Market Review 17.03.2017:

The US market seems to slightly lose its winning streak after this closing week. It does not mean that the market is losing, but the market is an unpredictable figure churner that such a decline is already expected. Meanwhile, the European Central Bank keeps the current interest rates, which it said would be extended further in time. The program on bond-buying would most likely stay until December.

This week, the focus of this article would be on how to gain a deeper understanding of fixed-income investing. What could be deduced here in case of the bullish market happening in the US? Would it entail a losing side on other financial markets or would it boost the other markets’ upheaval?

Fixed Income Investing – What to make of it?

As an introduction, bonds offer fixed rates of return for a fixed period of time or an extended one, depending on the investor’s choice. Portfolios would mostly consist of bonds and stocks, which would entail the feature of a diversified investment.

What are the rewards from such risks then?

  • Generally, when rates increase, the risk for any return in bond investment also rises. As an observation, interest rates do not faze out modest returns from bond investing.
  • The rate may be too low at the current level of investing nowadays, but this is a fool- proof testament that bonds would still perform well when stocks are dropping. Bonds and stocks show an inverse relationship where, if one is falling, the other would rise. That is why bonds are effective shields against market volatility.
  • Stocks that are paying dividends provide a great assessment of a well-performing investment. Remember that dividends are not a guarantee of fixed returns because it is part of equity, and corporate discretion always comes into play.

A diversified portfolio really means enough buffer in case other types of investment do not work out. It acts like a leverage that would enable an investor to forecast and see any upcoming upsets and market flow for a better set of decisions to be made.

What should an investor do?

  • Assess what the component of your portfolio would be through proper allocations of how much would be in bonds or in stocks. Ask a legitimate financial advisor for better decision-making.
  • Diversification is a must, as it would contain different types of assets in each bond and stock classifications.
  • Bonds should be kept in varying terms of maturities. Short-term bonds are preferred for better investment positioning and determination.

 

Market Price Recap

Stock Index Closing Change from Last Week % Change
Dow Jones 21, 903.54 897.83 -0.05%
NASDAQ   5, 861.73   -9.02 -0.02%
S&P 500   2, 372.60    10.52 +6.00%
Russell 2000   1, 365.26   -28.87 -0.03%

 

 

Others Closing Change from Last Week % Change
Oil        48.43 -.31 -9.20%
Gold 1, 201.40  5.90 +0.49%
EUR/USD           1.0674 -0.0033 -0.31%
USD/JPY      114.78 +1.24 -0.20%

 

Stock Index Closing Change from Last Week % Change
UK FTSE 100 7, 374.39 31.31 +0.43%
Stoxx Europe 600     374.73   1.51 +0.40%

 

Stock Index Closing Change from Last Week % Change
Nikkei 225 19, 633.75   29.14 +0.15%
Shanghai Composite   3, 237.02   24.26 +0.76%

 

 

 


Market Forecast 15.03.2017

After a slight disruption in a straight winning streak of the US stocks last week, the economic report and labor market are still promising and optimistic. Rates would be released this week, and here is a takedown of what would transpire this coming week.

US Reports:

The real deal would be whether the rate hike this coming March 15 would be able to sustain the expectations of investors and the concerned public. This is a scenario where the rate would be beneficial, yet at the same time disappointing due to its inherent risk. The economy as noted by Fed Chair Janet Yellen, is operating under speculation and speculation alone. It has not reached the boundary of objectives reasonable enough to conclude its effectiveness. The setback would be on the US dollar, as it would not gain enough if the Fed decided to increase its rate.

As for gold prices, the coming week might add a slight indicator of short-term confidence on the increase of its trading price. Oil inventories are seen to continue their record high number, which could counter the falling demand for gasoline, which resulted from its dismal closing price last week.

The inflation report would likely cause more increase in interest rates, as relayed by Yellen. On the report to be released Wednesday, consumer prices are predicted to increase by 0.2%, due to the increase in prices for automobiles, clothing, and energy. This increase in prices of commodity indicate a trigger point for inflation rate increase. Unemployment claims still continue to be below the 300K mark, which sustains a healthy labor market for the country.

Japan:

The Bank of Japan would release its rate decision this coming Thursday. The bank’s governor Haruhiko Kuroda said that the inflation rate target of 2% might be taking quite a longer time to achieve. While the concern is looming over Donald Trump’s protectionist policy, Governor Kuroda said that the said policy would actually be able to boost economic growth around the world and in the US. How this would occur is still mere speculation and projections for export activities are looking good until the upcoming fiscal year.

UK:

The Bank of England would also release its rate decision on Thursday. The past report saw the benchmark rate for the bank being retained at 0.25% and the bank opting to retain its measures on its other monetary policy. The bank positively forecasted an improvement in the economy, which would result in a higher chance of a rate increase in comparison to not putting a cut on it. The economic growth prediction rate is set at 2%, together with a lower rate for unemployment. Brexit seems to keep the growth from halting, and the country’s policymakers could expect continuous growth for the coming months.

