Short recap
Asia – risk off with miners, energy and banks in red
China shares slightly higher as MSCI decision was largely
priced in
Europe opening lower
Oil dropping like a stone on rising Libya and US
rig production, while OPEC not able to cut more
And rebalance the market, officially entering the
bearish territory
Japan facing declining domestic demand and labour
shortage, result of aging population
North Korea testing nukes again?
Be aware of still on going geopolitical risks:
Qatar, Saudis, Syria, Russia, North Korea and Trump’s reaction
S&P likely to cut UK rating (Brexit – short
time, high risks)
Equities
China A-shares included in MSCI Emerging Markets index
(to add 222 stocks)
Full inclusion can take 9+ years due to size,
access, capital flow restrictions…etc.
Initial weight of 0.73%, when fully completed, China
would represent 20% of the index
Thus USD 340 bln of a flow in
Near future market to expect up to USD 18 bln (until
May/Aug 2018)
Proving China is getting more internationally integrated
Energy stocks still negative view on falling oil
prices but…
…may be getting closer to attractive levels
Huge risks are credit events as industry copes with high
debt (still growing) versus lower operating income
Comment from last week as a reminder:
“Resources stocks to offer an interesting value
In particular energy but need some credit events
and cleaning within the space
Canadian Natural Resources, AltaGas, Roxgold
can be looked at”
Novartis having advantage over vision treatment
from Regenerom Pharmaceuticals
Aviva dropping its exposure to tobacco companies
Apple fighting with Qualcomm over chip
license, saying they are invalid
Ford to relocate part of Focus production to China
(a bit of opposite to Trump wishes)
Boeing very positive on 737 and demand growth
Banks to pick a new alternative to LIBOR
Huge valuation gap between DM’s techs and their
peers from EM space
Bonds
10-yr Trys yield at 2.16%
10-yr Bund yield at 0.26%
Fed hike priced at 21% (Sep) and 43% (Dec)
EZ credit spreads hitting lows seen back in 2014
On chasing yields in corps and lower rating issues, thus
redirecting flows from developed markets
EURUSD
This time risk off should be negative on EUR
As the market may reduce positions/risk-on flows to EZ
assets
And prefer USD and JPY
Saw profit taking and liquidation in EUR crosses
Only breaking 1.1179 (10 DMA) can negate the trend lower
Support at 1.1120/30, 1.1100 and then 1.1067 (50.0% Fibo)
Resistance 1.1187 (23.6% Fibo)
USDJPY
Resistance at 111.81 (Ichimoku), 100 DMA at 111.82
With large offers from 111.85
Support at 111.24 (50.0% Fibo), then 111.00 with stops
below
50 DMA at 111.11, 200 DMA at 110.80
Large expiring options between 111.25-30
Importers likely looking to buy dips towards 110.00
While exporters to sell above 111.00
GBPUSD
Heavy with line in the sand at 1.2500
1.2629 (100 DMA) and 1.2552 (200 DMA)
Bids ahead of 1.2600, stops seen below
NZDUSD - 0.7100 in sight if no hawkish surprise
from RBNZ
EURJPY – 122.50 attractive
Data/Events
Brexit - Queen’s speech 1030 GMT, later to be discussed
what may usually take up to 5 days
GE’s Schauble speaking
ECB non-monetary meeting
BOJ’s Kuroda speaking
Thu
EU Summit
Fed’s Powell (1400
GMT)
Fri
Fed’s Bullard (1515
GMT), Mester (1640 GMT), Powell (1815 GMT)
Should you have any questions feel free to contact me
anytime.
Good luck Champs!
Mr Hawk
DISCLAIMER: This material was created for informational
purposes only and represents the Land of Trading team’s view of the past and
current economic and capital market environment. It is not an investment advice
and should not be viewed that way at all, and the creators of this material
cannot be held liable for any potential losses resulting from trading, where
despite this disclaimer someone would consider this material as an investment
advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom
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