Weekly Market Forecast 26.12.2016

The market would be closed this coming Monday for the holidays, but the Trump effect could already be seen on the US stock market’s performance in the trading market over the past eight weeks. Currently, Dow Jones, mostly composed of large cap stocks, could be pushing to the 20,000th level in the coming weeks. However, with the holidays coming up, trading would be a little slower. As such, the 20 thousand figure would likely not be reached. Nevertheless, it is best to decide on how to play the cards on the US stock market movement when Donald Trump assumes the presidency this coming January. The positive sentiment could still be outweighed by the global reaction to the policies Trump would be implementing. Multinational investors would still be wary of the US Dollar’s effect on most foreign currencies, with a direct effect on the country’s deflation and strength against the USD.

As a year-ender preparation for a better outlook in the coming year, investors should still be cautious. It is true that the pro-economic policies to be implemented by the incoming administration include tax-rate cuts and infrastructure focus among others. However, the probability of resistance to these policies could still wager an effect on the stocks’ performance, depending on how the general public would react to it.

The global market should also take a close look at the US market’s effect. The outlook of the policies would veer less toward globalization but more on the national stimulus. The US dollar is seen to perform well at the expense of reliant currencies, with US investors on the respective country of operation. The Asian market is still on the verge of pressure against the USD. It is seen to be a quiet year-end in the Asian market. Many measures have been implemented by both the Japanese and Chinese governments to improve their monetary policies against the disparity in USD strength and its economic effect.

Oil prices are seen to continue its gaining streak for the coming weeks, benefiting from the upcoming cut in oil production starting next month. Gold and silver, along with other precious metals, still remain bullish until the coming weeks, which add to the effect of the rising inflation rate.

Here’s a look at the events that would transpire in the coming trading week.

EUR/USD – the coming holidays would be slow and light for trading between the two currencies. Although year-end figures would bring adjustments to the closing amount, it would still be a wise decision to consider waiting until next year. This would make for a fully-decided move by means of a better examination based on how the currencies outlook would look like,

Monday: December 26; Report for the Japanese Inflation and Unemployment figures for the month of November would be released. It is forecasted that a 0.2% down rate for inflation would be presented, as compared to the 0.1% increase last October. Unemployment data is forecasted to still remain at 3%.

Tuesday: December 27; Japan’s report for industrial production and retail sales are at a mix. Industrial production is seen to hike at 0.44% against a 1.4% decline in October. On the other hand, the retail sales report would strike down a 0.1% fall rate last October, further sliding by 0.9% in November. The US Consumer Confidence for December would be released against the November figure of 107.1.

Wednesday: December 28; The Pending Home Sales for the US, covering the month of November, would be released with a forecasted figure increasing by 1.62%, topping the 1.8% increase last October.

Thursday: December 29; The US Unemployment claims is forecasted to decrease further to the 271,000 figure against a 274,000 report from November. Oil inventories are also forecasted to strike low by 300,000 barrels from the 2.25 million last week.

Friday: December 30; PMI reports for the US would be released with a forecasted figure of 52.3 for December against the 57.6 last November.

 


Weekly Market Review Dec. 26, 2016

Good record gains have been ticking over the trading week, with the Dow Jones nearing its 20,000th mark. Although it can be seen as a week-per-week improvement on the overall stock market, it should be noted that uncertainty still looms over the market as volatility is high. Policies that would be put into place once the Trump administration takes over come January of next year could still play a pivotal role. This could result in a lot of decision-making, which would definitely affect the issues and events on a global market scale. Oil prices still continue to improve over the week.

Accordingly, Asian markets all closed on a low note, with the trading indexes decreasing, compared to last week’s figures. The Chinese yuan still continues its drop against the US dollar while the Chinese Academy of Social Sciences quoted that the next year’s GDP of growth for the country would slow down and reach 6.5% lower than the estimated 6.7% rate of the current year. The said move would be tied to the implemented monetary policies, to further boost the country‘s economy from the impending asset bubbles that are ready to slow down the market. Japan has not changed its current rates, and the monetary policies still remain. It is said that the Japanese yen is suffering from the current exchange rate relative to the USD, as US- based investors are affected directly by the conversion rate it generates. Despite this, the country is still optimistic as it would push to further improve on the economic movement of import. Its export is expected to further recover from the deflation it is currently into.

