 and US$20,000.
  2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Volt Lithium Corp.
  3. Michael Ballanger: I, or members of my immediate household or family, own securities of: All. My company has a financial relationship with Volt Lithium Corp. I determined which companies would be included in this article based on my research and understanding of the sector.
  4. Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
  5.  This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.

For additional disclosures, please click here

Michael Ballanger Disclosures

This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading and we recommend consulting a financial adviser if you feel you do not understand the risks involved.

Financial News Metals
12 Sep

Norway sees a drop in inflation. Natural gas rises amid workers’ strikes in Australia

By JustMarkets 

As of Monday’s stock market close, the Dow Jones Index (US30) increased by 0.25%, while the S&P 500 Index (US500) added 0.67%. The NASDAQ Technology Index (US100) closed positive by 1.14% on Monday. Strengthening tech stocks provided support to the overall market yesterday. Tesla shares rose more than 7% after Morgan Stanley upgraded their rating. Additionally, Qualcomm shares were up more than 3% after Apple extended its contract with the company to supply semiconductor chips for modems for another three years.

On Sunday, US Treasury Secretary Yellen made bullish comments for equities, saying she “feels very good” about the premise of a soft landing as “all inflation indicators are going down,” and she is increasingly confident that the United States will be able to contain inflation without severely damaging the labor market.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) added 0.39%, France’s CAC 40 (FR40) gained 0.52% on Monday, Spain’s IBEX 35 (ES35) increased by 0.75%, and the UK’s FTSE 100 (UK100) closed 0.25% up.

The European Commission lowered its 2023 eurozone GDP forecast to 0.8% from the previously projected 1.1%. It also lowered the Eurozone inflation forecast for 2023 to 5.6% from the previous forecast of 5.8%. Italian industrial production for July fell by 0.7% m/m, weaker than expectations of 0.3% m/m.

Berenberg currency analysts believe that the leveling of interest rates in the US and Europe, as well as the declining attractiveness of the US dollar as a safe haven, point to the possibility of a revival of the euro in the coming periods. Excess US government debt combined with potential refinancing difficulties could put downward pressure on dollar strength and give confidence to the euro. By the end of 2023, analysts forecast a significant strengthening of the euro against the dollar to 1.1200.

Norwegian inflation slowed more than expected in August. Data showed core inflation falling from 5.4% to 4.8% y/y and core inflation from 6.4% to 6.3% y/y. The consensus forecast pointed to an acceleration. All this raises doubts that Norges Bank will go for further monetary tightening. However, it should be understood that inflation is not as important to Norges Bank as it is to other central banks because Norway’s Central Bank operates on a model-based approach that places great importance on currency fluctuations and oil prices.

On Monday, oil prices fell from their highest in nearly ten months amid concerns about global energy demand after the European Commission cut its Eurozone GDP forecast. But dollar weakness on Monday provided support for energy prices. In addition, crude oil received support last Tuesday when Saudi Arabia and Russia announced an extension of oil production cuts until the end of the year. Oil was also supported by news of increased credit demand in China, the world’s second-largest oil consumer, which could lead to stronger economic growth and energy demand.

On Monday, natural gas prices received support from a rise in European gas prices to a one-week high. LNG production workers at key Chevron facilities in Australia began a partial strike last week after talks with management failed to reach an agreement. The workers said that if no agreement is reached, they will completely stop work for two weeks starting this Thursday.

Asian markets traded flat on Monday. Japan’s Nikkei 225 (JP225) decreased by 0.43% yesterday, China’s FTSE China A50 (CHA50) added 0.67%, Hong Kong’s Hang Seng (HK50) lost 0.58% on the day, and Australia’s S&P/ASX 200 (AU200) was positive by 0.50% on Monday.

In China, authorities returned to strong measures to defend the yuan. This came after the USD/CNY pair rose above the 7.30 level. Along with a much stronger CNY fixing, the PBoC issued a statement saying that market participants should “voluntarily maintain a stable market” and avoid speculative trades. However, sentiment towards China is still wary as other economic indicators for August continued to point to continued unfavorable factors for Asia’s largest economy.

Alibaba shares fell by 1.8% on Tuesday, extending losses after the head of its cloud division unexpectedly resigned this week.

