European Equities: Prelim Private Sector PMIs for May in Focus

Economic Calendar:

Friday, 21st May

French Manufacturing PMI (May) Prelim

French Services PMI (May) Prelim

German Manufacturing PMI (May) Prelim

German Services PMI (May) Prelim

Eurozone Manufacturing PMI (May) Prelim

Eurozone Markit Composite PMI (May) Prelim

Eurozone Services PMI (May) Prelim

The Majors

It was a bullish day for the European majors on Thursday.

The CAC40 and EuroStoxx600 rose by 1.29% and by 1.27% respectively, with the DAX30 ending the day up by 1.70%.

Following Wednesday’s losses, the FOMC meeting minutes released after the European close on Wednesday pegged the majors back early on Thursday.

With economic data from the Eurozone on the lighter side, stats from the U.S provided support later in the European session, however.

The Stats

Wholesale inflation figures for Germany were in focus this morning.

In April, the producer price index rose by 0.8% month-on-month, following a 0.9% increase in February.

According to Destatis,

  • Month-on-month, energy prices increased by 0.6%, with prices for intermediate goods rising by 1.8%.
  • Prices for non-durable goods increased by 0.6%, month-on-month, with prices for durable consumer goods up 0.4%.
  • Compared with April 2020, the index of producer prices for industrial products increased by 5.2%. This was the highest year-on-year increase since August 2011.
  • Prices of intermediate goods increased by 8.2%, compared with April 2020.
  • Compared with April 2020, energy prices jumped by 10.6%.
  • Price for durable consumer goods increased by 1.6%, with prices for capital goods up by 1.0%.
  • Non-durable consumer goods prices declined by 0.6%, however.

From the U.S

It was a relatively busy day on the economic calendar on Thursday. Philly FED Manufacturing numbers for May were in focus along with weekly jobless claim figures.

In May, the Philly FED Manufacturing Index fell from 50.2 to 31.5. Economists had forecast a decline to 43.0.

More significantly, however, initial jobless claims for the week ending 14th May fell from 478k to 444k. Economists had forecast a decline to 450k.

The downward trend in claims continues to support the optimistic outlook towards the U.S economy. Improving labor market conditions combined with the upward trend in personal savings rates point to a sharp pickup in consumption to fuel economic growth.

Impressive labor market figures will add further pressure on the FED to reconsider its policy stance in the coming months.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Thursday. Daimler rallied by 2.33%, with BMW and Volkswagen seeing gains of 1.58% and 1.49% respectively. Continental rose by a more modest 0.64% on the day.

It was also a bullish day for the banks. Deutsche Bank and Commerzbank ended the day up by 0.27% and by 0.93% respectively.

From the CAC, it was a bullish day for the banks. Credit Agricole rose by 0.63%, with BNP Paribas and Soc Gen both seeing gains of 0.48% respectively.

It was also a bullish day for the French auto sector. Stellantis NV rose by 1.87%, with Renault gaining 0.14%.

Air France-KLM saw more red, falling by 2.34%, while Airbus SE ended the day up by 1.53%.

On the VIX Index

It was back into the red for the VIX on Thursday, ending a run of 3 consecutive days in the green.

Reversing a 3.66% gain from Wednesday, the VIX fell by 6.81% to end the day at 20.67.

The NASDAQ rallied by 1.77%, with the Dow and the S&P500 ending the day up by 0.55% and by 1.06% respectively.

VIX 210521 Daily Chart

The Day Ahead

It’s a busy day ahead on the European economic calendar. Prelim private sector PMI numbers for France, Germany, and the Eurozone are due out.

Expect plenty of influence from the numbers, with the markets looking for a pickup in service sector activity to support the economic recovery.

From the U.S, prelim private sector PMIs are also due out, with the services PMI likely to have the greatest impact on the majors.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 18 points.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 Price Forecast – Stock Markets Continue to Tread Water

The S&P 500 has gone back and forth during the trading session on Friday as we continue to see a lot of grinding. Ultimately, the 3400 level above looms large and it looks like we will have to find some type of catalyst to get there. With the rising US dollar during the trading session on Friday, we have seen a bit of hesitation. However, we are still very much in an uptrend and it would make sense that we killed some time in this general vicinity in order to build up the necessary momentum to smash through the clearly obvious barrier. I think at this point in time we will break above there and go looking towards 3500 eventually. That does not mean we cannot pull back in the short term though.

S&P 500 Video 24.08.20

If we do pull back, I will be looking at the 3350 level as a potential buying opportunity, just as I will be looking at the 3300 level. Underneath there, I think there is a huge “floor” in the market closer to the 3200 level. This is an area that was previous support, and it is now being supported by the 50 day EMA as well. That being said, the market is likely to find plenty of value hunters going forward, unless of course there is some type of shock which of course is always a possibility. Looking at the overall attitude of the markets, I still believe that it remains a “buy on the dips” type of scenario in general. Looking at this candlestick, it tells me that we are simply killing time right now.

For a look at all of today’s economic events, check out our economic calendar.

