Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Market Insight - Feb 25

MARKET INSIGHT
By Bryn Griffiths (CEO, Edge Capital Markets)

Equities

Global equity markets ended the week with mixed results. Many exchanged ended relatively unchanged but that did not represent the volatility seen as Federal Reserve minutes from their last meeting were released and showed a number of junior members wanting the FED to consider varying the pace of the US$85bln monthly bond purchases. It is probably important to note that the senior members remained resolute in their plan to bring unemployment down and continue the plan. I know where my money would be in that debate. This dissention gave the markets a wee wobble, but equally not surprising as the market really were looking for an opportunity to settle for a while following such a strong run in the first 2 /3 months of 2013. The key measure of volatility, the CBOE VIX rose nearly 3% this week. The Chinese market was the worst performing index this week closing down 4.85% on the back of increasing concerns that Chinese officials will start looking to tighten monetary conditions to manage the once again property market that is heating up. This impacted on heavy weight property and banking stocks. European exchanges closed the week with little fanfare as all eyes were focusing on the weekend’s Italian Election. There could be some interesting price action in the UK market when it reopens on Monday following the downgrading of their sovereign debt by Moody’s just prior to the US market close. Also looming this week is the March 1 automatic US spending cuts that were kicked down the road from the infamous Jan 1 deadline. Will we see any progress finally on this front?
Weekly Moves: Australia 200 -0.3%, Hong Kong -2.8%, Japan +1.9%, China -4.9%, France +1.3%, Germany +0.9%, UK +0.1%, Dow Jones +0.1%, S&P500 -0.2%, Nasdaq -1.0%

Currencies
The US dollar saw strong inflows during the week with the US Dollar index closing up 1.0%. The EURUSD closed the week down 1.4% on concerns around the outcome of the Italian Elections where it seemed the anti-austerity Berlusconi was gaining popularity as well as the fact that European banks returned less than forecasted funds borrowed during the second Long Term Refinancing Operation (LTRO). The banks returned EUR61bln vs an expected EUR122bln. This clearly indicates that European banks are still holding onto funds and therefore there are still perceived risks in the region in the eyes of the bankers. The biggest looser this week was the GBP which closed the week on its knees following the downgrade by Moody’s of the UK Sovereign Debt rating. The GBPUSD is now down nearly 6% in the last 8 weeks.
Weekly Moves: AUDUSD +0.1%, GBPUSD -1.8%, EURUSD -1.4%, NZDUSD -0.7%, USDCAD +1.6%, USDJPY +0.0%, USDCHF +0.9%

Interest Rates
This week saw inflows into all the global markets except Australia which saw selling across their curve following a somewhat neutral statement from Australian Reserve Bank Governor Stevens. The market had priced in over 50bp cuts to their cash rate by the end of the year. Gov Stevens said that there was a significant amount of stimulus in the system that was still working its way through, and that the current overnight cash target at 3% is appropriate. Concerns around the Italian election result as well as the less that forecast return of banks Euro’s borrowed for stimulus purposes saw safe haven buying of German bonds drive their yields lower for the week. The debate about the Federal Reserve pulling out its stimulus was ignored by the bond markets where the “Smart” money plays where yield remain subdued during the volatility experienced in the Forex and Equity markets. The US automatic spending March 1 date now looms and may see safe haven buying leading up to any outcomes.

Closing Yields (Weekly Move):
3m 5y 10yr 30yr
US 0.12% (+0.02%) 0.83% (-0.02%) 1.96% (-0.04%) 3.15% (-0.03%)
UK 0.38% (+0.02%) 0.86% (-0.11%) 2.11% (-0.08%) 3.37% (-0.06%)
Germany 0.01% (-0.04%) 0.56% (-0.10%) 1.57% (-0.08%) 2.40% (-0.04%)
Japan 0.08% (-0.02%) 0.14% (+0.00%) 0.73% (-0.02%) 1.92% (-0.02%)
Australia 2.90% (+0.02%) 3.07% (+0.03%) 3.54% (+0.02%)

Metals
Precious metals saw strong outflows again this week as continued positive global economic data releases saw investors no longer needing safe harbour and exited the precious metals market. This belief was supported by minutes from the Federal Reserve indicting members wanted to consider reducing their bond purchasing program suggesting that things were improving out in the economy. We have now seen Silver fall 8% and gold down 4.7% in the last 4 weeks. Copper tumbled this week as US and European manufacturing data releases missed to the downside.
Weekly Moves: Gold -1.8%, Silver -3.5%, Copper -5.0%

www.edgecapital.co.nz

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: RBNZ Starts Talks On Tougher Rules For Property Speculators

The Reserve Bank of New Zealand is stepping up preparations to restrict lending to residential property investors as it watches house prices, particularly in Auckland, continue to rise strongly. More>>

ALSO:

Research: ‘Ageing Well’ Science Challenge Launched

Science and Innovation Minister Steven Joyce today launched the Ageing Well National Science Challenge, confirming initial funding of $14.6 million. More>>

ALSO:

Scoop Business: Govt Resisting Pressure To Pump More Cash Into Solid Energy

Prime Minister John Key says it is “not the government’s preferred option” to make a fresh capital injection into the troubled state-owned coal miner, Solid Energy, but dodged journalists’ questions at his weekly press conference on whether that might prove necessary... More>>

ALSO:

Lagest Ever Privacy Breach Award: NZCU Baywide Accepts “Severe” Censure In Cake Case

NZCU Baywide says that once it was found to have committed a breach of a former staff member’s privacy, it had attempted to resolve the matter... the censure and remedies for its actions taken almost three years ago are “severe” but accepted, and will hopefully draw a line under the matter. More>>

ALSO:

Scoop Business: PayPal Stops Processing Mega Payments; NZX Listing Still On

PayPal has ceased processing payments for Mega, the file storage and encryption firm looking to join the New Zealand stock market via a reverse listing of TRS Investments, amid claims it is not a legitimate cloud storage service. More>>

ALSO:

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news