Tag Archives: Japan Economy

Yellen’s Comments Send Gold Lower

Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the financial markets:

Main Trading Event Of The Day: USD PPI @ 12.30 GMT

WHAT WE’RE WATCHING TODAY

Yellen’s Comments Send Gold Lower

As Janet Yellen testified before the Senate Banking Committee yesterday, gold sank 1 percent in 10 minutes, taking the metal back below $1,300 for the first time in nearly a month. Rather than being the victim of a massive bearish trade, the metal seems to have was reacted to a slightly less dovish outlook from the Fed chair than some gold holders were expecting or hoping for. This could signal that higher rates will come sooner rather than later which is anti-inflationary, and presents competition for gold.

Several traders still noted the oddity of gold moving so quickly on comments that didn’t surprise many people. At 10:55 a.m. EDT, about 7,600 gold contract traded, which means that nearly $1 billion in nominal gold value changed hands in that minute. This boost in volume led to speculation that gold futures fell because someone “dumped” $2.3 billion worth of the futures. Other analysts however believe the explanation was simply down to Yellen’s comments which caused one trader to sell gold, the sale of which triggered stops around the $1,300 level.

Spot gold edged up slightly to $1,296.35 an ounce, after losing 3.3 percent in the last two sessions the metal’s biggest two-day loss since October. With the break below $1,300 an ounce and technical weakness, further losses for gold may be likely.

Japan: Demand Exceeds Supply for First Time Since 2008

Demand has overtaken supply in the Japan for the first time in six years, adding to inflationary pressure in the world’s third-biggest economy. The Bank of Japan’s measure swung to 0.6 percent in the first quarter from negative readings back as far as 2008. The change followed six straight quarters of economic growth that closed a shortfall between demand and supply that had put downward pressure on prices. BOJ Governor Haruhiko Kuroda has said he expects the elimination of this output gap, together with rising inflation expectations, to help drive consumer price gains toward the central bank’s 2 percent target. Whether this will actually lead the way to stable inflation, given lackluster growth in wages remains to be seen and companies are still cautious.

Stocks: Microsoft: Job Cuts Imminent

Microsoft is planning its biggest round of job cuts in five years after CEO Satya Nadella said last week that he was preparing to make sweeping changes at Microsoft. The reductions will probably be in engineering, marketing and areas of overlap with Nokia. The restructuring which may be unveiled as soon as this week may end up being the biggest in Microsoft history, topping the 5,800 jobs cut in 2009, according to sources. Nadella commented that Microsoft would have to become more focused and efficient as he issued his first company mission statement, calling for greater emphasis on mobile devices, cloud-computing and productivity software as consumers and businesses buy fewer personal computers to check e-mail, browse the Web and access data and software. Traders will be watching for news of Microsoft’s job cuts and the possibility of trading opportunities.

That sums up today’s highlights! Find us throughout the day on Facebook, Twitter, Google+ and LinkedIn for all the latest trading news. We hope you have a profitable day on the markets.

Japan Consumer Prices Increase At Fastest Pace Since 1982

Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the financial markets:

Main Trading Event Of The Day: German Prelim CPI – All Day

WHAT WE’RE WATCHING TODAY

Japan Consumer Prices Increase At Fastest Pace Since 1982

Japan’s core consumer prices rose 3.4 percent in May from a year earlier, rising at their fastest pace since April 1982 according to recent data. Annual consumer prices in Japan have risen for 12 consecutive months, a positive sign for the Bank of Japan and Prime Minister Shinzo Abe’s plan to finally rid the world’s third biggest economy of deflation risks. A series of economic data released at the same time showed Japan’s household spending fell 8 percent in May from a year earlier, compared with forecasts for a 2 percent decline. Japan lifted its consumption tax to 8 percent from 5 percent in April and with consumers upping their spending before the tax increase, consumption has fallen since then. Other data showed Japan’s retail sales fell 0.4 percent in May on-year, smaller than the 1.8 percent fall anticipated by economists. Japan’s jobless rate meanwhile fell to its lowest level in over a decade and a measure of labour demand rose to its highest in two decades. Japan’s economy has been in the spotlight this week after Abe unveiled details of the next stage of this economic strategy to boost Japan’s long-term growth prospects. Japan’s benchmark Nikkei stock index showed little immediate reaction to the data, slipping 0.12 percent in early trade.

Asian Stocks Fall As Fed Says Rates May Rise

Asian stocks fell as the regional benchmark index halted its seventh straight weekly gain and slipped from a six-year high, as a Federal Reserve official indicated that the U.S. may raise interest rates by March. The MSCI Asia Pacific Index slid 0.3 percent to 145.06 with eight of its 10 industry groups falling. The measure closed yesterday at its highest level since June 2008 and is heading for a 0.3 percent gain this week. Some analysts consider it a timely warning that the time for the Fed to start raising interest rates is drawing nearer. Japan’s Topix index slipped 0.8 percent as the yen strengthened against the dollar.

