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DAILY MARKET REVIEW November 26th, 2012
US Investors returned from the holiday weekend with a bearish sentiment in mind. Worries about Greece and the fiscal cliff are weighing on the markets heading into the holiday season. Profit taking is also a factor after last weeks strong showing of 3%-4% for the major market.
The news from Greece is that IMF ministers are ready to unfreeze the second round of bailouts for the weary Greece economy but the issue of whether some bailout loans, that have already been granted, will be be wrote off in order to help the ailing economy. Naturally this will be a high cost for the Euro-Zone economies.
In the US, lawmakers have not made any substantial headway regarding the so called "fiscal cliff". This leaves substantial uncertainty on the resolution of the sharp tax increases and Govt spending cuts that are looming and if not handled properly, will take effect at the end of December.
Apple has asked a judge to expand its lawsuit against Samsung, to include 6 new product including the new Note 2 that was just released in the US last week. Shares of Apple have been trading higher in Monday trading.
Early data from retailers following "black friday", the first day of the holiday shopping season, have shown strong growth in online sales. Its estimated more than a billion dollars were spent online over the weekend alone.
Last week the Euro grew against the Dollar from 1.2735 to 1.2990. The Resistance above is at 1.3388. But in order to follow in this direction further up the Euro needs strength and certainty which are not there at the moment. Analysts mention that against background of the crisis and the decline of the standards of living in Europe, a lot of protest activity is seen including separatist movements. If recently the market was concerned because of the probability of a few states abandoning the monetary union, now there is a chance that attention of the market will be drawn to the risk of collapse of some states (Spain for instance). It is recommended to watch closely the elections in Catalonia at the coming weekend. The victory of the CiU party might strike the Euro badly.
The US Dollar grew against the Yen last week from 81.08 to 82.83 with a subsequent dip to 82.36. The ascend of the Dollar was mainly supported by expectations of an abrupt shift in Japanese monetary policy, in case new government comes to power. So the forecast is the continuation of downward trend of the Yen towards the levels of 83.50 and 85.10. Though the probability of correction to 80.70 is not excluded as well.
The Pound appreciated against the US Dollar last week from 1.5881 to 1.6050 with further recoil to 1.6020. The Resistance above is near 1.6295, but the problem is that in case of the sales’ pressure on the Euro the Pound will apparently follow the trend of its continental neighbor as has already happened a lot in the past in similar situations. There are no firm factors for the Pound growth right now anyway. Overall the technical picture suggests a bearish trend. The probability of stabilizing for a while is not quite high.
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