Varchev Finance: Trading day in one post – 10.07.2018

Asian Stock Market – Asian stock markets posted profits after investors focused their attention on the upcoming financial statements, ignoring the risks of the trade war. Although the trade war is detrimental to companies, investors seem to “buy the fact”. In Japan, the Nikkei 225 rose 0.85%, mainly due to the banking sector. In South Korea, Kospi jumped 0.72% to reflect the positive expectations for the raw materials sector. In China, the energy sector led to a 0.67% growth for Hang Seng, while the Shanghai composite barely squeezed from scratch to reach + 0.13%.

FX Market – So far, the FX market moves entirely as expected. AUD and NZD are growing, while JPY, GBP and TRY are enjoying a great deal of attention from vendors. The Australian and New Zealander jumped, reflecting the rise in stock markets in Asia, suggesting that countries in the region would consume more raw materials coming from Australia and New Zealand. JPY as a hedge of portfolios and against a background of rising appetite has seen a decline. The GBP continues to decline, reflecting the political crisis in the British Parliament that broke out yesterday afternoon. In addition, more and more hedge funds prefer to be GBP Short in the medium term. According to CFTC, large investors increase their short exposure by over 33% to -28,781 contracts. This is the highest level reached by Short Seller in the last 9 months. For the last time, we watched such short-stacked volume in September last year, after which the GBP recorded a close to 5% adjustment against the USD and most major currencies. Adding to the crisis in the British government, the prospects for the cable do not look good. Today, GBP will also be in focus, as at 11:30 we expect very important news that will show black and white, the health of the British economy.

Commodity Market – Commodity traders continue to trade tensions between the US and Iran, resuming long-standing fears that the Iranian army will try to stop most of the world’s crude oil supplies by shutting the Hormuz Strait. The Hormuz Strait is a narrow waterway between Iran and Oman, connecting the Persian Gulf with the Gulf of Oman, the Arabian Sea and the Indian Ocean. The Strait handles about one-third of the world’s oil traffic, making it the most important crude oil supply point. In 2015. it processes about 30% of world crude oil and other oil products traded by sea. Threats to close the strait usually lead to higher oil prices. If they finally become a reality, the price of crude oil is likely to increase significantly, potentially damaging average consumers. Later today, we expect preliminary US oil inventories, with no surprises expected.

European stock market – Futures of European indices indicate a positive start on European markets. I expect the positivism gained during the Asian session to shift to Europe. The most attractive will be the raw materials and defense sector as it became clear that investors have high expectations and current stock prices are underestimated against the benchmark. The German DAX30 will start 30 points higher, the French CAC40 with 10 points and the UKX with nearly 7 points.

US Stock Market: On the first business day of the week. Wall Street is greenish due to the good performance of the banking sector and the declining tension surrounding the trade war between the US and their major partners. Dow jumped 320 points, as J.P. Morgan Chase, Goldman Sachs and Caterpillar were the leaders in the promotion. The SP500 and Nasdaq gained a moderate increase, which rose by 0.88%.

Economic Calendar for European and US Trade Sessions – 10.07.2018

11:30 UK – GDP

11:30 UK – Industrial Production

11:30 UK – Trade Balance

12:00 Germany – ZEW Economic sentiment

15:30 Canada – Building permits

17:00 US – JOLTs New Jobs

23:30 US – API Crude oil inventories

 Trader Petar Milanov

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