Markets and money – July 24

For today’s market previe, we saw Asia followed yesterday’s US rally but earnings affected Europe:

mkt724

Asian markets closed higher today following the rally that extended in the US yesterday, which brought it past the 9,000 level.  Strong earnings from the likes of Apple and McDonald’s brought the US markets to close higher for another day.  For Asian markets, refiners and metal producers also contributed to the positive close.  The Nikkei 225 rose 1.6% to 9944.55, as the yen fell against the U.S. dollar, boosting exports while the Shanghai Composite Index was up 1.3% to 3372.60, its best finish since June 3, 2008.  The Hang Seng was also there as it closed at 19,982.79 or 0.8% up –  just 18 points shy of the 20,000 level, which was hit intraday.

Here’s how the other markets did: South Korea’s Kospi was higher by 0.4% while the Singapore’s Straits Times Index was the best performing after adding 2%.  India also saw Sensex move up by 1%.  Australia’s S&P/ASX 200 climbed 0.6% while the main index of its neighbor, NZX-50, was 1.5% better for the day.  The downer: Taiwan’s Taiex slipped 0.1%.

It was the opposite for the European markets as the DAX lost 0.3% to close at 5,229.36 and the CAC-40 closed at 3366.45 or 0.2% lower.  The FTSE 100 was lucky to have ended a small 0.4% higher at 4,576.61 after reports released today showed the UK contracted more than double the forecast and has seen its steepest contraction since the 30s (excluding WW2 and its immediate aftermath). Apparently, the good earnings from the US were not enough to reduce worries over the negative earnings from some companies including Ericsson, which reported a 56% drop in profits.  Merck, the German drug maker, wasn’t so far with a 48% reduction in profits.  Banks however finished higher.

Going to the US, both the Dow and the S&P are barely higher.  The blue chip index  is up two-tenths of a percent while the broader market index is half that.  The typical outperformer Nasdaq is down after rather ugly numbers from Microsoft and online retailer Amazon.  At the moment, it’s hard to say whether the US markets will close higher or lower.  The Dow has been negative before 2pm ET, so was S&P.  Yet we can be sure of yet another positive finish for the week, following the strong rally we had yesterday.

With that, movements in the currency markets should be a bit predictable:

curr724

Both the yen and the dollar are lower today, and even for the week, after some strong results from companies came out.  From an FT news report: Over the week the yen lost 0.6 per cent to Y94.80 against the dollar, fell 1.2 per cent to Y134.79 against the euro and dropped 1.1 per cent to Y155.69 against the pound.  The dollar also suffered weaker by 0.7 per cent to $1.4217 against the euro, by 0.6 per cent to SF1.0699 against the Swiss franc and by 0.5 per cent to $1.6429 against the pound.

Focusing on today’s currency movements, the euro is stronger after some positive data from the region came out.  Germany’s Ifo Institute’s business climate index rose for the 4th consecutive month.  There’s also the preliminary Markit euro-zone composite purchasing managers’ index for July, which showed an increased more than the forecast.  It is a weak day however for the pound after worse than expected contraction for the quarter put the country in its steepest decline since the 30s.

From WSJ: Late Friday morning, the euro was at $1.4205 from $1.4203 late Thursday, and the dollar was at ¥94.77 from ¥95.10, according to EBS. The euro was at ¥134.68 from ¥135.07. The U.K. pound was at $1.6432 from $1.6524, and the dollar was at 1.0724 Swiss francs from 1.0720 Swiss francs.

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