Accendo Markets Weekly Roundup, 12 Apr 2013 - Gold lost shine, EZ fears rekindled, 60% discounts

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Last week’s correction to 6,215 may have been tough (-4.4%) dented by poor macro data (jobs, manufacturing, services) and a nuclear threat, but expectations of continued major central bank intervention/loose monetary policy, some positive macro data points and a good start to earnings season on both sides of the Atlantic have helped keep risk appetite alive delivering a rebound of sorts (3%). With momentum having slowed up around 6,400, is this just a pause before another recovery leg, or is the aggregate of macro concerns too much for investor risk appetite?

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China has been a big focus this week with softer inflation suggesting no policy tightening soon, easing concerns this might be imminent and that global growth might take a hit at a time when emerging nation growth is needed to offset developed nation weakness. Note trade data showing weak Chinese exports but strong imports; good for resources stocks but could domestic consumption and inflation be reheating, needing policy tightening? The world’s #2 nation is likely to remain in focus next week with key GDP data published on Sunday night/Monday morning likely being a  driver for late Asian trading and the start of the new European week.

FOMC minutes form the US Fed spiced thighs up with more calls for tapering of asset purchases from mid-year. However, QE-addicts appeased by the meeting having taken place before the awful Non-Farm Payrolls of last Friday and confident that still not enough improvement in labour market for tapering to be on the cards anytime soon. The IMF cutting US growth forecasts but raising them for Japan suggests optimism for the latter at the early stages of the BoJ’s monumental intervention but less hope for the US as QE3 efficacy called into questioned in the face of stubborn jobs and growth data (Consumer confidence and Retail Sales slumped). JPMorgan and Wells Fargo manage to kick off Q1 earnings season well for the US banks with EPS beating consensus even if revenues were a bit light. Could the UK financials follow suit in the weeks to come or will profits miss expectations and the weight of scandals, mis-selling and capital deficits dominate?

Concerns have returned in the Eurozone, as finance ministers meet in Dublin, but investors appear to more resilient (when Cyprus fell in to the arms of bailout the sell-off was not as big as expected). Portugal in focus after needing spending cuts to keep first bailout on track and a real possibility that even with extensions to assistance deadlines (which may also be offered to Ireland), it may still require a second dose of help. Slovenia could be the next county to call for international bank/sovereign rescue (What structure? More depositor bail-ins?). Cyprus still under the spotlight, needing an additional €6bn for its bailout. Where will it get that from, and more importantly, what is the plan to get the country growing (without a finance industry) to pay it all back?

Some positive data for the UK with Industrial Production and Construction Output rebounding and UK potentially having avoided a triple-dip recession, in a week that saw Baroness Thatcher pass away, generating much discussion about her domestic and international impact as first female UK leader.

 In commodities, despite both Gold and Oil slumping on growth concerns, the yellow metal stood out most falling almost 4.5% to revisit 2012 lows of $1520 after a three pronged attack; 1) strengthening of USD (commodity denomination) vs. EUR following FOMC comments and poor US data; 2) News Cyprus is to sell €400m of Gold to help with its bailout. Like with depositor bail-ins, fears have risen that other Eurozone nations, with a lot more gold reserves, may need to do the same, and; 3) A bearish note by a major brokerage, cutting 2013 and 2014 price targets.

With Gold having fallen from highs of $1800 last October could it be worth a look again? Or is global growth so poor and US Fed’s QE3 having such little impact that inflation is no longer a worry (so gold not needed as a hedge)? Is this leaving USD as the default safe-haven of choice?

 

Before I sign off for another week, I point you to our trading report of this week which highlighted certain significant share price falls from 2013 highs (20-60%). For a copy of the report to find out what has seen certain names sink and what could help them swim, as well as the names we believe offer recovery potential, be sure to contact us. Not convinced? How about we provide you with the information on those stocks which may have rallied too hard from 2013 lows, and could be Short-Selling candidates? Accendo Markets caters for both sides, helping you trade the way you want to.

As always, enjoy your weekend. The fun and games start again next week.

For any commentary/analyst opinion on anything CFD/Spread Bet/financial markets-related, please contact research@accendomarkets.com

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Accendo Markets is an online trading services provider, offering CFDs, spread betting and forex to retail (private) clients. Accendo Markets was established in 2007 and has since gone on to win various awards including "2012 Winner of Best Execution only CFD provider" at City of London Wealth Management awards. Accendo Markets Ltd. is authorised and regulated by the Financial Services Authority (FSA). Register now for your FREE trading Guide Risk warning CFD trading, spread betting and Forex trading can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. Authorised and regulated by the Financial Services Authority.
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