市場新聞與洞察

By Deepta Bolaky STOCK MARKETS After a stellar year for the stock markets, investors were entertaining the idea that equities will outperform in 2018 even though a correction above 15% was expected at some point. The U.S equity markets showed impressive strength in 2017 without experiencing the major pullbacks that often accompany rallies. The rally in the stock markets was mostly driven by global economic growth and impressive corporate profits.

However, in February 2018, the CBOE Volatility Index jumped to 37.32 and there was a massive sell-off in the equity markets. There was no fundamental driver behind the sharp fall, but the slide started as investors panicked over a number of issues: S economic growth and rising interest rates Trade policy and protectionism measures Geopolitical risks For the first half of the year, the EMEA region were in a sea of red while the S&P500, Nasdaq Composite and ASX200 stayed in the black backed by technological shares as investors were battling with two main challenges, namely trade uncertainties and interest rates. World Equity - % Change in 6 months (Before the implementation of tariffs) Each headline on trade tariffs were moving the stock markets, driving“panic selling” or the selling associated with the “risk of higher costs related to tariffs”.

During these past couple of months, trade uncertainties and geopolitical risks have been weighing on the overall market sentiment, but the Asian and European stocks took a greater hit. Chinese stocks have emerged as the biggest losers and have even moved into a bear market. As soon as tariffs and counter-tariffs became a reality, weeks of volatility in the stock markets receded.

Investors appear to have come to terms with the situation and risk sentiment has improved. As of writing, we can see that the stock markets are trending in positive territory. World Equity - % Change in 6 months (after the implementation of tariffs) Trade tensions in the market were unpredictable and even though investors are wary, its effects on the equity markets might not be long lasting.

In the third quarter, we may see investors trimming some of their equity exposure if trade tensions escalate. This trimming could also be encouraged by what we called the “summertime” on Wall Street. Stocks with stronger future growth projections like the technology shares will most likely stay in high demand in the second half of the year 2018.

However, performance of US stocks could be capped with the trade retaliatory responses from other countries. Aside from trade-related concerns, strong earnings expectations at the beginning of the third quarter may drive the equity markets higher. Short-term traders should probably stay cautious and watch for warning signs that could cause a sudden change in direction.

Trade tariff-affected sectors such as the automobile and commodities stocks, together with Chinese stocks, will likely stay under pressure as it is difficult for market participants to see an immediate end to the US-Sino trade tariffs. Investors should also keep an eye on the approach adopted by companies during the earnings season. Long-term traders can be more strategic and look for market dips for buying opportunities.

Interest rates will be a key driver to watch. An old stock market saying has resurfaced: “Bull markets do not die of old age, but are killed off by the US Federal Reserve” CURRENCY MARKETS The US dollar gained impressively in the second quarter against G10 currencies. This growth of the greenback can be attributed to the following drivers: The strength of the US economy compared to other developed markets; and A hawkish Fed compared to the other central banks.

Recent job reports were also strong enough for markets to anticipate another potential rate hike in September but without the acceleration in wage growth, a fourth hike looks less likely. The upcoming CPI figures will provide more insights on the path of interest rate. On the technical side, analysts see the strength in the US dollar since mid-April as a reversion.

When RSI approaches 40, it is normally used as “a buy signal” which has helped the greenback to bounce back. This particular situation is similar to the one that had occurred back in July 2014. Both the fundamental and technical sides provided support to the US dollar’s bullish momentum.

A hawkish Fed is calling for a higher dollar but it is important to note that the dollar is navigating through a difficult global environment. The drop in US Consumer Sentiment Index and Economic Optimism in June shows that consumer confidence has taken a hit despite a strong US economy. Unlike the bullish USD, the Euro has been under pressure due to the ongoing political turmoil in Europe that is threatening the unity of the European bloc.

The ECB’s dovish view, US trade tariffs on European cars, and slower growth have undermined the recovery of the EUR. British Pound is also facing the same fate with growing uncertainties around Brexit. Despite strong economic data and a hawkish BoE, the local currency is unable to sustain gains, due to Brexit jitters.

If Theresa May manages to push through the soft Brexit deal, the Pound might recover a semblance of normality. However, now that the implementation of the tariffs has become a reality, we have seen that investors are coming to terms with the situation and the “panic-selling” has scaled down. The wave of optimism is being felt across both the equity and currency markets.