European Equities: Geopolitics and Manufacturing PMIs in Focus

Economic Calendar:

Monday, 1st June

Spanish Manufacturing PMI (May)

Italian Manufacturing PMI (May)

France Manufacturing PMI (May) Final

Germany Manufacturing PMI (May) Final

Eurozone Manufacturing PMI (May) Final

Tuesday, 2nd June

Spanish Unemployment Change

Wednesday, 3rd June

Spanish Services PMI (May)

Italian Services PMI (May)

German Unemployment Change (May)

German Unemployment Rate (May)

French Services PMI (May) Final

German Services PMI (May) Final

Eurozone Markit Composite PMI (May) Final

Eurozone Services PMI (May) Final

Eurozone Unemployment Rate (Apr)

Thursday, 4th June

Eurozone Retail Sales (MoM) (Apr)

ECB Monetary Policy Decision

ECB Press Conference

Friday, 5th June

German Factory Orders (MoM) (Apr)

The Majors

It was a bearish end to the week for the European majors, with a run of 5 consecutive days in the green coming to an end for the DAX30.

The DAX30 led the way down sliding by 1.65%, with the CAC40 and EuroStoxx600 falling by 1.59% and 1.44% respectively.

Economic data from the Eurozone took a back seat on the day, as the markets looked ahead Trump’s news conference. The U.S President had announced earlier in the week that he would introduce measures against China in response to the new security law for HK.

There had been no details ahead of the post-European close news conference to placate the markets earlier in the day.

Late in the European session, U.S economic data added to the market angst at the end of the month.

The Stats

It was a busy day on the Eurozone economic calendar on Friday. Key stats included French and German retail sales figures for April, 2nd estimate GDP numbers for France and prelim inflation figures for May.

There was nothing positive for the markets to consider. There were also no surprises in the slump in consumer spending in April.

Consumer prices were also in decline in the month, which was in line with market expectations.

The only positive was an upward revision to GDP numbers out of France, though really nothing for the markets to get excited about.

While the French economy contracted by 5.3% in the 2nd quarter, consumer spending tumbled by 20.2% following a 16.9% fall in March.

Germany recorded a 5.3% fall in spending, following on from a 4% slide in March.

From the U.S, it was a busy day on the economic calendar.

It was also a busy day on the economic calendar. April stats took a back seat, however.

Chicago’s PMI and finalized consumer sentiment figures for May did disappoint, however.

Chicago’s PMI fell from 35.4 to 32.3, with the Consumer Sentiment Index revised down from a prelim 73.7 to 72.3. This was up just marginally from an April 71.8.

The numbers were certainly not good enough to support those expecting a speedier economic recovery from the April abyss.

The Market Movers

For the DAX: It was a bearish end to the week for the auto sector on Friday. Volkswagen and Daimler slid by 2.37% and by 2.78% respectively to lead the way down. BMW and Continental saw more modest losses of 1.41% and 2.10% respectively.

It was also a bearish day for the banks. Deutsche Bank declined by 1.39%, with Commerzbank sliding by 6.96%.

Deutsche Lufthansa also hit reverse, falling by 2.68% to end a run of 4 consecutive days in the green for the week.

From the CAC, bank stocks were under pressure on Friday. BNP Paribas and Soc Gen slid by 4.27% and by 4.92% respectively, with Credit Agricole falling by 2.15%.

The auto sector saw a 2nd consecutive day in the red, with Peugeot and Renault sliding by 4.65% and by 7.74% respectively.

Air France-KLM and Airbus SE also saw red, with the pair falling by 5.77% and by 5.69% respectively.

On the VIX Index

It was back into the red for the VIX on Friday. Reversing a 3.51% gain from Thursday, the VIX fell by 3.78% to end the day at 27.5.

A late reversal led to the loss on the VIX as the markets responded to Trump’s news conference late in the U.S session.

While Trump announced sanctions and an end to the U.S relationship with HK, the phase 1 trade agreement was left untouched. An olive branch or saving face… It was good enough for the U.S equity markets on the day that recovered early losses.

Economic data from the U.S did not help, however, which had also pressured the markets ahead of the news conference.

VIX 01/06/20 Daily Chart

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. Key stats include May’s manufacturing PMIs out of Italy and Spain. Finalized numbers are also due out of France, Germany, and the Eurozone.

The markets will be looking for a slower pace of contraction in Italy’s manufacturing sector mid-way through the 2nd quarter.

Finalized numbers for Germany and the Eurozone will also need to avoid downward revisions to support the majors.

Later in the day, the markets preferred ISM Manufacturing PMI from the U.S will also garner plenty of interest. If the Chicago PMI from last week is anything to go by, the markets may be in for a surprise.

Ahead of the European session, China’s Caixin Manufacturing PMI drew attention, with the PMI rising from 49.4 to 50.7 in May. From the weekend, the NBS PMIs were fairly steady…

Ultimately, however, expect the markets may be in the hands of the news wires. Any Beijing response to the latest moves by the U.S administration will be the key driver. Expect the U.S administration to also react to any retaliation from China. Status quo would suggest Trump’s move was nothing more than muscle-flexing…

COVID-19 news updates will also need monitoring. Late last week, we saw a pickup in new cases. A continued uptrend will also test support for riskier assets. Medical experts continue to warn of the easing in lockdown measures coming too soon. Sunday’s numbers should ease any immediate concerns, however.

