Asian stocks finished the session mixed on Wednesday as worries that the weak global growth will hurt companies’ profits mounted and as market participants remain skeptical about the abilities of Eurozone leaders to bring down member states’ borrowing costs even after yields retracted from the highs they reached several days ago. The FTSE Asia 100 Index, which tracks the performance of markets across Asia, ended 0.1% lower to 5,940.97. Japan’s Nikkei share average declined, posting a fresh new two-week low, holding just barely above its 25-day moving average. The index’s losses came in a response to the low profits, posted by several U.S. firms as these weak earnings were seen as a warning signal of the future global growth. The Nikkei dipped 0.1% to 8,851.00, extending its four-day losing streak, setting a new record for the period after April. The broader Topix index slipped 0.2% to close at 757.29. The Bank of Japan is scheduled to begin a two-day policy meeting later today. Although some investors are hoping that the Japanese central bank will announce further steps aimed at spurring the growth in the third largest economy in the world, an increasing number are projecting that the bank will probably refrain from any stimulus measures for now as it issued an unexpectedly positive report last week. The Korea Composite Stock Price Index (KOSPI) slid 0.17% to finish the day at 1,826.39 points. Australian stocks inched slightly higher, adding 0.06% on rather low volume, as investors continue to be cautious as a slew of bad economic data for the United States and China is weighing on the market. The benchmark S&P/ASX 200 index gained 2.4 points, to close at 4,100.4 points, paring all the losses it posted in the first part of the session when the index was trading 0.5% lower than the previous day’s close. The bounce came after the latest numbers for the consumer confidence surprised on the upside. New Zealand’s benchmark NZX 50 index was also among the gainers, adding 0.4% to 3,478.8 points. China’s main stock index closed 0.5% higher, rebounding from the six-month low it hit earlier this week. Drug producers were the biggest advancers. The benchmark Shanghai Composite Index closed at 2175.4 points after marking a fresh new six-month low on Tuesday. The Hang Seng Index added 0.1% to close at 19,419.9. The China Enterprises Index, which tracks the performance of the top Chinese listings in Hong Kong declined 0.1% to 9,373.3. The 30-share benchmark BSE Index slipped 0.73% to finish the session at 17,489.14 points, while the 50-share NSE Index dropped 0.73% to close at 5,306.30 points. In Southeast Asia, Singapore’s Straits Times Index rallied 0.8%, while Malaysia’s benchmark KLSE Index advanced 0.3%.
European stocks inched slightly higher on Wednesday, the heavyweight telecom and utility companies gained, offsetting the steep decline in luxury goods stocks, whose shares dropped in a response to the slower sales growth at Burberry. The FTSEurofirst 300 advanced 0.1% to 1,039.74 points, after paring a decline of 0.6% from earlier in the session. At the same time the Euro STOXX 50 index climbed 0.4%. Both indexes entered green territory just when U.S. stock index futures indicated a higher opening on Wall Street, although turnover remained well below its 90-day average for both indexes. The STOXX European telecoms index was the top performing European equity sector, advancing 1.2%, while the utility index also climbed 1%, as investors put their money in stocks, which are regarded for their high dividend yields. European bank stocks, one of the hardest hit by the debt problems in the region, also advanced. The Eurozone STOXX bank index rallied 1.8%, with Italian bank UniCredit climbing 2.5% as Bank of Italy governor Ignazio Visco reassured investors that the country’s leading banks are adequately capitalized. French luxury goods groups LVMH and PPR slipped more than 2% after British rival Burberry announced slower quarterly sales growth, which caused Burberry’s shares to plunge around 6%. The Stoxx Europe 600 index added 0.1% to trade at 255.78 but the index continues to range around the previous days close. Spain’s IBEX 35 index snapped out of the negative trend, gaining 1.1% to 6,799.30, as Prime Minister Mariano Rajoy said that 65 billion euros ($79 billion) worth of new austerity measures will be undertaken in order for the country to meet its new budget-deficit targets. Yields on 10-year Spanish government bonds dipped 12 basis points to 6.68%. In the U.K., miners pulled the stock indexes lower as metals traded mixed. Rio Tinto PLC and BHP Billiton PLC each moved 1% lower. The FTSE 100 index dipped 0.2% to trade at 5,651.24, further weighed by losses in Burberry shares. The loss also added pressure on the CAC 40 index, which declined 0.3% to 3,164.60. The DAX 30 index, however, was among the gainers adding 0.6% to 6,477.23, as utility firms propelled the index higher. E.ON AG advanced 2% and RWE AG rallied 1.8%.