The European market mostly remains unchanged while many banking regulations are implemented to ease the pressures among other sectors. On other news, Deutsche Bank and Credit Suisse have both settled fines against the US Department of Justice, with USD 7.5 billion and USD 5.3 billion, respectively. The said settlement was due to alleged mortgage-backed securities, which both parties have resolved. It is estimated that 40-45% was paid in upfront cash. The remaining balance would be paid through what they call “consumer relief.” This would lessen the impact for both banks with regards to their capital.

Global Stock Market

The US stocks impressively closed on all positive indexes. Dow Jones falls short on its 20,000 target, closing at 19,933.81 up +0.07%; NASDAQ closed at 5,462.69 (+0.28%) while S&P 500 bowed at 2,263.79 up +0.13%; and the consistently performing Russell 2000 closed at 1,371.51 up +0.65%. On the other hand, the Asian market is on a down, with Nikkei 225 closing at 19,427.67, down -0.09%, and Shanghai Composite at 3,110.15 (-0.94%). European stocks slightly make a figure improvement. Stoxx Europe 600 closed at 359.98, up by a mere 0.04% while UK FTSE 100 closed at 7,068.17, up by only +0.06%.

Global Currencies

The Euro/USD closed at 1.0456, with a mere change of 0.0018. On the other hand, the Japanese yen continues to struggle against the USD, closing at 117.32 (-0.22). The GBP/USD exchange posited a slight movement on the rate, closing at 1.2288, with a change of 0.0002.

Commodities

Crude oil continues its gaining streak, closing at 53.25, posting a +0.57% change. The same goes for gold, closing at 1,135.20, with +0.40% change.

The US market, especially in the case of Dow Jones, aims to reach the 20,000 level. As such, it may act as a happy trigger for investors who may be reliant on the market’s positive performance. However, this is not the case as these indexes among stock groups pertain to the performances of their components. They are not a guarantee of eventual gain in the coming months; rather, they’re a stimulus to be observed and taken into consideration with regards to your investing goals. Yes, the sentiment all over the market would be positive once it reaches the 20 thousand figure, but remember that these figures are only indicators of what you should do. As always, take the necessary steps for the appropriate diversification of your portfolio.


During the 2016/2017 Christmas & New Year Holiday season, the trading times will be as follows:

Instrument 23/12/2016 26/12/2016 27/12/2016 30/12/2016 2/1/2017
Forex Normal Hours Opens 06:00 Normal Hours Normal Hours Normal Hours
US Shares Normal Hours Market Closed Normal Hours Normal Hours Market Closed
UK Shares Early Closing at 14:30 Market Closed Market Closed Early Closing at 14:30 Market Closed
German Shares Normal Hours Market Closed Normal Hours Normal Hours Normal Hours
French Shares Normal Hours Market Closed Normal Hours Normal Hours Normal Hours
US Futures Indices Normal Hours Market Closed Normal Hours Normal Hours Market Closed
UK Futures Indices Early Closing at 14:30 Market Closed Market Closed Early Closing at 14:30 Market Closed
European Futures Indices Normal Hours Market Closed Normal Hours Normal Hours Market Closed
Agricultural Futures  Early Closing at 20:00 Market Closed Normal Hours Normal Hours Market Closed
Spot Energy Normal Hours Market Closed from 15:00 to 20:00 Normal Hours Market Closed
Energy Futures Normal Hours Market Closed Normal Hours Normal Hours Market Closed
Precious Metals Normal Hours Market Closed Normal Hours Normal Hours Market Closed
All Spot Indices  Normal Hours Market Closed Normal Hours Normal Hours Normal Hours

The times mentioned above are in server time (GMT+2).

The above schedule may be subject to change.

Clients are advised to be extra cautious when trading between 24/12/2016 – 04/01/2017. During this period, reduced levels of liquidity are expected, which are likely to result in wider spreads. CIBfx reserves the right to enable “Close Only” or even disable trading on instruments with low liquidity without prior notice, if deemed necessary.