The Latest Coronavirus Figures

On Sunday, the number of new coronavirus cases rose by 112,809 to 6,263,071. On Saturday, the number of new cases had risen by 124,155. The daily increase was lower than Saturday’s rise while up from 101,608 new cases from the previous Sunday.

France, Germany, Italy, and Spain reported just 991 new cases on Sunday, which was down from 3,045 new cases on Saturday. On the previous Sunday, 1,470 new cases had been reported.

From the U.S, the total number of cases rose by 20,569 to 1,837,170 on Sunday. On Saturday, the total number of cases had risen by 23,338. On Sunday 24th May, a total of 20,190 new cases had been reported.

In the futures markets, at the time of writing, the DAX was up by 167.5 points, with the Dow up by 57 points.

For a look at all of today’s economic events, check out our economic calendar.

Optimism Burns Eternal

There was strong follow-through in the Asia Pacific region, where most markets advanced by more than 1% today. However, the bloom came off the rose, so to speak, in Europe. After a higher opening, markets reversed lower, and the Dow Jones Stoxx 600 is off about 0.75% in late morning turnover. All the major sectors are lower, led by utilities and industrials.

The US 10-year yield closed yesterday at 72 bp, its highest in a month, and sent Asia Pacific yields higher. However, the German-French proposal and ideas that the ECB will likely increase its bond purchases saw peripheral yields fall more than core rates.

The US 10-year yield is also a little softer. The risk appetites were expressed as a weaker US dollar, yen, and Swiss franc, while high-beta dollar-bloc currencies and Scandis jumped, and this has continued today. The JP Morgan Emerging Market Currency Index rose by nearly 1% and is up another 0.2% today and is at new highs for the month.

Gold reached $1765.4 yesterday before stabilizing, and today it is consolidating around $1726-$1740. Oil is also consolidating after yesterday’s surge. The July WTI contract reached $33 yesterday. It bottomed in late April a little above $17. It is trading today between $31 and $33 a barrel.

Asia Pacific

China is adding pressure on Australia. Even though Beijing has not formally linked its actions against Australian barley and beef as retaliation for its calls for an investigation into Covid-19 and the wet markets, there is little doubt about the subtext.

China is threatening to widen the trade dispute, and reports suggest it could extend to other products, such as wine, seafood, and oatmeal. On the other hand, Australia is the largest producer of iron ore, and Chinese demand has lifted prices to eight-month highs. Brazil, the second-largest producer, is being hobbled by a surge in virus cases and is now the world’s third-largest hotspot. Still, China’s apparent willingness to disrupt trade, as it has with Canada over Huawei, is unsettling.

The Bank of Japan’s next scheduled meeting is on June 18, but officials signaled an emergency meeting at the end of this week. The ostensible purpose is not to adjust monetary policy itself. Instead, it is expected to unveil a new program to support small businesses. The central bank left its bond-program unchanged today and stepping into the market to buy JPY1.2 bln of ETFs and REITs.

The dollar has been confined to about a 30-pip range against the yen below JPY107.60. For the sixth session, it has been limited to the range set on May 11 (~JPY106.40-JPY107.75). There are options for $1.5 bln that expire today between JPY107.65 and JPY107.75 and a $640 mln option at JPY107.35 that will also be cut today.

Just when the Australian dollar looked to be (finally) rolling over, with its first close below the 20-day moving average in a month before the weekend, it jumped up yesterday, and the follow-through buying today is testing recent highs. The late April high was set near $0.6570, and today’s high is just below. The intraday technicals suggest consolidation is likely. The PBOC set the dollar’s reference rate a little higher than the bank models suggested.

The dollar remained above CNY7.10 for the second session, which had been seen as the upper end of the acceptable range. We had thought that ahead of the National’s People Congress later this week, officials would have wanted a more stable yuan exchange rate. Meanwhile, tomorrow, the Loan Prime Rate is set, and more than 75% in a Reuters poll expect the one and five-year rate to be unchanged at 3.85% and 4.65%, respectively.

Europe

It has been up to the individual European countries to respond to the virus. The federal or joint effort has been limited largely to the ECB. However, that will change in the coming weeks as the EU prepares to respond. Yet, that is a point in itself, the level is not the monetary union but the larger group of 27. The vehicle is the EU’s budget seven-year financial framework that has been a bone of contention even before the pandemic.

Germany and France jointly proposed a 500 bln joint borrowing as part of the EU budget that will be used to help spur economic recovery. Germany and France envisioned grants, while several countries want loans. The funds would be raised by the EU and available based on need, while the repayment will be according to the share of the EU budget (tied to the size of an economy).

The ultimate EU effort will likely be larger than these funds, which still require agreement among the members. Last month the EC suggested a 2 trillion-euro packaged that included 320 bln euro borrowing. Its proposal included grants, loans, and guarantees. Investors liked what they saw, and Italian bonds rallied strongly.

The 10-year yield fell 19 bp, the most since late March, and the premium over German narrowed to below 215 bp for the first time in a month. The French 10-year yield rose a couple of basis points, less than the (~six basis-point) increase in the German Bund yield, despite Fitch’s cut in the outlook to negative before the weekend.