U.S. stocks opened into negative territory on Wednesday, as market participants preferred to shed some of their holdings in risky assets ahead of the minutes of the latest Fed meeting. The Dow Jones Industrial Average inched slightly lower, weight by Boeing and DuPont, adding to the losses it posted in the past four sessions. The S&P 500 and the NASDAQ were only slightly changed at the market open. The CBOE Volatility Index, considered by many as the best indicator of fear in the market, traded above 18. Among the key S&P sectors, energy advanced, while techs were among the biggest losers. Market participants will be watching closely for any indications of how close the Federal Reserve might be from delivering a third round of quantitative easing aimed at spurring the growth in the world’s biggest economy. The minutes of the last Fes meeting are scheduled to be released at 14:00 Eastern Time. On the economic front, U.S. trade deficit shrank by 3.8% to $48.7 billion in May, according to the Commerce Department, which was just in line with what analysts were expecting. Wholesale inventories for May are scheduled to be announced at 10:00 a.m. Eastern Time, with economists expecting a rise of 0.4% following April’s 0.6% gain. After the closing bell, oil company Chevron is scheduled to announce its second-quarter update and hotel chain Marriott will post its earnings for the past three months. The government, on the other hand, is scheduled to auction $21 billion in benchmark ten-year notes with the results available shortly after 13:00 Eastern Time.
Dow Jones Industrial Average
Yesterday the Dow moved higher at the market open, pushing above both is 25-period and its 200-period moving average. The index, however, was not able to hold on to its gains and moved lower in the second part of the day, finishing the session slightly above the lows for the day. The blue chip traded as low as 12,610.74, but the bulls managed to regain some of their control over the market and pushed the index to the closing level of 12,649.60. Today, as we already mentioned, the Dow opened lower and was briefly trading at the lows of yesterday before paring some of the losses and moving to the current level of 12,647.05. Support is provided by the intermediate highs we reached at the end of last month around 12,600. Resistance, on the other hand, stands at the highs we touched in the beginning of the month around 12,900. Oscillators are mixed with the relative strength index at 42 and the stochastic in oversold territory, standing at 12. The stochastic retracted from the highs it reached in the beginning of the month and is currently approaching the key 0 level.
Gold
Gold had a volatile session yesterday as it moved higher in the first couple of trading hours, but the precious metal was unable to hold on to its gains and moved lower in the second half of the day. The bullion was trading above 1600 dollars per troy ounce at one point during the session, but that only lasted for a very brief moment. Around noon the precious metal declined and hit lows of 1564 before rebounding and closing at 1573. Today gold is having a relatively calm session as compared to yesterday’s sharp swings. We marked highs of 1583 earlier in the day, but after that we moved into the red to touch lows of 1570 for the session. Now we are off of the lows and gold is changing hands at 1574.45 dollars per troy ounce. Support is provided by yesterday’s lows around 1565, while resistance continues to stand at the 200-period moving average around 1595. Oscillators are in mid-range with the relative strength index at 39 and the stochastic at 32. The MACD is moving sideways, just slightly below the key 0 level.
USD/JPY
The currency pair pushed below its 200-period moving average yesterday in an effort to start a new downward trend, but after touching lows of 79.17 for the session the bulls took control and pushed the USDJPY back above the key 79.40 level. Their efforts, however, proved to be futile as bears dominated the market in the second part of the session and they managed to close the yen just a whisker above the 200-period moving average at 79.36. Today the USDJPY extended its slump to touch fresh new lows for the month, but after that we say a sharp push on the upside, which send the Japanese currency both above its 200-period and its 25-period moving averages. The USDJPY is currently trading at 79.57, just slightly off of the highs of 79.59 for the session. Support in the currency pair is provided by the 200-period moving average, while resistance stands at the 50-period moving average around 79.65. Oscillators are in mid-range with the relative strength index at 54 and the stochastic at 40. The MACD continues to move in tight range, but it has just moved below the key 0 level.
Disclaimer:
The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.
