Asian stocks declined on Monday as market participants continued to worry about the slowing world economy and about Europe’s debt crisis, which continues to take its toll on investor confidence.
The FTSE CNBC Asia 100 Index, which tracks the performance of markets across Asia, erased 0.8%. Japan’s Nikkei share average dropped as traders continued shedding their holdings in risky assets and moved to safe havens. Among the biggest decliners were sectors sensitive to overall economic conditions, with mining slumping 3.6% and shippers slipping 2.1%. The Japanese benchmark dipped 0.7% to 8,734.62, penetrating from above its five-day moving average of 8,753.04. The broader Topix closed the session down 0.8% to 745.22. The Korea Composite Stock Price Index (KOSPI) slipped 1.2% to end the day at 1,825.38 points. In Australia, the benchmark S&P/ASX 200 index declined 20.4 points to close at 4,027.8, after touching an intraday low of 3,993.8. The index slipped 1% on Friday and finished the week 0.2% lower. New Zealand’s benchmark NZX 50 index was only slightly changed, inching just 1.9 points higher to 3,401.1. The benchmark Shanghai Composite finished the session at 2,224.1 points, its lowest level since mid-January, dragged down by financials and manufacturing, as mainland equity traders were highly concerned with the growth of the second biggest economy in the world. Hong Kong shares dropped for a third consecutive day, with the benchmark Hang Seng Index pushed past its chart support level by Chinese banking and energy majors. India’s main 30-share BSE index slipped 0.53% to 16,882.16 points, after earlier climbing as much as 0.93%. The broader 50-share NSE index slid 0.61% to 5,114.65 points. In Southeast Asia, Singapore’s Straits Times Index dipped 0.5%, while Malaysia’s KLCI finished the session almost unchanged.
European stocks and the euro both extended their slump on Monday, with market participants worrying that Spain’s debt problems will continue to weigh on global growth at least in the near future. The FTSEurofirst 300 declined 1.2% at 989.88 points, while the euro dropped to a near two-week low of $1.24713 versus its American counterpart, its lowest level since June 12. German bund futures trended upwards to a session high of 142.12, up 125 ticks for the day. The Stoxx Europe 600 index finished at 243.68, erasing 1.2%. London’s FTSE 100 index moved 0.7% lower to end the session at 5,476.70. In Spain, shares of BBVA SA slumped 3.2%, Banco Santander SA slipped 2.8% and Banco Popular Español SA shed 1.9%. In France, BNP Paribas SA slid 3.3% and Société Générale SA declined 3.1%, weighing significantly on the CAC 40 index, which dropped 2% to finish the session at 3,030.04. Oil group Total SA also ended the day into the red, with its shares erasing 1.6% as oil prices lost ground. Among German stocks, Deutsche Bank AG slid 2.8%, while Commerzbank AG shed 1.4%. Frankfurt’s DAX 30 index slipped 1.7%, finishing at 6,153.39, further dragged lower by industrial conglomerate Siemens AG, which slid 2.1%. In Greece, stocks were also hit hard. The Athens General Index dropped 4.4% to finish at 581.83, with National Bank of Greece SA moving 8.2% lower.
U.S. stocks opened in the red on Monday, with market participants expecting a summer of slow growth and as Wall Street is pricing in Europe’s debt problems. Major indexes slipped nearly 1%, with the biggest decliners being the cyclical stocks. All ten sectors in the Standard & Poor’s 500 moved lower, with the energy and financial sectors posting the biggest losses. Industrials and technology also lost more than 1%; consumer staples and utilities were only slightly affected. The Dow dipped about 1% last week, while the Standard & Poor’s 500 slid 0.6%. The Nasdaq tech barometer was actually higher, gaining 0.7%, but the broader sentiment remained negative as traders are still eyeing Europe’s debt problems. Market participants are looking for more directions from Europe and are waiting for a possible ruling from the U.S. Supreme Court on the future of President Obama’s nationalized health care plan. European leaders meet on Thursday to discuss policy measures, which will be aimed at the ongoing sovereign debt crisis. Some analysts believe, though, that little will be achieved at the two-day summit, despite the leak of a memo which appeared to outline specific steps towards creating a cross border banking union, closer fiscal integration and the possibility of a debt redemption fund.
Dow Jones Industrial Average
The Dow moved slightly higher on Friday, paring some of the losses it posted on Thursday. The American blue chip index started the day around 12,600 and closed at 12,653.27 after touching intraday highs of 12,672.06. The index, however, remained below its 25-period moving average, which is currently acting as a resistance level. Today the Dow opened lower and is currently trading around the lows for the day around the 50-period moving average, which is acting as a support. If we break below it, the next support stands at the lows of mid-June. Oscillators are moving around the lower bounds of their respective ranges with the relative strength index at 39 and the stochastic at 20. The MACD is trending lower after retracting from the highs it reached last week.
Gold
Gold had a choppy Friday session, opening lower, but moving higher towards the end of the day. The precious metal closed around the highs, but was way into the red for the week, which saw the bullion slide from highs around 1630 to lows around 1558. Today gold is moving in close range, currently standing slightly below the highs for the session at 1576 dollars per troy ounce. Support is formed by the lows around 1563, which we touched at the end of last week. On the upside resistance stands at the 200-period moving average at 1587.96. Oscillators are mixed with the relative strength index around the lower bands of its range, while the stochastic is in mid-range, but is trending higher. The MACD is still moving around the lows it touched last week, but is issuing buy signals.
USDJPY
Friday saw the currency pair marking fresh new highs as investors put their money into dollar denominated assets. We finished the session around the highs for the day, which were also highs for the week. Today we moved above 80.50 for a while, but after that a sharp drop in the USDJPY followed, erasing much of the gains we posted in the second half of last week. We pushed through the 25-period moving average and we are currently heading towards its 50-period counterpart. Support is provided by the 200-period moving average, while resistance stands at the highs of today, slightly above 80.50. Oscillators are currently trending lower with the relative strength index at 43 and the stochastic close to the lower band of its range. The MACD is also trending lower, issuing sell signals.
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.