The UK reported jobless claims surged by 856.5k in April, while the claimant count rate rose to 5.8% from 3.5% in March and 3.4% at the end of 2019. Those working but experiencing an income loss qualify. The average weekly earnings (2.4% vs. 2.8%) and unemployment rate (3.9% vs. 4.0%) are March readings. Separately, while in trade talks with the EU, the US, and Japan, the UK unveiled a new post-Brexit tariff schedule. Some items like dishwashers and freezers will enter the UK duty-free next year. A 10% tariff will remain on cars, and duties will still be levied on agriculture goods.

The German ZEW survey was mixed. The current assessment deteriorated to a new low of -93.5 (from -91.5). However, the expectations component soared to 51.0 from 28.2. This is its highest level in five years. The IFO survey and the PMI, both due later this week, are seen as more important soft economic reports.

The euro is extending yesterday’s rally, which was the largest in a month, and the first push above $1.09 since May 4. The high from May 1, when Europe was on holiday, was near $1.1020, and that area is the next target, and the 200-day moving average is found there as well. The euro has not traded above it since late March. The intraday technical readings, however, are stretched, and initial support is seen near $1.0920. Sterling recovered smartly yesterday.

After falling to almost $1.2075, its lowest level since late March, sterling rebounded to nearly $1.2230 yesterday and reached almost $1.2270 today. The gain is notable too because another MPC member (Tenreyro) weighed on on the negative interest rate debate and claimed it was a powerful transmission mechanism with a positive impact on some EU countries. An option for nearly GBP430 mln is set at $1.23 rolls off today. As is the case with the euro, sterling’s gains through the European morning have stretched the intraday technical readings, cautioning against chasing it immediately higher.

America

An experimental vaccine by Moderno, the US biotech firm, showed some promise in a small first study to spur an immune system response to the novel coronavirus. The innovation here appears to be stimulating one’s own body to generate the spike protein that, like Covid-19, which ideally triggers the creation of antibodies. This helped lift sentiment. On the other hand, President Trump has given the World Health Organization 30-day for “major substantive improvements,” or America’s temporary funding freeze will become permanent.

NASDAQ reportedly will tighten its rules for IPOs that will make it more difficult for small Chinese companies to list. The listing of many Chinese companies on US exchanges has come under greater scrutiny recently. While the need for reform is clear, in the current setting, it is seen as part of the larger US campaign against China.

The US reports April housing starts and permits. At issue is the magnitude of the decline, and expectations are for a drop of 20-25%. It is the May survey data that, like the Empire State survey and University of Michigan consumer sentiment, that may show the first signs that a bottom was reached. Still ahead this week are the Philly Fed survey and preliminary PMI.

Separately, Treasury Secretary Mnuchin and Fed Chairman Powell will testify remotely before the Senate Banking Committee, and their prepared remarks have already been released. The takeaway is that although more steps may be taken, the economic recovery is expected to begin in Q3.

Canada and Mexico’s economic calendars are light today. The US dollar tested this month’s low near CAD1.3900 earlier day to extend yesterday’s loss that began from a little above CAD1.4100. The downside momentum appears to be stalling, and initial resistance is seen in the CAD1.3970-CAD1.4000 area. The greenback is also consolidating yesterday’s losses against the Mexican peso. Yesterday, it had fallen to its lowest level since mid-April near MXN23.45. The next support area is seen in the MXN23.25-MXN23.35 band.

For a look at all of today’s economic events, check out our economic calendar.

This article was written by Marc Chandler, MarctoMarket.

E-commerce: A Growth Story that Looks Set to Continue

Online trading platform eToro has not missed the opportunity to deliver investment products for its client base to take advantage of the rapid growth seen in the retail eCommerce space.

Back in the ‘wonder days’, e-commerce was something for Silicon Valley and those with the foresight of just how integral the web and online shopping would become to our everyday lives.

10-years ago, we would be hopping off to the travel agent to book our flights to our dream destinations or home for the holiday season.

Hotels had to take credit card bookings by fax, at best and, in the worst case, risk holding a room for a ghost booking.

Department stores prospered as the one-stop-shop concept peaked back at the turn of the Millennium.

2 decades on, millennials and non-millennials alike have materially shifted the retail landscape.

The Numbers

While e-commerce has been long associated with global trade, growth in retail eCommerce sales has also been impressive.

In 2017, global retail e-commerce sales hit $2.3 trillion, with sales projected to hit a whopping $6.54 trillion by 2022, according to Statista.

The top 3 online stores reportedly had revenues totaling close to $100bn in 2017. While less than 10% that was still quite a chunk of the market.

By region, there were also some significant variations in retail eCommerce sales. Perhaps unsurprisingly, Asia has been one of the front runners in recent years.

China reportedly accounted for 19% of total retail e-commerce sales back in 2016, compared with just 6.7% in Japan.

Unsurprisingly, China’s retail e-commerce sales have continued to rise since back in 2016.

The increase in the middle class and greater product awareness driving demand.

China will not have been alone, however, with Europe, the U.S and the rest of the laggards also seeing an increase in numbers. In spite of that, however, it would be hard to actually catch up with China.

According to reports, retail eCommerce sales account for more than 35% of total retail sales in China. That is the highest in the world.