Please feel free to contact us if you have any questions.

 


Weekly Markets Forecast 20.12.2016

The short-term interest rate has been increased by the US Federal Reserve last Tuesday, which has resulted in a record high for the US stock indexes. Furthermore, the US Fed is also planning a three-part hike on the rate for the year 2017. It is quite remarkable that the US economy is seen to improve over the coming year, with the possibility of a continued hike of the said rate. Oil prices were also forecasted to hit the $60 per barrel price share for the coming year. The US economy is still seen as being in the bullish mode, as the released reports are all optimistic of producing positive effects. Here’s an outlook for the coming week December 19-23, 2016.

  • US Reports – Wednesday would see the release of the US Crude Oil Inventories report. In contrast to the past forecast of the 1.4 million barrels decrease, it exceeded the said figure with a staggering 2.6 million barrels.

Thursday would be the release of US Durable Goods Orders, expected with a 0.2% increase against a 4.8% figure for October. The increase for the past month was attributed to a strong commercial aircraft demand and the maintenance of a slow but steady growth in the country’s manufacturing industry. The US GDP Data for the third quarter is forecasted at a 3.3% figure, after exceeding expectations from the previous quarter. The increase was attributed to increases in exports and increased investments in the country itself; thus providing a positive outlook. US Unemployment Claims is forecasted at a figure of 255,000 which would still continue the trend of being below 300,000 for the 93rd time.

  • Interest Decision in Japan – The Bank of Japan will be holding a meeting this coming Tuesday to come up with a decision regarding their monetary policy. During the last November meeting, the bank retained its current policy even though it was not able to meet its inflation rate deadline. As expected, the said target inflation rate would be achieved only by 2018. Based on what the Bank of Japan is currently feeding the news, they said that the policy would still stay as long as no event would cause the unstable economic status of the country to continue, particularly its decline against foreign currencies. Deflation is a major factor to be considered in the meeting, since it really affects the foreign investments in the country.
  • Canadian GDP Report2017 is forecasted to have an overall growth of 2% from the 1.1% of 2016, according to the Bank of Canada. The third quarter Canadian GDP report is forecasted to have an increase of 0.1%. The second quarter GDP report also forecasts a gain, which is attributed to the increased exports of energy products.
  • New Zealand GDPThe third quarter GDP report is forecasted at 0.8%, after a 0.9% growth report for the second quarter. Both export and the country’s own demand for products is still paving the way for a positive outlook on the country’s economic stability. The overall growth figure would be forecasted at 3.7%. These optimistic figures would still uphold the policy of not cutting rates as suggested by the Reserve Bank of New Zealand.
  • Ifo Business Climate Index for GermanyThe December 2016 business sentiment would reach 110.7, as forecasted, compared to 110.4. The US election has currently no effect on the German economy, but with Brexit and the elections, the effect is seen to come later within the next period.
  • The EUR/USD would still have a bearish outlook in the coming week as on the Euro side, European Central is continuing its bond buy-off to stabilize the Eurozone. Meanwhile, the US side is chomping up on how the Trump policies would affect the overall picture of both economies. The Euro/USD, as forecasted, could be seen dropping for the coming week.

Weekly Market Review Dec. 19, 2016

As expected, the US Federal Reserve increased the short term interest, bringing in another 0.25%, resulting in 0.75%, while the stock market resulted in a mixed trade. On a global scale, the USD continues its strength over other currencies. This week would show an in-depth view of what the hike would mean and how it would affect the global market.

US Federal Interest Hike

Many analysts believe that the US economy would improve in the coming year, but not because of the US elections. The fiscal policies and measures Trump would like to implement on the country’s economy would not happen overnight. It would still undergo the formal process of being enacted as laws; therefore, time would still be a variable on when it would show positive or negative results for the said measures.