For instance, the performance of the US dollar in the second quarter compared to the start of the third quarter is significantly opposite. Similarly, the Euro has seen a slight improvement and has appreciated against more pairs within the G10 currencies since we stepped into Q3. The British Pound also found some support at the beginning of this quarter compared to the previous one.

Recently, some ECB policy makers have expressed their views that they support an interest rate hike earlier than projected. In the UK, strong data is also supporting an August hike. This might help to bridge the gap between European central banks and the Fed.

Currently, both EUR and GBP pairs are finding short-term buyers as the risks on the political front are undermining their performance. As political tensions recede, we can see those currencies emerging slightly stronger against the US dollar. Investors might want to keep monitoring data to see if there is a pick in the Eurozone area and in the UK to help form buying positions.

From a global perspective, we can see that countries affected by tariffs are seeking unity among themselves against the US. Such retaliatory measures might bring more volatility in the markets in the coming weeks.

Oil on the Rise After reaching its lowest price for 15 years back in January, we have seen the oil prices rising in the recent months since June. The price recently reached a two-year high following a partial closure of the Keystone pipeline connecting Canada-US oilfields. With more upcoming meetings and geopolitical tensions rising in the Middle East, the future of the oil prices will depend on how the future events unfold.

OPEC Meeting The next Organization of the Petroleum Exporting Countries (OPEC) is taking place on 30 th November in its headquarters in Vienna, Austria. It is expected that the pact on cutting output beyond March 2018 expiry will be extended, although Russia – a non-OPEC member and the second largest oil exporter in the world has sent mixed signals about its support for an extension on the cuts. “With the majority of OPEC members endorsing an extension, Russian support is the key risk,” Jon Rigby, head of oil research at UBS, wrote in a note. Last month, President Vladimir Putin indicated that Russia is backing extending the deal to the end of next year, but recent comments by officials and Russian media have created uncertainty since Putin’s comments.

British bank and financial services company Barclays expects a 6 to 9-month extension of an OPEC led deal to limit oil output during the meeting on 30 th November. The bank expects Brent to remain above $60 per barrel in the last quarter of this year and fall to $55 in 2018. “Whether or not the countries extend and the duration of the deal are not the relevant questions in our view. We believe the level of the cut is what really matters, and we assign a low likelihood to this detail being announced on November 30,” analysts at the bank said in a note. “If the meeting concludes as the market expects, prices could experience a short-term selloff, but the technicals and fundamentals will likely remain constructive,” the bank said.

Other concerns for oil prices are the geopolitical tensions in the Middle East. Saudi Arabia and Iran have been involved in aggressive exchanges over the conflict in Yemen with both countries backing different sides. The Gulf region exports around 28 million barrels a day which is almost one third of a global production, therefore its important the relationships in the Middle East does not intensify further.

UKOUSD: Source: GO Markets MT4 USOUSD: Source: GO Markets MT4 See here for more information on Oil Commodity Trading.

Upcoming News » 10:30pm Employment Change - CAD » 10:30pm Trade Balance - CAD » 10:30pm Unemployment Rate - CAD » 10:30pm Average Hourly Earnings - USD » 10:30pm Non-Farm Employment Change - USD » 10:30pm Unemployment Rate - USD The BOE delivered on market expectations overnight with a rate cut to historic lows of.25%. Even though the cut was fully priced in it didn’t help the GBP/USD as it lost over 150 pips post release. Oil continued its rise adding another 70 cents after a very soft Asain session.

European stocks had a very strong session backed by the rate cut from the BOE. The FTSE100 increased by 105.76 points in contrast, US stocks had a quiet night in trade. The S&P500 barely changed up by 0.02%.

RBA statement, there are current concerns over the AUD and China. They’re keeping the current direction for the GDP and CPI outlook. Japan’s real wages rose the most in 6 years but this figure is exaggerated by the effect of falling prices.

The AUDUSD today has been in one way traffic, buyers have taken it past its.7640 resistance level. Local stocks have been flat and the JPY has been in a tug of war battle throughout the day. The JPN225 started strongly but has been struggling to hold it’s open.