In 2018, China retail eCommerce sales hit $1,526.70bn. This accounted for more than 50% of the total of $2,016.33bn in global retail eCommerce sales in 2018.

Retail eCommerce sales in the U.S hit $525.69bn, which is still a big number as the pre-millennials continued to support the malls and the shopping avenues.

Elsewhere, the numbers are smaller. Retail eCommerce sales hit $123.60bn in the UK and just $109.26bn.

China to Lead the Way

When considering the fact that retail eCommerce sales jumped by 34.3% in China in 2018, compared with 16.0% in the U.S and 24.2% globally, that’s quite a move.

Couple that with China’s projected growth, population size and the projected rise in the number of online buyers, the future looks bright for the retail eCommerce space.

In 2018, digital buyers accounted for just 48.2% of the Chinese population. This is projected to rise to 58.8% by 2022.

Focusing on the world’s largest retail eCommerce market, Alibaba has the largest market share at 58.2%.

JD.com’s market share sits at just 16.3%, while Amazon China has just 0.7% of the market share.

When also factoring in the continued rise of the middle class in China and projections that see China’s GDP surpassing that of the U.S within the next 10-years, retail eCommerce investments should form part of any investment portfolio, when looking at the numbers alone.

eToro shares this view and offers a blended retail eCommerce portfolio for its clients to benefit.

If we look at 2019 retail sales figures, China saw retail sales growth of 8%, year-on-year, in 2019. That towered over 5.82% growth in the U.S over the same period.

In actual numbers, China is projected to see total retail sales exceed that of the U.S for the 1st time in 2021.

www.eMarketeer.com had projected for China’s total retail sales to hit $6.031tn in 2020 versus U.S retail sales of $5.695tn.

Economic woes and the coronavirus outbreak will have set China back and may lead to China falling behind total U.S retail sales until 2021 – 2022.

This is a delay, however, China will likely overtake and sooner rather than later.

The Players

A number of marquee companies have driven the surge in online retail sales. These included Alibaba, Amazon.com, JD.com, Apple, Walmart, Dell Technologies, the Otto Group, Vipshop Holdings, Gome Electrical Appliances, and even Macy’s…

It’s ultimately America’s Amazon.com and China’s Alibaba and JD.com that perch at the top of the e-commerce retail sales tree.

While JD.com is currently focussed domestically, Alibaba and Amazon.com have a more global footprint. The jury is still out on who has the brighter future and whether they can hold onto their existing market shares.

Alibaba and JD.com may have geographical concentration risk, but when considering the shift in China’s demographics, both look well placed and that’s assuming the focus doesn’t extend significantly beyond China’s borders…

When we consider the likes of Amazon.com, Walmart.com and the other U.S household names that have gone web-based, protectionism could become their undoing.

Only recently, Walmart.com pulled out of the battle for market share in China, deciding to become an investor in JD.com.

Amazon.com has ultimately also failed in China and Alibaba in the U.S.

The Ever-Changing Landscape

Time will tell whether the two big U.S names can regroup. Exploring low penetration geographies will be key from an investment perspective. That then brings regulation and geopolitics into focus.

When we consider Apple.inc, a top 5 retail eCommerce player, China is a sizeable market, as is the EU. Trump’s foreign policy could materially damage Apple.inc and even Amazon.com and Walmart’s fight for global market share.

That delivers the opportunity to smaller players and that’s never a bad thing for investors in search of the next big opportunity.

Is the growth in eCommerce over? The numbers suggest not… Finding the right geography by researching demographics and consumer behavior is key, however.

One thing is certain. The world is unlikely to stop shopping any time soon. The easier it is the better and let’s not forget the logistics involved in a physical shopping spree…

Investors don’t need to go direct to the source to get exposure to the retail eCommerce space.

Investing in e-commerce

While there are a large number of listed e-commerce stocks available to gain exposure to the industry, more niche investment opportunities are also available.

eToro has developed an e-commerce ShoppingCart within its copy portfolio platform.

CopyPortfolio is a portfolio management product developed by eToro. The investment strategy provides access to an equally weighted portfolio that gives investors exposure to the retail eCommerce sector.

eToro developed the ShoppingCart in recognition of the sector’s historical growth and anticipated expansion in the coming years.

While the broader eCommerce sector includes non-retail players involved in payments, logistics and cybersecurity, eToro’s ShoppingCart focuses on pure retailers.

This gives prospective investors a blended portfolio exposure to the retail eCommerce sales industry.

In conclusion, there’s unlikely to be much backtracking for the eCommerce sector. How the sector performs in the coming years, however, will have a correlation with economic growth and labor market conditions.

Trade wars and regulatory risks are also factors to consider. This is particularly the case as countries such as the U.S enter a phase of protectionism.

Either way, however, eToro is well-placed to deliver investors with exposure to a sector that will continue to expand globally. While some markets may see growth level out, others will undoubtedly enter into what is becoming an ever-increasing global online retail market.

The good news for those investing in eToro’s e-commerce ShoppingCart, the minimum investment is just $2,000 and eToro provides all the analysis and portfolio details that an investor could want to monitor the portfolio’s performance.

Building a personalized portfolio would certainly be more cumbersome and less cost-efficient.