  • The US economy had seen its growth in GDP, passing the 3% mark. This would mean that the economy as a whole could support the country. The US Federal Reserve is seeing the increase as a positive indication of improvement in many areas of the US economy. Inflation rate is forecasted to continue its 2% increase over the course of two years. On the other hand, the labor market makes the economy more sustainable for improvement and to accommodate more jobs.
  • It is likely that there would at least be three more announcements to raise the interest for the coming year. However, this would still depend on how the move would affect the whole economy, over the course of the Trump administration. The global economy should be considered as well. It should also be taken into consideration that the enactment of laws that will allow these measures to take full effect will be needed. This would also depend on how fast the current administration will implement them.
  • The US Dollar’s rise in value should also be viewed with caution. This would affect the multinational companies’ return when its denomination currency is devaluing over the country it operates on. This means that the US companies’ foreign investments, which suffer from a devaluation over the US Dollar, would have a lower return.

 

Market Close Recap

Global Stocks

Mixed closing numbers were reflected last Friday, December 16, for S&P 500 Index (2,258, -0.1%) and NASDAQ (5,437, -0.1%) but not for Dow Jones (19,843, +0.4%). Although the highlight for the week was Tuesday, trade has seen record highs for most indexes after the US Fed’s announcement on interest rate.

The Asian market has seen improvement with the Japanese Nikkei 225, closing at 19,401.15 and with a +0.66% change. Stoxx Europe 600 closed at 360.12, up by 0.34%. The same goes for UK’s FTSE 100 with +0.18%, closing the index at 7,011.64.

Currencies

As stated earlier, the US Dollar is rallying with its value over other global major currencies. Despite the positive closing week for the Nikkei, the Japanese yen is considerably suffering from devaluation after the US elections, with its rate currently at 11%. The same goes for the Chinese Yuan where the government is consistently selling its foreign currencies to avoid further devaluation.

The Euro/USD closed at 1.0451 (+0.0036) while the GBP/USD closed at 1.2485 (+0.0065). The Japanese yen continues its negative streak, closing at 117.92 (-0.25).

 Commodities

Crude oil continues its increase, closing at 52.03 with +2.22% change compared to last week. The same holds for gold, closing at 1,136.80 (+0.62%). The related rally on oil prices was triggered by non-OPEC members starting a production cut of 558,000 barrels/day while OPEC member Saudi Arabia posited that further cuts in its production could be implemented.

Viewpoint for the Coming Year

The coming year would be more volatile. That is why the best course of action is to know what you should expect and do regarding your portfolio. As the rates could possibly be raised over time, slowly steer away from portfolios that provide fixed-income returns. Always check your appetite for risk. This is so you could further assess and set the balance of the mix of your stocks, bonds and other investments, which would be volatile and show more unpredictability.


Market Forecast 12.12.2016

US Stocks took gains in the closing week, as the Trump presidency somewhat manages to deliver positive results in the market. After an agreement among members and non-members of OPEC to cut oil production, the price for oil products continually reaches an uptick for the past few weeks. The coming week is a headliner. Italy would decide whether to vote. Then it remains to be seen how their decisions would affect the Italian banks. As for the US, many are awaiting an anticipated increase in interest aside from the economic reports to be released, including unemployment, retail, and PPI’s.

  • UK Reports – Inflation and employment figures would be released in the coming trading week. Inflation data that would be released on Tuesday has an expected hike rate of 1.1%, representing the month of November, as compared to 1% last October. The said hike, based on analysts’ forecasts, are from the advancement in raw materials’ price, contradicted by the slow growth in tuition fees in the university and clothing prices. As for the employment data to be released on Wednesday, 6,200 is the forecasted figure that would reflect against 9,800 last October. Based on the analysis, the streak in momentum for the country’s labor market is losing. GBP is continuously depreciating over the USD, resulting in increased figures in inflation. On the other hand, the Bank of England is optimistic for an economic turnaround, which will improve its growth rate, enabling it to reach its target inflation rate.
  • US Reports – Retail reports would be released next Wednesday. This happens after a strong return from higher sales of automobiles and a great outlook of sale on construction materials. This would be further strengthened with the impending Fed interest hike on interest rate. The expected figure for retail sales would increase by 0.3%, while 0.4% is for core sales. As for Producer Price Index, the expected figure would be increased by 0.1% for the month of November. The Inflation report is seeing an increase, with a forecasted increase of 0.2%, which is an indicator for the Fed to pursue the increase in interest rate.