S&P 500 (F)(US500) 4,487.46 +29.97 (+0.67%)

Dow Jones (US30) 34,663.72 +87.13 (+0.25%)

DAX (DE40)  15,800.99 +60.69 (+0.39%)

FTSE 100 (UK100) 7,496.87 +18.68 (+0.25%)

USD Index  104.53 -0.57 (-0.53%)

Important events for today:
  • – Australia NAB Business Confidence (m/m) at 04:30 (GMT+3);
  • – UK Average Earnings Index (m/m) at 09:00 (GMT+3);
  • – UK Claimant Count Change (m/m) at 09:00 (GMT+3);
  • – UK Unemployment Rate (m/m) at 09:00 (GMT+3);
  • – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
  • – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
12 Sep

Bitcoin is the currency for AI, attracting institutional investors

By George Prior

Bitcoin’s compatibility with AI technologies is driving major institutional investors to increase their exposure to the cryptocurrency, says the CEO and founder of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organizations.

Nigel Green says: “The buzz surrounding AI is real – Nvidia’s shares, for example, have jumped almost 210% this year on the frenzy around its uses within AI.

“The AI boom is grounded in tangible technological advancements and the potential to reshape industries across the board.

“The transformative capabilities of AI, coupled with its cross-industry disruption, data-driven nature, and rapid innovation, make it a compelling investment opportunity.

“This is, of course, attracting huge amounts of institutional capital.

“These same institutional investors are increasingly recognising Bitcoin as the currency for the AI era and, therefore, are also increasing their exposure to the world’s largest cryptocurrency.”

There are three key reasons why Bitcoin is the currency for AI and why this synergy is attracting institutional money.

“First, in the world of AI, data integrity is paramount. The ability to trust the source and history of data is crucial, whether it’s for training machine learning models or verifying the authenticity of data inputs.

“Bitcoin’s blockchain provides a tamper-proof record that can be used to ensure data integrity in AI applications,” notes Nigel Green.

“Second, Bitcoin’s borderless nature facilitates seamless cross-border transactions, enabling AI companies to access the resources they need without the limitations of traditional financial systems, such as high fees and lengthy processing times.

“Third, AI relies heavily on data, and organisations are increasingly seeking ways to monetise their data assets.

“Bitcoin opens-up new possibilities for data marketplace platforms where AI-focused firms can access and purchase datasets with ease, creating a thriving ecosystem of data sharing and monetisation.”

As AI continues to advance, new use cases for Bitcoin in AI applications will inevitably emerge. Research and innovation at the intersection of AI and crypto are likely to unlock even more opportunities for synergy between the two fields.

Institutional investors are forward-thinking and recognise the potential for substantial returns on their investments in this rapidly evolving space.

“As both Bitcoin and AI technologies continue to evolve, their integration is set to drive innovation and transformation in various industries, reshaping the way we perceive and interact with both digital currencies and artificial intelligence.

“The growing interest from institutional investors underscores the enormous potential of this partnership and further validates Bitcoin’s role in the future of AI,” concludes Nigel Green.

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of offices across the world, over 80,000 clients and $12bn under advisement.

Cryptocurrencies Financial News
11 Sep

ECB could push EU into long recession with rate rise on Thursday

By George Prior

The European Central Bank would risk plunging the European Union into a long recession if it decides to raise interest rates at its pivotal meeting on Thursday, following the growth downgrades of the bloc by the European Commission.

This is the stark warning from Nigel Green, CEO and founder of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organizations, after the Commission, the executive arm of the EU, said on Monday that the economy will expand by just 0.8% this year and 1.4% in 2024.

The figures represent a downgrade from predictions by Brussels in May of 1% growth in 2023 and 1.7% next year.

The Commission also said that Germany is set for an extended recession in 2023 – it’s the only major European economy to witness an economic contraction this year.

Nigel Green comments: “It’s reported that the ECB’s decision on whether to raise interest rates or not on Thursday is on a knife-edge. This is because the central bank is having to deal with stalling growth and persistently high inflation.

“But we urge the ECB to refrain from raising interest rates considering the economic context and potential consequences.”

He continues: “The 0.4% contraction in Germany’s economy, coupled with the European Commission’s downward revision of growth expectations, suggests that the trajectory might be less stable than anticipated.

“In such a precarious environment, raising interest rates would further hinder economic growth and job creation.

“The largest economy in Europe is already struggling. Higher borrowing costs for businesses and consumers will further stifle investment and consumption, which are essential drivers of economic recovery. With Germany’s economy facing headwinds, it is crucial to maintain affordable-as-possible financing options to support businesses and individuals alike.