Zero Commission Stock Trading The Evolution Continues

For years, retail and institutional investors had grappled with commission fees that ate into earnings.

There was, in fact, very little reason for the online trading world to change tact, after all, it was the standard across the industry.

It all changed back in the 4th quarter of 2019, however. It was inevitable that one of the largest online platforms would take the 1st step as the on-line trading industry became more cutthroat, with brokers batting for clients in a relatively saturated market place.

The change was not only significant but also out of the blue. Online trading platforms used to charge as much as US$7 for each trade. When considering the size of the on-line stock trading market, this translated into significant revenues for brokers and materially reduced earnings for investors.

In 2017, the major brokerages cut fees and market volatility in 2018 saw brokers bleed. That paved the way for 0% commission trading that hit the on-line stock trading world in 2019.

This market volatility and slide in broker income was not just seen in the U.S but also across the Pond.

eToro was well placed and nimble enough at the time to follow the trend from the U.S and shift the landscape in Europe.

Why the Need for Change?

While there has been a marked growth in online trading platforms, supporting the trade of stocks globally, some fared better than others.

While the likes of Charles Schwab was certainly amongst the leaders in the U.S, eToro was and remains a front runner in Europe.

It was for this very reason that Schwab was able to catch the markets off guard late last year and for eToro to set the trend in Europe.

While the market balked at the concept of dropping commission fees, it is worth noting that fees were not dropped for all investment strategies and services.

The decision to cut commission fees and offer 0% commission trading was ultimately made to lure investors away from banks and other platforms that held commission fees unchanged.

It wasn’t just the existing investor base that eToro and others were interested in. The removal of fees also drew in new investors, which was key.

A larger client base provides a significant opportunity to cross-sell other investment products, where commission fees remain.

With the U.S and European equity markets hitting fresh record highs at the turn of the year, investors will have certainly enjoyed better returns after being freed from punitive commission fees.

Investor Benefits

Market access to a wide range of stocks offered under the zero-commission scheme is certainly an exciting proposition for investors and traders.

There is absolutely no reason for investors and traders to show loyalty to platforms that continue to eat into earnings.

For investors and traders, higher profit margins as a result of 0% commission trading increases interest in alternative asset classes.

Just in the last week, we saw the global equity markets bleed in response to the spread of the coronavirus.

In stark contrast, the cryptocurrency market was on the move, finding sizeable inflows as a hedge.

This was not a one-off, with the rise in tensions between Iran and the U.S also leading to a spike in the crypto market.

Investors and traders have benefitted, not only from the vast number of 0% commission stocks on offer but also from eToro’s crypto asset class offering.

For investors, this is an undeniable benefit, while eToro also sees a jump in its investor base.

Ultimately that is essential for a successful platform as it delivers liquidity for investors and traders across the eToro platform. This is particularly important in volatile markets…

The Now

One thing is for certain, the trading world has grown over the last decade. We’ve seen geopolitical risk take center stage since Trump’s President Election victory back in 2016.

Retail investors across Europe have historically accounted for a small proportion of the equity market investor base. High commission fees and inaccessibility left many out in the cold

That has now changed and eToro’s decision to go commission-free on an array of stocks has driven that change.

For investors, it’s not just the crypto world that is on offer.

eToro also offers Indices, Exchange-Traded Funds. Even FX has seen volatility on the rise, drawing investors in.

The benefit for a trader and investor is the one-stop-shop that eToro offers, which allows investors and traders to more efficiently manage P&L. There’s no need to have multiple platforms to cover the ever-widening range of asset classes on offer.

Looking at eToro’s European platform, eToro not only offers zero commission on trades but also:

  • Zero stamp duty for UK investors. Under UK law, investors must pay stamp duty.

eToro goes a step further than others by paying this for investors.

  • No limit on trading volume.
  • The offer of fractional shares.
  • Free access to TipRanks expert stock analysis.

It is fair to say that brokers who held onto their trading commission fees have little time left. The 0% commission stock trading world has become the norm.

The Future

For investors who may have cashed out, with global equity markets having hit record levels, there is something to consider.

As the global equity markets become more accessible to the untapped, bourse market caps are inevitably going to rise.

An increase in the retail composition across the more institutionally biased equity markets of Europe and the U.S will also see volatility pick up. We’ve seen the crypto world draw seasoned traders away from the more traditional asset classes in search of volatility.

eToro is ideally positioned to allow its client base to benefit and to offer the same seasonal investors access across multiple asset classes.

It’s certainly an exciting time for the global financial markets and traders entering the online trading world.

Satoshi delivered Bitcoin to remove the banking world’s grasp on payment platforms.

eToro may well eat into the banks’ trading monopoly.

With the zero-commission investing now on offer, we will also see a rise in the offering of fractional share trading.

eToro is already there. Evolution suggests that fractional trading is next, just as we have seen across the crypto market.

After all, not everyone is able or wants to stump up $9,000 for a single Bitcoin…

That would grant the less wealthy investor access to a whole new world. Even the likes of Amazon.com, Tesla, and Berkshire Hathaway, the world’s most expensive stock, would be within reach.

Zero commission is only available to clients of eToro Europe Ltd. and eToro UK Ltd., and does not apply to short or leveraged stock trades. Zero commission means that no broker fee has been charged when opening or closing the position. Other fees may apply. For additional information regarding fees click here. Your capital is at risk.