The US unemployment claims figure is continuing to stay below the 300,000 mark despite the forecasted 252,500, which a thousand more compared to the last report. The below 300K mark is a significant measure to say that the US labor market is stable, supported by economic gains in the market. Building permits data is also expected to increase due to the incoming policies on increased spending in construction.

The coming week would see whether the interest rate would increase to 0.75%, as many suggested and forecasted. The likelihood for the first rate hike is at 97.2%. As indicated by the Federal Reserve’s Chairwoman Janet Yellen, the upcoming President’s policy by January does not seem likely to affect their measured view on growth, that is why the interest rate hike would seem to happen. Wednesday would see the FOMC Economic Projections meeting, together with the announcement of the Fed’s decision on interest.

  • Other Markets – The US stock market could be seen having a follow-up improvement for the big-cap stocks while the oil sector could be getting back at rallying on its process. The Euro/USD is moving past its closing figure of up to 1.0870 despite the expected return plummeting down. This currency trade is seen to still be in a bearish mode as the USD might continue to rise in its value. This would entail an international effect on major currencies. It would be deduced that with the upcoming Fed Rate hike, if the USD increases its value, then foreign investments in USD would have to cope with the devaluation that would follow and reduce the equivalent return in terms of the dollar. Canada would also release its manufacturing date and CREA Real Estate Sales figures.

Weekly Market Summary Dec. 14, 2016

This week sees a lot of optimism towards the market as most major economies gained at the end of the week. For the US market, the Trump administration is undeniably pushing an uptick in the market as reflected on Russell 2000, which sets a record high performance index. Again, Trump’s administration aims to reduce taxes while increasing the spending in infrastructure to bring in more jobs and outflows in the economy. The US market also reflected a positive job employment report, including low figures for unemployment benefit seekers and a slight discrepancy over the job openings offered to workers. Good news is coming in for the energy and oil sector. Demand is increasing, as well as prospect of more investors. This would lead to more trading in the sector.

Moving to the European market, the European Central Bank’s announcement to retain the current interest corridor pushed the record high for the US market last Thursday. They would also be reducing the asset buyout month from 80 billion to 60 billion Euros per month. Its president, Mario Draghi, indicated that the program to boost the economy of Eurozone would continue until it reached the target inflation rate of 2%. Italy is taking measures to do something regarding their banking sector problems, which lead to its uncertainty in the country’s market outlook. Prime Minister Matteo resigned over the rejection of the plan to reform the constitution, which raises the question on what would be next for the country. Eurozone countries (France, Spain, Germany and Italy) showed a strong business outlook, although still far from resulting in a significant move to push to the target inflation rate of 2%.

The Asian market also registered closing on a positive note. Japan is gaining on the market despite its yen still being weaker than the US dollar. China’s trade policy is still looking for how Trump’s policy would affect its own due to impending restraints on foreign outsourcing by the US. On other markets, Brazil is looking for solutions regarding their fiscal policies. Their state-controlled oil and gas sectors would hike prices for its product after a price increase in the global market.

 Stock Overview

Dow Jones; 19,757 (+3.1%), S&P 500; 2,260 (+3.1%), and NASDAQ; 5,444 (+3.6%) all had a record high close for the trading week despite bonds still lagging in the week because of interest rates rising. Russell 2000, which performed best this week, closed at 1,388.07 (+5.6%).

On the global market side, Japan’s Nikkei 225 closed at 18,996.37 (+1.23%), Stoxx Europe 600 at 355.38 (+0.97%) while UK’s FTSE 100 closed at 6,954.21 (+0.33%).

Currencies

The major exchange rate has a mixed result for this trading week. The Euro/USD closed at 1.0563 down 0.0054 while the USD and the Japanese Yen was up 1.32 to a close of 115.36. The Sterling is down by 0.0012, closing at 1.2573, while the AUD and USD is also down by 0.0013, with a close of 0.7449.

