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Varchev Finance: Trading day in one post 08.03.2018

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Asian stock market: Markets in Asia clawed back some gains on Thursday after sliding in the last session on trade-related fears. Gains in the region came after U.S. stocks closed above session lows on fresh developments related to planned metals tariffs. The benchmark Nikkei 225 index rose 0.31 percent and the Topix was up 0.12 percent. Elsewhere, South Korea's Kospi advanced 0.46 percent. Shipbuilders put in a strong showing, with Samsung Heavy rising 6.3 percent and Hyundai Heavy Industries climbing 5.84 percent. Hong Kong's Hang Seng Index jumped 1.42 percent, or 429.55 percent as all of its sectors traded in positive territory. The heavily weighted financials sector was firmly higher: HSBC advanced 0.59 percent and insurer AIA added 2.47 percent in early trade. Greater China markets also saw gains, but were a tad more muted. The Shanghai composite added 0.29 percent and the Shenzhen composite rose 0.57 percent.

FX Market: The Bloomberg Dollar Spot index was little changed. The Japanese yen rose less than 0.1% to 106.03 per dollar. The euro was flat at $1.2407. A “critical turning point is approaching” for dollar-yen, which could briefly decline past 105 as it reaches the second bottom in a triangle trading pattern, Naohiko Miyata, chief technical analyst at Mitsubishi UFJ Morgan Stanley, wrote in a note on March 6. Over the past decade, the pair has bottomed once every 47 weeks on average, and this week is the 46th week of the cycle that started April 17, signaling that a bottom may be near, he wrote. The euro could spark further issues to European Central Bank (ECB) President Mario Draghi on Thursday if policymakers significantly change their language on monetary stimulus. The euro is expected to strengthen further on Thursday if the ECB gives up the so-called "easing bias" — where the central bank favors a more accommodative policy. Until now, the ECB has stated that it stands ready to increase the level of bond purchases it makes in both duration and/or size in case the economic outlook deteriorates in the euro zone. Dropping such a statement — the easing bias — would indicate that the ECB believes that prices in the euro zone are increasingly more aligned with its "close to but below 2 percent target." Markets would perceive this as a slight move towards policy normalization, which traditionally pushes the currency higher. Minutes from the last monetary policy meeting in January showed that the bank could announce changes to monetary policy in "early" 2018, but it thought that it would be too premature to change its monetary policy stance at the start of the year. Almost a third of 56 economists surveyed by Reuters said they expect a removal of the easing bias on Thursday. The same survey, released Friday, showed that the majority of economists questioned said the change will only come in June. The minutes from the last meeting also showed that the ECB is tracking the euro, saying that the exchange rate was a "source of uncertainty." This is because the currency has surged since the start of the year, especially against the dollar. A stronger euro could have an impact on European exports and affect prices in the region. As a result, the bank could be forced to change its monetary policy stance. However, if ECB President Mario Draghi delivers only a "very small and cautious shift of the communication, this should push the euro slightly lower," Brzeski said. He added that over the coming weeks, it's likely that the euro will be more impacted by U.S. politics rather than by the ECB's comments. The euro-dollar exchange rate has often moved on U.S. political developments this year. For example, in January, comments from Treasury Secretary Steven Mnuchin pushed the dollar lower and sent the euro higher.

Commodity market: WTI gained 0.2% to $61.29 a barrel after dropping 2%. Gold inched up 0.2% to $1,327.87 an ounce. The price of copper climbed the most in seven years in 2017 and is set to jump again this year as electric vehicles, mobile phones and computer chips put pressure on supplies. By 2025, demand for copper in electric-vehicle batteries will be more than three times what’s forecast for 2020, and demand will triple again by 2030. That’s feeding concerns mine development and production of the metal won’t be able to keep up.

European stock market: Uncertainty about a possible trade war casts a shadow over European benchmarks. The German DAX will start the session with about 11 points loss at 12,250; The French CAC will begin trading with 5 points in a negative territory at about 5,196; while UKX remains unchanged for the time being. Investors will be keen to monitor Mario Draghi's press conference at 15:30 for fresh clues about the future of monetary policy, a possible date for a final exit from quantitative easing, interest rate and inflation forecasts, and more. Any news from Washington regarding the proposed tariffs for steel and aluminum will also weight on index movements - as traders will also watch for a counter-response from the region.

U.S. stock market: Stocks closed well off session lows on Wednesday after the White House hinted Canada and Mexico could be exempt from tariffs proposed by President Donald Trump. The Dow Jones industrial average ended 80 points lower after falling more than 300 points. The S&P 500 closed just below breakeven after falling nearly 1 percent. Real estate and tech were the best-performing sectors. The Nasdaq composite closed 0.4 percent higher, hitting a session high in late-afternoon trade, as shares of Facebook and Alphabet rose 2.2 percent and 1.3 percent, respectively. The Russell 2000, which is made up of small-cap stocks, outperformed, rising 0.8 percent. White House press secretary Sarah Sanders said the plan could include carve-outs for Mexico and Canada, two key U.S. trade partners. Trump is expected to release more details on his tariffs plan on Thursday or Friday.

Economic calendar for the European and U.S. trading sessions:
09:00 Germany - Factory Orders
14:45 Europe - Interest Rate Decision
15:15 Canada - Housing Starts
15:30 USA - Initial Jobless Claims
15:30 Europe - ECB Monetary Policy Statement and Press Conference
18:00 Canada - BoC Governor Poloz Speaks


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