Using the Wisdom of the Crowd by Copy Trading with eToro

Copy trading is a style of trading that has seen massive growth over the past five years. Inspired by the rise of social networks a few years earlier, financial markets trading platforms decided to try to merge the dynamism of financial markets trading, with the social and peer-to-peer information and knowledge sharing character of a social media platform.

It worked and copy trading has been the fastest growing part of the retail-facing CFDs and forex trading market since. But for those who haven’t yet become acquainted with this social, dynamic and educational trading format, we’ll explain everything you need to know here.

Hold tight and get ready to discover:

  • What Exactly Is ‘Copy Trading’?
  • Who Is Copy Trading Suitable For And Should I Try It?
  • Can Copy Trading Be Profitable?
  • A Step-by-Step Guide To Starting Copy Trading With eToro

What Exactly Is ‘Copy Trading’?

As the name suggests, the core of ‘copy trading’ is trading financial instruments such as forex pairs, cryptocurrencies, commodities, stocks and indices by mirroring, or copying, the trading position of other traders linked through a social platform. Copy traders can browse the historical record of traders they are considering copying and they are ordered in a leaderboard based on success rate.

Copy traders can further burrow down into individual traders and look at their record for trades on particular instruments. For example, a trader might be successful overall but further inspection shows they have a particularly strong record trading forex pairs or just certain forex pairs such as EUR/USD or USD/JPY. They might also trade commodities like gold and oil, stocks like Facebook and Apple and indices like the S&P 500. But their record may not be quite as strong across these other asset classes.

So the copy trader may wisely decide to only copy trades placed on the instruments the trader being mirrored has the best record on. They’ll choose other traders to mirror when placing trades involving other instruments based on where they are strongest.

Traders can set alerts based on their own preferences that tell them when one of the traders they are following has set up a position. They can then decide on a trade-by-trade basis if they’d like to copy those trades.

Copy trading also involves plenty of flexibility. It’s not a case of selecting a trader to ‘copy’ and then the platform automatically mirroring their every trade exactly. It can be but only if the copy trader chooses to do so. But different traders have different account values. So a trader starting off with an account balance of $200, $500 or $1000 wouldn’t be practically able to exactly copy the trades of another trader with an account balance of $10,000.

Or at least all of them and it probably wouldn’t be wise. It is recommended that the investment exposure on individual trades doesn’t exceed a few percent of overall capital. Trading is not about every trade finishing in the money. Even the best traders take plenty of positions that finish out of the money. The secret is in getting enough right. So spreading risk is important. You don’t want to blow half your account balance on one trade that doesn’t work out.

With that in mind, traders can copy a trade exactly as a percentage of overall account balance rather than value. Or choose another value based on their own strategy if they wish. The ‘copy’ trade will use the copy traders selected value with the ‘copy’ restricted to when the position is opened and closed based on the actions of the trader being copied.

Copy trading also leaves room for flexibility. The trader can, should they wish, decide mid-trade to go their own direction and no longer copy the trader they chose to by closing a position early or leaving it open.

There’s also a lot of social interaction on Etoro’s copy trading platform with traders openly discussing potential trades, their reasoning and strategies. Used smartly this can be a great resource for new, less experienced and even more experienced traders to learn by sharing each other’s knowledge, opinions and research techniques.

For the CFDs or forex broker hosting a copy trading platform the advantage is encouraging more people to trade, for longer and more successfully. Brokers make their money by taking a small cut of every trading position. This is called the ‘spread’ – the difference between an instrument’s buy and sell price.

New traders often make a lot of mistakes while they are learning the ropes and can quickly burn through their initial deposit. Many never trade again after that. Offering copy trading and the ability to mirror the trades of more experienced and successful traders gives new traders a great opportunity to learn on the job and trade successfully by copying others before striking out on their own. They then trade more and for longer so the broker makes more money from them. Successful traders are incentivised to lend their experience and expertise to those copying their trading positions by being given a cut of the broker’s spread. It’s a win-win-win.

Why should people try social trading?

Basically any trader can learn something from seeing how other traders go about their business. When do they open a position and why, when do they get out and how much capital have they exposed to a trade? There’s no ‘right’ way to trade and markets are also constantly evolving so there’s always something to learn.

For Some, it might be less about copying particular traders or trades and more about interacting with other traders and exchanging views and approaches. For experienced traders with a solid track record of success, trading on a copy trading platform is further incentivised by the potential to build up a following of ‘copiers’. If their record shows they are worth copying and they succeed in attracting a strong following their share of the spread could be a great source of additional income on top of their own trading.

Can Copy Trading Be Profitable?

While there’s no guarantee that copying a previously successful trader will be profitable, because they might suddenly stop being successful, copy trading certainly can be. For some there is probably a better chance of being profitable by copying a trader with a strong track record than there is by going it completely alone and taking decisions based on still limited knowledge and experience.

Even for more experienced traders, learning things from others should help them become a more rounded, experienced and ultimately profitable trader.