AUS200 has been very quiet but is still holding above its short term 5490 support level. The USD has mainly been weaker so far today. Tonight we have average hourly earnings, the non-farm payroll employment change, and unemployment figures coming out at 10:30pm AEST.

The market is looking for 0.2 increase in earnings, 180K increase in the employment change and a slight decrease in unemployment to 4.8%. Any big misses in the employment change will cause USD and equity index volatility. AUDUSD – Another very strong session so far today.

We have seen a break out of the.7640 resistance point that goes back to the 24 th of June. We have one more clear resistance point to be tested at.7670. For the moment the current uptrend looks very strong.

One thing to note, we have had a breakout and divergence is starting to build. No indication a turn is coming but it’s something to keep an eye on. HKG33 – Testing highs closing highs today.

A strong rally today has seen prices hit 22175 closing highs. This area lines up with a previous high set in December 2015. A break above 22285 reconfirms the current trends strength.

A fail at this area could see a retest of the 21580 to 21320 area. XAUUSD – Buyers have returned after yesterday’s short-term weakness. Yesterday’s reversal was a key in buyer commitment in the short term, but I still see 1367 – 1374 as levels that need to be closed above. 1374.88 has proven to be a turning point and holds significance.

Step one in the short term is a move over the current short term resistance seen at 1363.55. Good Trading. Please note that trading oil CFDs, Forex or Derivatives carries a high level of risk, including the risk of losing substantially more than your initial investment.

Also, you do not own or have any rights to the underlying assets. You should only trade if you can afford to carry these risks. Our offer is not designed to alter or modify any individual’s risk preference or encourage individuals to trade in a manner inconsistent with their own trading strategies.

All times are in AEST. Written by Joseph Jeffriess, GO Markets Market Strategist

Most political scientists believe that all problems in the world are related to politics, and most economists believe that all problems are rooted in economics. However, what’s happening in Turkey now seems to be a combination of both as I'll explain. Firstly, investors have always regarded Turkey as one of the Emerging Markets with good economic growth.

We can see from the statistics that the GDP has remained an average 7% to 8% growth in the past ten years, and it even exceeded 10% in 2015. It looks pretty, right? But this is just nominal GDP.

From Economics 101 we know that we should divide nominal GDP by inflation rate to get a real GDP figure. Here is the inflation rate of Turkey: It looks bad. In July 2018 this number soared to 15.8%, which begs the question: what caused such high inflation?

Let me give you the overall picture, and then we can discuss the detail. Firstly, the high inflation is boosted by food prices and household goods such as furniture. Secondly, Turkey relies heavily on importing foods and merchandises from foreign countries, which has created a consistently negative trade balance since the 1990's.

A constant trade deficit means you have to borrow debt to satisfy the consumption of that imported good. See how Turkey’s Government debt accumulated in the past decade: Today only one country, the US, appears to escape from this natural law, by borrowing infinite new debts to cover its old debts and prolong repaying these obligations until...well... the end of the world. On the surface, it would seem all other countries need to obey this rule and repay their debts, unlike the US.

Thus, when a country’s debt is accumulating to a relatively high number (we often use Debt to GDP ratios to monitor), this country’s economy become vulnerable and potentially easier to be attacked by other financial powers. You could argue that this is an unlevel playing field in some respects and the US could well be using its ability to take advantage of this situations as they arise. A perfect example of this was George Soros who famously attacked the currency of southeast Asia Countries in 1997.

Note the foreign debt-to-GDP ratios rose from 100% to 167% in the four economies within the Southeast Asia region during 1993–96. If Turkey can somehow avoid getting involved in any significant conflicts of the world and focus on developing its economy, this whole debt issue might sort itself out over time. But unfortunately, given Turkey’s geographic location, it appears destined to be pulled into most conflicts simply by proximity.

We all know how vital areas such as Istanbul and the Turkish Straits are throughout history. Internally, Turkey has a Kurdish ethnic issue and a high household debt issue; externally it has the downing of a warplane issue with Russia, and also an Armenian genocide conflict with Germany. The list goes on.

In short, this patch of land is no stranger to dealing with massive problems. Ultimately this latest crisis comes down to one thing. Does Turkey compromise with America’s arrogant request, or make a stand against Washington's tactics and attempt to go their own way?