Commodities

Oil is gaining its momentum week per week as crude oil closed at 51.48, up by 1.26% after OPEC’s agreed oil-production cut. On the other hand, gold is down 0.94% with a close of 1,161.40.

 On a Personal Note

As promising as it looks, the Trump administration could bring in more gain in the coming weeks due to its pro-business policies. But do not falter from the long-term goal of investing. Uncertainty is far more uncompromising when you stick to the hype of policies not yet implemented, and looking forward to its positive effect immediately. Always be patient and always take the economy as a whole.

Small cap stocks are performing well, so it is advisable to throw in a mix of middle to small cap. Maintain a balanced portfolio so that in case of drastic changes on one portfolio, you have another that could hold up its value. Never be intimidated by the short-term hype of gains, but look forward to its long-term goal and view.

 

 


Weekly Market Summary Dec.2, 2016

The pressure is on both the global market and the US Federal Reserves, particularly on how US President Donald Trump could curb long-term decision plans on US fiscal policies. Trade restrictions are one of Trump’s restrictions, and curbing the outsourcing of jobs to Asian countries could post effects on how the US economy could move forward. Federal concerns also arise as during the campaign, Trump and Chairman Yellen have not been in good terms as to how her office should be run. Yellen is making sure that the central bank’s independence still prevails and that it remains in consonance with its long-term goals despite the appointment of high-level jobs. It is also her stand not to bail out due to pressure from the current presidency with regards to coming up with short-term solutions pertaining to the US economy and fiscal policy.

 Stock Market Recap

Slight gains permeate closing prices for Russell 2000 (1,314.25, +0.03%), NASDAQ (5,255.65. +0.09%), S&P (2,191.95, 0.04%) and Dow at 19,170.42, -0.11%. Financial stocks have been the highlight for the week’s trading since they are being bought while technology-based stocks are on a selling streak.

OPEC’s Agreement

A decision has been made by OPEC members to cut 1.2 million barrels a day in production with the condition that non-OPEC members, especially Russia, would cut about 600,000 barrels as well. The said production would start next year on the 1st of January and would last for a 6-month period. Due to that announcement, crude oil gained on the closing week. It closes at 51.57. The agreement within OPEC also led to a value rally on oil because of the Asian market investors’ demand for more production.

 US Dollar Global Takedown

Currencies closed positively for the US Dollar. The Euro/USD closed at 1.06, same as last week; the USD/Yen closed at 113.22, up by 2.1%; and the Pound/US closed at 1.25, up by 1.1%. In truth, Trump’s fiscal policies resulted in the US Dollar holding its gain, topping more than a hundred rate. Although it may seem to look good, the investors and businesses funding the country think it is situated, which means value discrepancies. The devaluation of the country’s denomination against the US Dollar would not be good for the company. Not to say that it has no benefit for America itself. Many could recommend its use whenever Americans decide to purchase in that country. You could plan a vacation because of the country’s devalued amount against the US Dollar.

Other Global Market News Recap

Gold closed at 1.184, down by 2%. Despite a modest economic growth for the Eurozone, they still haven’t reached the inflation rate of 0.8% as only 0.6% was reported by the European Union’s Statistic Agency. On the other hand, the Asian market is on a polarizing mix. Japan continues its gaining streak of four weeks despite the US Dollar rate still dwindling down and  causing losses for  investors who use US dollars. On the other hand, China’s currency has its value dropping, resulting in its sell-out for foreign currency such as the US Dollar.

 Actions to be taken

As always suggested, diversify your portfolio. Now could be the best time to look for investments where governing bodies and private sectors could focus on policies and support. Again, do not focus only on a single sector because the effect of Trump’s announcement on policies could still change. Since the market is rallying towards cashing in more values and gains, try to capitalize on this movement. Check small caps because they are the most gainers from this short-term effect adjustments and market volatility. Monitor sectors, companies, and industries that could outperform their past performances. Base it on the effect of approved curbing of oil production, the strengthening of the US dollar, and the global positive outlook on the market. The Fed rate hike is positively likely to conjure, and you can decide better from thereon.