“Due to its size and influence, should the economic situation in Germany get worse due to further rate rises, there’s a real risk that the wider EU could be plunged into a long recession.”

The deVere CEO goes on to add: “The time lag for monetary policies is incredibly lengthy. It takes around 18 months for the full effect of rate hikes to make their way into the economy – and that’s where we are – and so financial conditions will get squeezed even harder in the near term.”

The ECB must also consider the economic divergence within the Eurozone. Raising interest rates could exacerbate disparities and potentially lead to further divergence among Eurozone countries.

It is crucial for the ECB to communicate its intentions clearly, notes the deVere CEO, to the markets and the public. Raising interest rates without adequate explanation could lead to market volatility and confusion, which are detrimental to economic stability.

He concludes: “Despite the risks of steering the wider EU into a recession with another rate rise, we expect that the ECB will argue it is still too soon to pause in its battle against inflation and, therefore, will go for one final hike on Thursday.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of offices across the world, over 80,000 clients and $12bn under advisement.

Economics & Fundamentals Financial News
11 Sep

EUR/USD Braces for Pivotal Week Ahead: An In-Depth Look

By RoboForex Analytical Department

The EUR/USD currency pair kicked off the week on a vibrant note, trading around 1.0720. The days ahead promise a series of impactful events that could influence the pair’s trajectory.

In the U.S., critical inflation data for August is set to be released this week. Year-over-year Consumer Price Index (CPI) figures are expected to have increased to 3.6%, up from 3.2% the prior month. On the eve of the Federal Reserve’s upcoming meeting, this uptick could bring mixed sentiments. In contrast, core inflation is projected to decline to 4.3% year-over-year from the previous 4.7%.

Across the Atlantic, the European Central Bank (ECB) is scheduled to convene on Thursday to determine interest rate policy. Given the precarious state of the Eurozone’s economy, the consensus expectation is that the ECB will opt to maintain its current interest rate of 3.75% per annum. Any statements or actions from the ECB are expected to significantly influence the euro’s value.

Technical Analysis of the EUR/USD Currency Pair

On the 4-hour chart, EUR/USD recently completed a downward wave at 1.0686. In the short term, the market could experience a corrective rally towards 1.0755. Upon reaching this level, a fresh downward structure targeting 1.0680 may ensue. Subsequently, a bullish wave could set its sights on 1.0911. The Moving Average Convergence Divergence (MACD) indicator lends technical support to this scenario; its signal line is currently below zero but appears to be gearing up for an upward move.

On the 1-hour chart, a consolidation zone has taken shape around 1.0720. The market at one point extended this range upward and could potentially trend towards 1.0755. Once this price level is attained, a downward movement towards 1.0680 may commence. This viewpoint gains technical validation from the Stochastic oscillator, whose signal line has recently recoiled from the 80 mark and is now oriented downward, possibly heading towards the 20 level.

In summary, the EUR/USD pair faces a week rich in potential catalysts, with key data releases and policy meetings in both the U.S. and Eurozone. Both short-term and medium-term technical analyses suggest a mixed outlook, with opportunities for both upward corrections and renewed declines. Keep a close eye on economic indicators and central bank actions as they could drastically alter the landscape.

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

 

Financial News Forex and Currency News
11 Sep

Will iPhone 15 event help Apple recover $200bn lost last week?

By George Prior

Apple’s iPhone 15 event on Tuesday will boost stock prices for shareholders but it will not be enough to recover its stock market valuation which fell by more than 6%, or almost $200bn (£160bn), in two days last week.

This is the prediction from Nigel Green, CEO and founder of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organizations, who goes on to say that investors will see a dip in the stock price as a buying opportunity.

Stock prices fell after reports that Chinese government workers have been banned from using iPhones.

He comments: “Apple’s new iPhone showcase on Tuesday, dubbed ‘Wonderlust’ is expected to unveil new hardware, including the iPhone 15 and Apple Watch models.

“Apple’s iPhone events typically generate significant buzz and anticipation, leading to a surge in sales. This in turn will boost stock prices for shareholders in the short-term.

“However, we don’t expect it to be enough to recover its full stock market valuation which fell by more than 6%, or almost $200bn in two days last week.”

The deVere Group CEO continues: “This is not because of the issue of Beijing reportedly banning government workers using iPhones.  The impact of this move has been greatly exaggerated.

“The drop in stock prices comes at the same time as the release of an important rival phone in China, the Huawei Mate 60.

“It also comes at a time when Apple has had three consecutive quarters of declining sales due to the macroeconomic climate in the market with major headwinds for consumption across the board.