US Economy Shrank More Than Expected In Q1

The U.S. economy contracted at a much steeper pace than previously estimated in the first quarter, but there are indications that growth has since rebounded strongly. GDP fell at a 2.9 percent annual rate, the economy’s worst performance in five years, instead of the 1.0 percent pace it had reported last month. While the economy’s woes have been largely blamed on an unusually cold winter, most of the revisions suggest other factors at play beyond the weather. Growth has now been revised down by a total of 3.0 percentage points since the government’s first estimate was published in April, which had the economy expanding at a 0.1 percent rate. Economists had expected growth to be revised to show it contracting at a 1.7 percent rate. Trade was also a bigger drag on the economy than previously thought. The economy grew at a 2.6 percent pace in the final three months of 2013. Data such as employment, manufacturing and services sectors point to a sharp acceleration in growth early in the second quarter. However, the pace of expansion could fall short of expectations, which range as high as a 3.6 percent rate. Economists estimate severe weather could have slashed as much as 1.5 percentage points from GDP growth in the first quarter. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 1.0 percent rate. It was previously reported to have advanced at a 3.1 percent pace. Exports declined at a 8.9 percent rate, instead of 6.0 percent pace, resulting in a trade deficit that sliced off 1.53 percentage points from GDP growth.

That sums up today’s highlights! We hope you have a profitable day on the markets.

China & Japan Data In Focus

Welcome to Monday’s ‘Just A Minute!’ bringing you a 60 second summary of what’s happening in the markets:

Main Trading Event Of The Day: EUR German Flash Manufacturing PMI @ 08.30 GMT

Trading Event Of The Week: Key global leaders are meeting in the Hague this week for scheduled nuclear talks, however, the current Crimean crisis will provide the basis for major discussion and global focus. There is potential for Russia to be removed from the G8, furthering the geopolitical tensions and humiliating president Putin. If such a move is made, there will be significant reaction in the global financial markets.

WHAT WE’RE WATCHING TODAY

China & Japan Data In Focus This Week

In the markets this week, much of the focus will be on data from China and Japan for the latest insight on the health of Asia’s two biggest economies. China’s HSBC’s flash purchasing managers’ index (PMI) for March is released on Monday, followed by industrial profit data on Thursday. The HSBC PMI fell to 48.1 in March, compared with a final reading of 48.5 in February, staying below the 50-mark that divides contraction from expansion in the sector. It is the latest sign of weakness in the world’s second biggest economy. Favourability towards investing in Chinese stocks has diminished over the past four years among market analysts, leading almost every previous bull to lose interest. Analysts are now calling for deflation in the country where they once could only see unstoppable growth. Focus is now on a credit bubble and efforts by the PBOC to deleverage in order to reign in shadow-banking. The deflationary pressures China is experiencing are also linked to commodity prices. Despite the pessimism, some analysts believe that the four-year downtrend in the Shanghai Composite Index is coming to an end, rather than getting ready to accelerate, suggesting that fundamentals almost always look the worst before price turns.

In Japan, economic data at the end of the week will provide a snapshot of the economy and is likely to show continued reasonable growth albeit distorted by the pull forward associated with the coming sales-tax hike. Data is expected to show inflation in Japan rose an annual 1.3 percent in February, after a 1.3 percent rise in January. Retail sales are forecast to rise 3.2 percent in February from a year earlier, while February household spending is seen up 0.1 percent from a year earlier versus a 1.1 percent rise in January.

U.S. Dollar Needs Fresh Impetus To Continue Rally

The U.S. dollar held on to last week’s gains on Monday although there appears to be a lack of any impetus to extend them. The dollar index stood at 80.143, little changed from late New York levels on Friday, not far off a three-week peak of 80.354 set on Thursday. Investors snapped up the dollar last week as they swiftly brought forward the risk of a U.S. interest rate hike early in 2015 after Fed Chair Janet Yellen surprised markets by raising the prospect of such a move. Traders said further gains for the dollar now depend on the strength of coming data, with any acceleration in the U.S. economic recovery likely to bolster expectations of an earlier normalisation of Fed policy. A broader based rally in the USD requires validation of the Fed’s more aggressive interest rate forecasts from a continued step-up in U.S. data according to analysts.

Gold Extends Weekly Loss On Speculation Of Interest Rate Hike

Gold extended the biggest weekly retreat since November, falling half a percent on Monday on speculation that U.S. interest rates will increase next year, further denting the metal’s appeal as a hedge against inflation. A lack of activity in the physical sector also raised some concerns, with demand from China likely to be subdued because of a weak yuan and the discounted prices on the Shanghai Gold Exchange, which discourage imports. Gold eased $7.14 an ounce to $1,326.80 down from a six-month high of $1,391.76 hit early last week. Gold remains under pressure from the U.S. dollar as the U.S. Federal Reserve scales back its quantitative easing program and has suggested a rise in interest rates earlier than expected. The Federal Reserve announced its third $10 billion cut in monthly bond purchases last week as Chair Janet Yellen said benchmark interest rates may rise about six months after the asset buying ends, expected later this year. Investors are less concerned about the tapering part but more about rising U.S. interest rates with Yellen’s comments now at the back of investors’ minds until as 2015 approaches.

That sums up today’s highlights! As usual, you can keep up with events, news and trading tips on our Facebook, Twitter, Google+ and LinkedIn pages.

We hope you have a profitable day on the markets!