New Zealand:

The country would release its GDP data this coming Wednesday with a forecasted a 0.7% growth rate for Q4 of 2016. The last third quarter saw an increase in construction and consumer spending activities. The resulting forecast was triggered by a rising number of tourists, boosting manufacturing for tourist export and retail. Note also that the service sector took an expansion of 1.1% for the quarter alone.

As always, stay diversified and study the balance of an investment portfolio. Market volatility is a surefire miss, if not considered carefully.

 


Market Summary 10.03.2017

This weekly recap would be on a different side of the narrative compared to past articles. This week, it would be focused more on the things an investor should really know and consider. For a quick recap on the highlight during the past trading week, US stocks still continue its record high registry where the market was really optimistic.

The US Market Continues Gain Streak:

Optimistic data on the country’s economy drive the positive sentiment of most investors. Now that politics is again taking recognition and becoming a major a factor consideration in the market watch, the world would still follow any development as to how these short term gains would translate in the long run.

Stock Index Closing Change from Last Week % Change
Dow Jones 21, 005.71 183.95 +0.88%
NASDAQ   5, 870.75   25.45 +0.44%
S&P 500   2, 383.12     1.20 +0.67%
Russell 2000   1, 394.13   -0.40 -0.03%

 

Others Closing Change from Last Week % Change
Oil        53.01 -0.31 -0.58%
Gold 1, 232.50  5.90 +0.49%
EUR/USD           1.0590 -0.0033 -0.31%
USD/JPY      113.78 -0.24 -0.20%


Europe Sees a Positive Week Coming:

The export and import industry of the zone contributes to the positive gains during the trading week. In other news, Germany reached its highest level of inflation, which resulted in pressure on the country’s bonds.

Stock Index Closing Change from Last Week % Change
UK FTSE 100 7, 374.26 121.26 +1.67%
Stoxx Europe 600     375.23   5.71 +1.54%
Europe Dow 1, 621.06 +24.08 +1.55%


The Asian Market is slowly recovering:

China is looking forward to a solid contribution from its manufacturing and services industry. Economic policies would be laid out the coming week. Based on the last economic data, the country would be able to sustain a strong start and footing to be able to curb any financial risk and uncertainty. Japan, on the other hand, has enough income growth that would be able to counter the inflation. Meanwhile, the Bank of Japan is monitoring the implemented low rates as it hits the profit of financial institutions.

Stock Index Closing Change from Last Week % Change
Nikkei 225 19, 469.17 185.63 +0.96%
Shanghai Composite   3, 218.31  -35.12 -1.07%


An Investor’s Guide:

Remember to practice cleaning and de-cluttering in sifting through any financial advice and what the media reports. Sometimes, scratching only the surface could not provide definite satisfaction in terms of the answers and predictions an investor would really want to know. Currently, there is a lot of noise, gossip, and speculation, which in the end, just do not add up or worse, lead to bad decisions.

For an investor to easily assess some worthy news for business consideration, look out for these tips:

  • Global Economic News as a whole. The effect of certain news, especially when it comes to trade agreements, restrictions, and open policies does not purport to a specific area but to an interconnection of economic flow of value and importance. In the event that an influential market suddenly declares a certain policy that would affect the global economy as a whole, then investors should be wary and cautious as to their next move and decision.
  • Policies that are uncertain. Since the US is implying protectionism, the dice is rolling all over the market, which is affected by such restrictions (i.e. Mexico). When a certain policy takes effect, the world would surely implore fiscal measures and policies that would curb any negative impact on the country as a whole.
  • Focus on the real news and not the senseless noise. Always stay focused and diversified, as most financial advisors would say. With a lot of things going on, filter the news that matter and do not feed the hype. Always keep an eye on long-term investments and not on short-run gains. Rebalance the risk based on the investor’s appetite and remember to be cautious about every decision on the portfolio.

 

 


Market Forecast 7.3.2017

With most global markets gaining during the last few weeks, the markets releasing economic data seem to benefit from positive figures. Aside from that, monetary policies were implemented to curb any movement in inflation and equity investment uncertainties.

Global Rate Decisions:

The European Central Bank would release its rate decision this coming Thursday. It may seem that the ECB would keep the rate based on January and that the bond-buying effort would still be in place. ECB’s head Mario Draghi directly said that even if the Eurozone is getting more positive, time is still needed for it to fully recover. He further explained that more monetary and fiscal measures should still be considered to fully reach its desired recovery.

Meanwhile, the Reserve Bank of Australia would also release its rate decision this coming Tuesday. The February rate of 1.5% was still in place and as economists would say in the upcoming announcement, rates would likely be raised. Others would contradict the sentiment that since the inflation does not rise, then the rate should likely be more put down.

