Asian Markets follow their European and US counterparts

Posted on September 22, 2020 by Exclusive Capital Research Team

Market Brief, Tuesday, 22nd of September, 2020

The major US stock markets saw a new sell-off on Monday, through their recent lows, although a bid in tech saw the Nasdaq close the day in the green. The Nasdaq is currently trading around 10942 while the S&P and Dow Jones are trading at 3274 and 27070.

The Asian session was subdued following the selloff in their US counterparts with the ASX down by 0.6%. In China, the Hang Seng and Shanghai Composite were down by 0.4 and 0.1% respectively with HSBC and Standard Chartered extending their losses over recent money laundering allegations.

The dollar index traded above 93.50 as risk-averse sentiment saw it trade as high as 93.80. The EURUSD dropped below 1.18 and is currently trading around 1.1755 while GBPUSD is trading around 1.28.

WTI and Brent traded lower on Monday with WTI trading below 39.50 and Brent at 41.33$ per barrel as a demand-side concern following new expected lockdowns in Europe and supply-side factors with Libya output expected to reach 260k barrels per day putting pressure on crude.

Beware of the greater fool’s game

Posted on September 21, 2020September 22, 2020 by George Kessarios

Analyst Insights, Monday, 21st of September, 2020

When major indices crash to the tune of 10% in 3 days, it is a warning sign. When stocks like TSLA lose 30% of their value in 3 days, it is also a warning sign. And the warning sign reads with big bright neon lights – Danger Ahead.

In finance and economics, the greater fool theory states that the price of an object is determined not by its intrinsic value, but rather by the local and relative demand of consumers.

In market terms, the greater fool theory states that it is possible to make money by buying stocks, even if they are overvalued because there will always be a greater fool who is willing to pay a higher price.

This game continues until it doesn’t anymore. At some point, people will refuse to purchase such securities even on the dips for a quick trade. Either because sentiment has changed, or because there is no abundance of fools anymore.

Please note that there are companies in this market trading for 30-50 revenue. Yes, these companies might be growing fast, or are benefiting from the current COVID pandemic, however, it is rare (very rare) that such valuations can be sustained.

While Investment professionals and seasoned traders know all too well the rules of this game and act accordingly, the same cannot be said of the average investor.

The bottom line is that the market is currently in a speculation frenzy playing the greater fool’s game, and extreme caution is warranted.

Risk-off sentiment in US Stock markets

Posted on September 21, 2020September 22, 2020 by Exclusive Capital Research Team

Market Brief, Monday, 21st of September, 2020

The major US stock markets saw a sharp sell-off on Friday, through their recent lows, although they are currently off their worst levels. This comes after the quadruple witching and worries over the tech-sector. The Nasdaq is currently trading at 10900 while the S&P is at 3300.

The Asian session was subdued following the selloff in their US counterparts with the ASX down by 0.8% while the Nikkei is closed for Respect for the Aged Day. In China, the Hang Seng and Shanghai Composite were down by 1.1 and 0.5% respectively following a leaked document from HSBC that the bank made suspicious transactions in 2014-2015.

The dollar index traded below the 93 levels heading into this week’s risk events. The EURUSD saw the strength and is currently trading around 1.1867 and GBPUSD trading around 1.2950.

WTI and Brent traded marginally higher on Friday and is currently trading within that range. WTI is trading just under 41$ per barrel while Brent is just above 43$ per barrel.

Stock markets sell off post FOMC

Posted on September 17, 2020September 17, 2020 by Exclusive Capital Research Team

Market Brief, Thursday, 17th of September, 2020

The major US stock markets sold-off in the US session as the FOMC left FFR unchanged at 0.00% to 0.25% and sees rates unchanged at least through 2023. The Nasdaq is currently trading around 11,1146 while the S&P is at 3,360.

The Asian session was subdued following the selloff in their US counterparts with the ASX down by 1.1% and the Nikkei by 0.7%. In China, the Hang Seng and Shanghai Composite were down by 1.9 and 1% respectively following the drain of liquidity by the PBoC liquidity.

The Bank of Japan kept monetary policy changes unchanged with rates held at -0.1% and QQe with Yield Curve Control. The BoJ revised higher the Japanese economy outlook. Some initial strength was seen in the Yen complex with USDJPY currently trading around 105.

The dollar index saw strength post-FOMC as the greenback surged through the 93 levels. Its major counterparts saw weakness as the EURUSD traded though 1.18 to the downside and is currently trading around 1.1765. The GBPUSD saw some initial support at the 1.29 level and is currently trading around 1.2927

WTI and Brent traded marginally lower after its recent surge. WTI slipped below 40$ per barrel and is currently trading around 39.60 while Brent saw resistance at 42$ per barrel and is currently trading 41.75 as there is talk of OPEC not discussing further cuts.

Traders Poised for a Busy Week Ahead

Posted on September 15, 2020 by Exclusive Capital Research Team

Forex Update, Tuesday, 15th of September, 2020

Japanese industrial production numbers were better than expected but the big story in Japan is the Liberal Democratic Party’s selection of Yoshihide Suga as Japan’s next prime minister. Suga appears to be a logical choice for the job and for a country that wants continuity.

The greenback traded lower across the board as investors position for dovishness from the Federal Reserve tomorrow. No major changes in monetary policy are expected but more confirmation on the FED new strategy to accommodate a higher period of inflation without having to raise interest rates

The recent forecast for further improvements in July data by ECB President Christine Lagarde has instigated the recent strength in the Euro. However, with only, a modest and gradual recovery in the Eurozone expected investors may have grown less optimistic about the outlook for the economy. If the ZEW survey which is due out later today falls more than expected, it could trigger the first decline in EUR/USD in 5 trading days.

Earlier today the UK posted better than expected Jobs data. This has given slight relief to the pound and could be overshadowed by the government’s furlough scheme ending in October, ongoing Brexit disputes, and the ability to control Increasing Covid-19 infections.

The New Zealand dollar was the best performing currency today and, the Australian and Canadian dollars lagging. The rally was driven primarily by the government’s decision to ease restrictions in every major city except Auckland and to ease social distancing requirements for Air New Zealand.

This announcement overshadowed a report that service sector activity weakened. Second-quarter New Zealand GDP numbers are the most important piece of data for the country this week. Retail sales and consumer prices are due this week for the ‘Loony’ with August labor market numbers will be in focus for the ‘Aussie’ along with the minutes from the last Reserve Bank meeting released this evening.

UK Government wins vote on Internal Market Bill

Posted on September 15, 2020September 15, 2020 by Exclusive Capital Research Team

Market Brief, Tuesday, 15th of September, 2020

The major stock market indices traded higher in the Monday session in the US with major tech giants showing strong performance with Tesla up by 12.5% and Apple up by 3%.

The Asian session was somewhat mixed with the ASX being marginally lower by 0.1% and the Nikkei down by 0.5%. In China, the Hang Seng and Shanghai Composite were up by 0.5 and 0.3% respectively following better than expected Industrial Production and Retail Sales data.

In the UK the UK government managed to win the Internal Market Bill which will now move to the Committee of the legislation process. The UK government managed to win the vote by 340-263 votes.

In the forex space, the dollar index was under pressure during Monday’s session which caused it to slip back below the 93 levels with its major counterparts the EURUSD and GBPUSD trading around the 1.19 and 1.2870 levels.

WTI and Brent traded near last week’s lows around 37.10 and 39.50 on-demand fears from the OPEC Monthly Oil Report and light damage caused by Hurricane Laura to energy infrastructure in the US.