It is turning out to be quire an opening that Europe is facing. The EUR/USD is below 1.25 at the moment, and the USD/JPY already beat 114.4, going so far as to approach 114.6. Hitting 118 in 3… 2… Nikkei/TOPIX and HSI futures are up post-close, indicating a price for spot Nikkei 225 around 17 070, and around 23 720 for the HSI equivalents. This is of course changing rapidly by the minute, and will in the immediate future since we haven’t heard anything in particular on the newswires from Kuroda Haruhiko’s press conference on monetary policy. Still, it seems as if Japanese investors are content with the re-balancing they got the chance to do yesterday, and while volatile the market gradually calmed down today and allowed for small, measured gains across the Tokyo indices.
I think these relatively new technical regimes will provide me with a lot of good opportunity to run momentum analysis, and to that end there will be a small change. Most charts I have been doing over the last month on live stock market data turned out to be regularly updated on the links I provided. Running regular updates on the data means often rehashing the same technical data, and if that is auto-updated anyway there is little use to include the chart every time I post. I have therefore added a “Watched Charts” page, to which I will refer for each individual, identical data technical analysis update. If the chart is from aastocks.com, then it’s visible on the page, updated when you access the page, but if not then it’s updated whenever you click it, the investing.com links being streaming quotes. I will still post specific analysis from CMC Markets and my own Excel spreadsheets when I feel like it, but the smaller (ir)regular updates will instead be accessible on a constant page that loads that data on demand.
However, if you’re an active investor/trader, you’re probably watching something completely different these days anyway: oil.
Oil seems to be following the momentum effect of non-US$ currencies pretty nicely, meaning that the weakening factors are:
- World economy growth concerns, with “slowdowns” in China, easing to counter growth worries in Europe and a weakening yen not resulting in much of any inflation.
- Massive supply increases from the US production of shale.
- An increasing dollar value meaning that suppliers are getting paid more in local currency and non-US buyers are paying more in local currencies.
At the moment, the effects mainly seem to be holding Japanese inflation in check, US producers not gaining a lot, and generally distribute earnings to oil-import countries that predominantly export globally. Other energy sources are not joining the pity-party, for Japan in particular natural gas seems to be holding very steady. Still the oil fall of 18% so far in 2014 and 28.5% fall from the first week of June is probably more than enough to add to Japan’s trade balance even though natural gas is up 16% since its bottom last week. Natural gas however is very volatile, and has fallen from the year-start, and is down by 36% since its late February peak.
I guess China is seeing an investment opportunity, going in with relatively cheap capital to places that are seeing squeezes due to lower materials prices, and building infrastructure to secure supply when prices rise again. Combining this with a Chinese push locally westwards where there are a lot of rare-earth minerals and little development could easily add to better urbanization prospects in parts of the Chinese West that get to act as trading and mining hubs. In the long run if capital is committed to this on a national scale I guess it would put some pressure off of the Eastern Seaboard and help growth in the western provinces, making those moving into locally growing towns a lot less likely to protest for economic reform.