“These should be the main reasons stock prices fell last week, not the knee-jerk reaction to a ban that affects only around 500,000 government employees’ phones.

“And as these real reasons remain in the short term, we believe it will be a struggle for Apple to make up the stock market valuation with Tuesday’s event.”

But, says Nigel Green, the dip in stock price “will be used by savvy investors as a buying opportunity.”

He notes: “The robust fundamentals of the biggest company remain unchanged. It has huge amounts of capital and expertise, dominates the market, and is amazingly adaptable – which is critical.

“This is evidenced by Apple CEO Tim Cook, despite being the head of a major US company, has managed – so far at least – being viewed by Beijing as almost ‘independent’ from the US, which many other major brands haven’t been able to pull off.

“For me personally, Apple remains a ‘buy’.”

He concludes: “We don’t expect the iPhone 15 event on Tuesday to rock the world for Apple shareholders, but global investors will not be ruling the company out – if anything they’ll be using the volatility as an opportunity.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of offices across the world, over 80,000 clients and $12bn under advisement.

Financial News Stock Market News
11 Sep

Analysts forecast a significant euro rise by the year’s end. Inflation in China returned to positive dynamics

By JustMarkets

At the close of the stock market on Friday, the Dow Jones Index (US30) increased by 0.22% (-0.86% for the week), while the S&P 500 Index (US500) added 0.14% (-1.61% for the week). The NASDAQ Technology Index (US100) closed positive by 0.09% on Friday (-2.61% for the week). Strengthening crude oil prices on Friday boosted energy stocks and the broader market. Stocks also received support as the likelihood grew regarding a pause in Fed rate hikes amid comments from Dallas FRB Governor Lorie Logan, who stated the following: “Another pass at raising interest rates may be appropriate at the FOMC meeting later this month.” Markets rate the odds of a 25 bps rate hike at the September 20 FOMC meeting at 7% and a 25 bps rate hike at the November 1 FOMC meeting at 48%.

Friday’s US economic news was negative for equities after consumer credit rose by $10.399 billion in July, weaker than expectations of $16.000 billion. On Friday, Canadian labor market data was released. In July, the number of employed in the Canadian economy increased by 39.9k, which was above expectations of 18.9k. The unemployment rate remained at 5.5%. A more detailed report showed that overall, Canada’s labor market remains resilient, but imbalances in certain sectors are widening, which could lead to problems in the future.

A draft document prepared by G-20 leaders meeting this weekend in India warned that “cascading crises” pose challenges to long-term economic growth and called for coordinated macroeconomic policies to support the global economy. In addition, global economic growth is uneven and below the long-term average as uncertainty about the economic outlook remains high, and the balance of risks tilts to the downside.

Equity markets in Europe were mostly up on Friday. Germany’s DAX (DE40) increased by 0.14% (-1.03% for the week), France’s CAC 40 (FR40) gained 0.62% (-1.25% for the week), Spain’s IBEX 35 (ES35) added 0.61% (-1.27% for the week), and the UK’s FTSE 100 (UK100) closed up by 0.49% (+0.18% for the week).

Berenberg currency analysts believe that the leveling of interest rates in the US and Europe, as well as the declining attractiveness of the US dollar as a safe haven, point to the possibility of a revival of the euro in the coming periods. Excess US government debt combined with potential refinancing difficulties could put downward pressure on dollar strength and give confidence to the euro. By the end of 2023, analysts forecast a significant strengthening of the euro against the dollar to 1.1200.

Asian markets were predominantly up last week. Japan’s Nikkei 225 (JP225) decreased by 0.58% for the week, China’s FTSE China A50 (CHA50) fell by 2.77%, Hong Kong’s Hang Seng (HK50) ended the week down by 2.10%, and Australia’s S&P/ASX 200 (AU200) ended the week negative by 1.67%.

HSBC currency strategists revised downward their forecasts for the Australian (AUD) and New Zealand (NZD) dollars against the US dollar (USD). Firstly, they assume that AUD and NZD will experience a weakening trend before stabilizing in the second quarter of 2024, with AUD/USD and NZD/USD rates reaching 0.62 and 0.55, respectively, by the end of the first half of 2024.