Global Market Outlook:

The Federal Reserve is still playing largely on the part of the economy, as many are prospecting another rate hike this coming March 15.

China might be able to gain a balance on its economy. The reforms were already showing significant movement as the export industry was slowly gaining. Other global economies might want to take advantage of the country’s growing consumer market, as optimistic sentiment could be drawn towards more spending, and the global trade focus could culminate in the coming years.

As for Europe, equities might show an improvement, as earnings were looking good and the hype on the zone’s politics might not pose a significant risk in the coming few weeks.

Canada would release its employment date on Friday. January reports an increase of jobs in the service industry while the unemployment rate registered at 6.8% against 6.9% last December. This means that the country is slowly recovering from oil price slowdowns, although the jobs created were mostly part-time, doubling its increase by almost 100% against increases in the full-time jobs created.

For a given fact, the US unemployment report registered the lowest figure, and this figure is surely a major factor for consideration in the Federal rate hike. The labor market in the US poses a healthy prospective; if maintained, this could lead to a record on full employment rate.

Currency Trade:

The EUR/USD for the coming week might continue its bearish streak, as Mario Draghi might be able to proclaim certain measures and policies that would further boost the economy and bring it back from its slump.

On the other hand, the USD/JPY is seen to be bullish the coming week. Despite the erratic effect of Trump on the country’s economy, strong export activities might be able to cope and produce more positive data figures for the country as a whole. With the upcoming release of Q4 figures, the market would likely respond and gear towards the bullish line on every market analysis tool.

In the end, market volatility plays a big part on what to normally consider in every investment decision. Trend analysis, forecasting tools, and other sophisticated market simulators could not even guarantee sure decision-making; they’re simply tools in making a wise one. Economic factors, political agenda, and the world’s reaction on the policies being implemented would all contribute to how the market would truly react and show significant figures are in making economic decisions.

Currently. it is to be considered that the short-term effect of the continuous market rally would not necessarily mean a reflecting factor on how it would translate in the long run. Being focused and diversified would surely put any investor on the advantage line.


Market review 3.3.2017

Amidst the alleged plans of the Trump administration of interest rate hikes fairly soon, the delay of its implementation has the U.S. dollar hitting a low.  United States Secretary of Treasury Steven Mnuchin announced last week that the Trump administration will implement a small percentage of the promised economic reforms, and the implementation will be delayed until August of this year. This has resulted in a mediocre performance of the U.S. dollar against other major currencies.

The political rumours in the UK about the Scottish referendum have also affected the pairing of the USD and the GBP.  It started out as a promising pairing at the beginning of the week, but it turned out to be an exercise in caution, at least until the rumours have abated. Many investors watched with bated breath whether the USD/GBP pair will continue to decline this week.  It continues its slight decline.  Although this is the case, the real estate market, durable goods orders and GDP data from both the United States and the United Kingdom has increased slightly, making the future of this currency pairing slightly brighter.

U.S. durable goods orders such as electrical gear and communications equipment rose the previous month, and are expected to continue rising all throughout March. There is in fact, an estimated increase of 0.5% monthly until December 2017. The United States manufacturing sector also showed an increased manufacturing PMI, and by February month-end should be at 56.1 points. The U.S. Services sector, on the other hand, has shown a bit of an increase as the employment index continues to rise in February. It is also good news for the U.S. oil sector, as crude exports continue to rise. When it comes to the U.S. market, investors need to keep a close watch on unemployment claims, as this might affect the standing of the U.S. dollar.

In the United Kingdom, the construction and housing sector continues to be bullish, and there is an expected increase in business during the next 12 months.  Although there is a decrease in export orders and new businesses, Manufacturing PMI output and prices charged increased. Because of the bright standing of the real estate housing industry in the UK, the business confidence of construction companies increased this year.

The pairing of the Euro and US Dollar also showed a bit of a decline this week. There are two significant political events to watch out for in Europe, and both of these will most likely affect the standing of the Euro. On March 15, the Dutch General Elections will be held.  If the PVV party is victorious, then the Euro will definitely be shaken.  The PVV party is in favour of The Netherlands leaving the European Union. On April 23, the French Presidential election will be held. If the political party Front National is victorious, its leader Le Pen promises a referendum of French nationals on EU membership. This will also significantly affect the Euro. Should the Euro decline, many financial analysts are recommending investors to rely on safe-haven instruments, and the popular ones right now are the Japanese Yen and gold.

On the other hand, the Australian Dollar and US Dollar pair has stayed on the periphery of the bullish trend line, albeit only for a short term. Many investors are still a bit wary about the negative reading of the Australian economy.  However, the economy of Australia is slowly bouncing back, and expected to recover in the next few months. Although there is an overall slump in most economic sectors, the agricultural sector gained 7.5 %, a figure which provided the much-needed offset to their numbers.