That is the dilemma that President Erdogan is currently facing. Lanson Chen GO Markets Analyst This article is written by a GO Markets Analyst and is based on their independent analysis. They remain fully responsible for the views expressed as well as any remaining error or omissions.

Trading Forex and Derivatives carries a high level of risk. Sources: TradeEconomics.com

New sanctions imposed on North Korea by United Nations (UN) Security Council North Korea has been slapped with new sanctions after the detonation of a hydrogen bomb, an even more powerful nuclear weapon than the atomic bomb. The new resolutions widely adopted by the international community show the urgency of restricting North Korea’s ability to funds its weapons programs. Sanctions were imposed in the past but these fresh sanctions are much harsher.

The US submitted 2 drafts of sanctions whereby they proposed a complete ban on oil in the first draft. After a few negotiations and backing from China and Russia, the second draft was less drastic but unanimously adopted by the UN members. It includes the following new resolutions: China, being the main ally for supplying North Korea with oil for military purposes, has agreed to put a cap on crude oil and refined petroleum products after rejecting a full embargo proposal.

A complete textile ban which accounts around $760 million of North Korea’s exports revenue was maintained and combined with the previous sanctions on their exports such as iron, coal, seafood, and other minerals. The United States strongly believe that the combined measures will account for 90% of their exports reported in 2016. The new sanctions also prohibit countries from recruiting North Koreans and approving new and existing joint ventures.

Warning from North Korea following new sanctions North Korea immediately condemned the act and warned the United States of the “greatest pain and suffering” following the toughest-ever sanctions. Kim Jong-un’s foreign ministry also mentioned that they “will make absolutely sure that the United States pays due price if measures restricting its oil supply and textiles exports were passed”. North Korea accused the United States of manipulating the UN members and persuading them into adopting illegal and unlawful sanctions against them.

The following days will be crucial. Markets might revert to safer asset classes with these new escalated tensions. Stay with us for more live updates!!!!

By: Deepta Bolaky GO Markets

NAFTA - What Happens Next The North American Trade Agreement (NAFTA) came into effect on 1 st January 1994 and it formed one of the World’s largest free trade zones. It laid down the foundations for a strong economic growth for the United States, Canada and Mexico. While there is ample evidence of its shared positive economic impact, but how about its costs to the United States?

Over the last couple of months, the question has been raised as to how positive NAFTA is, especially to the United States. During the Presidential election campaign, Donald Trump repeatedly said that the Agreement is only beneficial to Canada and Mexico and has threatened to end it with the two nations. » Impact on the US economy Since NAFTA has been in place, the United States trade with Canada and Mexico has more than trebled, growing faster than trade with countries around the world. Most statistics suggest that NAFTA had positive impact on the US GDP of around 0.5 percent (total addition of up to $80 billion) to the US economy.

One of the reasons why NAFTA is criticised is for destroying around half a million jobs and lowering the wages. The US has also seen its trade deficit has widening during that period. An exodus of US manufacturers across the border saving on labour costs has resulted in thousands of US manufacturing jobs lost to their Mexican neighbours.

That is one of the reasons Donald Trump is pushing to renegotiate the agreements and bring back jobs to the US. US manufacturing jobs from 1993 to 2016 Source: BLS It is hard to say with certainty if NAFTA is directly responsible for the decline in the manufacturing jobs sector since the biggest drop we have seen was from around 2000 to 2002. It is worth pointing out that China joined the World Trade Organisation on 11 th December 2001 so that may have had an impact on the drop in the manufacturing jobs too.

It has been noted that the automotive industry was one of the most affected industries since the agreement came into place back in 1994. Forex - USDMXN and USDCAD since Trumps decision to renegotiate NAFTA Click to enlarge Click to enlarge Source: GO Markets MT4 » What happens next? It looked like the NAFTA agreement was on its way out but on 27 th April Donald Trump announced he received phone calls from both the Prime Minister of Canada and the President of Mexico to make him change is his mind.

President Trump decided to make a surprising U-turn and will instead renegotiate NAFTA but on only one condition – if the deal is a fair for all three countries as he is pushing to bring back jobs to the US. There is no timeframe of when renegotiations will begin between the three countries but it is worth keeping an eye for further development as it will most likely re-shape world trade in the years to come. -By Klavs Valters