Bank of Japan Governor Kazuo Ueda said over the weekend that the central bank may end its negative interest rate policy when the 2% inflation target is reached, indicating a possible interest rate hike. Ueda said the central bank may have enough data by the end of the year to determine whether it can end negative rates. Currently, the BoJ is targeting short-term interest rates at 0.1% as part of its negative rate policy. In addition, 10-year government bond yields are at zero as part of efforts to revitalize the economy and sustainably meet targets.

Consumer prices in China returned to positive momentum in August, while the decline in factory prices slowed. According to the National Bureau of Statistics, the Consumer Price Index (CPI) rose by 0.1% year-on-year in August, slower than the median estimate of a 0.2% increase. The CPI declined by 0.3% in July. Core inflation, which excludes food and fuel prices, was unchanged at 0.8% in August. The Producer Price Index (PPI) fell by 3.0% from a year earlier, which was in line with expectations, after falling by 4.4% in July. According to analysts, overall, rate inflation still points to weak demand and requires more active policy support from the government.

S&P 500 (F)(US500) 4,457.49 +6.35 (+0.14%)

Dow Jones (US30) 34,576.59 +75.86 (+0.22%)

DAX (DE40)  15,740.30 +21.64 (+0.14%)

FTSE 100 (UK100) 7,478.19 +36.47 (+0.49%)

USD Index  105.07 +0.01 (+0.01%)

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
11 Sep

Trade Of The Week: Gold Outlook Hinges On US CPI Data

By ForexTime

Gold prices caught our attention on Monday morning after briefly punching above $1930 as the dollar retreated.

Over the last few weeks, the precious metal has been influenced by conflicting forces and this continues to be reflected in the choppy price action. The potent cocktail of themes ranging from Fed hike expectations, global growth concerns, and dollar volatility among others have trapped prices within a wide range.

Bulls and bears remain engaged in a fierce tug of war with a fresh fundamental spark needed to shift the scales of power in one direction. Regarding the technical outlook, gold is still respecting a bearish channel on the weekly charts. However, strong support can be found at $1915 – a level where the 200-day SMA resides. 

This could be an intense week for gold and here are 3 reasons why:

  1. US August CPI report 

The August US Consumer Price Index (CPI) report published on Wednesday, September 13 will act as a critical piece of information that determines whether the Fed will keep rates higher for longer.

Given gold’s zero-yielding nature, this pending report has the potential to trigger explosive levels of volatility.

Market expectations for US August CPI:

  • CPI year-on-year (August 2023 vs. August 2022) to rise 3.6% from 3.2% in the prior month.
  • Core CPI year-on-year to rise 4.3% from 4.7% seen in July.
  • CPI month-on-month (August 2023 vs. August 2023) to rise 0.6% from 0.2% in the prior month.
  • Core CPI month-on-month to remain unchanged at 0.2% from 0.2% seen in July.

Headline inflation is expected to jump thanks to higher energy costs, but all eyes will be on the core CPI figures which are forecast to remain unchanged month-on-month. Ultimately, further signs of cooling inflationary pressures may feed the argument around the Fed concluding its hiking cycle.

It is worth noting that traders are currently pricing in a 7% probability of a 25-basis point hike this month, with this jumping to 44% by November, according to Fed funds futures.

  • Gold prices could shine if the inflation numbers print below market forecast, as signs of slowing inflation strengthen the argument around the Fed already finished with hikes in 2023.
  • Should the inflation figures print above market forecasts, gold prices are likely to depreciate as expectations rise around the Fed having headroom to hike one time this year.

  1. US data dump 

After the main course, which is the US CPI report, investors will be dished out more key US economic reports in the second half of the trading week to complete the meal.

All eyes will be on the US retail sales, PPI, initial jobless claims, industrial production, and University of Michigan consumer sentiment which could provide insight into the health of the US economy. When factoring the Fed’s emphasis on data-dependence when it comes to monetary policy decisions, this data dump could trigger dollar volatility – ultimately impacting gold prices.

  • Should the overall US economic data print below market expectations, this may weaken the dollar – pushing gold prices higher.
  • If overall US economic data prints above expectations, the dollar could receive a boost – dragging gold prices lower.

  1. Technical forces 

Despite rebounding from the 200-day SMA, gold prices remain trapped within a range on the daily charts with support at $1915 and resistance at $1931 where the 50-day SMA resides.

Gold could be in the process of a technical rebound or pullback with both technical and fundamental forces determining where prices conclude the week.

  • A solid daily breakout and close above $1931 could signal a move higher with the next key level of interest found at $1953.
  • Should prices slip back under the $1915 support, this may invite bears to attack $1900 and $1885, respectively.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

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