However, traders should be aware that there are never any guarantees in trading and choose the traders they copy and how they copy them carefully. Copy trading is a very useful trading tool but shouldn’t be mistaken for a silver bullet to amassing riches quickly. Successful traders carefully and methodically build up their trading balance over time by spreading their risk and playing the odds, not by putting everything on a few positions and waiting for them to finish in the money before retiring in luxury!

A Step-by-Step Guide To Starting Copy Trading With eToro

Starting to copy trade on the eToro platform couldn’t be simpler. Registering an account takes a matter of minutes. The only thing to really be aware of is that you will need your personal identification number, or NI number in the UK, at the ready. Before you put actual cash on your balance you may have to have to provide a scanned copy of your national identity document or passport.

Once you’ve done that you’ll have an account. The next step is to fill in your public profile. That’s what will be seen by other traders and has to be completed before you can interact with them though you have some flexibility on how much information you provide.

Once you’ve done that, which literally takes 10-15 minutes from beginning to end, if not less, your all set to copy trade!

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFD assets.


Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Past performance is not an indication of future results.

This content is intended for information and educational purposes only and should not be considered investment advice or investment recommendations.

USD/CAD Daily Forecast – 1.3344 Fibo Level Acting as a Critical Resistance

After marking the day’s opening near 1.3268 level on Monday, 1.3277 resistance ensured to cap daily gains in the Asian session. Traders can expect low volatility throughout the day amid lack of significant economic events.

USD Index at its Top Mark

Greenback bulls might conquer the pinnacle in the long-term soon, ignoring a near-term short impulsive downside. Substantial SMAs remain stalled near the bottom region of the USD Index chart, developing an excellent shield to limit daily losses.

US Dollar Index 1 Day 19 August 2019
US Dollar Index 1 Day 19 August 2019

On the upper side, the Greenback might have to surpass multiple barriers to reach the 99 highest level. Overhead resistances stay stemmed near 98.31, 98.44, 98.68, and 98.93 levels. However, a stable 10-day old slanting support line was another point of interest on the south side.

Oil Prices Jumped on Rising Middle East Tensions

After a weekend attack on an oilfield in eastern Saudi Arabia, the Crude Oil WTI Futures grabbed some fresh bids, climbing new levels. Also, on the technical chart, the prices were forming a falling wedge trading bullish pattern. Hence, traders can expect a strong surge in the near-term prices soon.

OIL 1 Day 19 August 2019
OIL 1 Day 19 August 2019

Anyhow, escalating trade tensions continued to put a lid over any potential gains. Meantime, reports suggested that the US President Donald Trump was quite less optimistic over resolving the trade issues. Trump proclaimed, “I’m not ready to make a deal yet.”

Significant Economic Events

Today, traders can take a back seat as the economic calendar lacks critical USD-specific and CAD-specific events. Also, the market won’t witness any oil-impacting Crude reports like the EIA/API data reports on Monday.

Technical Analysis

1-Week Chart

On the weekly chart, the USD/CAD pair was heading upwards, targeting the center line of the Bollinger Bands.

USDCAD 1 Week 19 August 2019
USDCAD 1 Week 19 August 2019

Anyhow, a triumphant march above the center line would signal for a sustained uptrend in the upcoming sessions. On an overall view, the pair was forming a symmetrical triangle for the last two years. Nevertheless, the Relative Strength Index (RSI) was stuck near 50 mark, revealing neutral buyer’s interest.

1-Day Chart

After testing the 1.3344 Fibonacci Retracement level last week, the Loonie pair appeared to rebound and head southwards.

USDCAD 1 Day 19 August 2019
USDCAD 1 Day 19 August 2019

However, the MACD line and the signal line of the MACD technical indicator stood above the zero line, strengthening the bulls. Also, the below-lying Parabolic SAR provided additional support to the buyer side. Ability to breach above the 1.3344 resistance would enable fresh challenge over next resistances stalled near 1.3437 and 1.3526 levels. Any move on the flip side would activate the support handles near 1.3183, 1.3112, and 1.3018 levels.

USD/CAD Daily Forecast – Bulls Crossing Fingers, Expecting US Oil Output Growth

The Loonie pair opened up today near 1.3049 level and showcased a breakout, shattering the sturdy 1.3054 resistance. Somehow, the pair rebounded in the Asian session itself after touching the 1.3059 mark. On the downside, the bears ensured to cross and below the near term 50-day SMA. However, pair found significant stoppage near 1.3049 resistance-turned-support laterwards.

On the USD front, things appear more bullish in the short term. The Greenback bulls had already crossed above the 50-day SMA yesterday.

US Dollar Index 60 Min 16 July 2019
US Dollar Index 60 Min 16 July 2019

In the early hours, the US Dollar Index was heading north, targeting the 100-day and 200-day SMA confluence. Any move taking the Index above this confluence would enable it to challenge the robust 97.09 and 97.12 levels.

Meanwhile, the Oil prices were heading down, trading near $59.44 bbl. US Oil Production resumed in the Gulf of Mexico region after Hurricane Barry. The market expects the Crude output to rise undermined US production restart. Such an action would go against the OPEC+ supply cuts, who agreed on another extension for nine more months.

Significant Economic Events

Today, there are quite a few high volatile economic events on the US economic docket. Among them, the vital events remain the Fed‘s Chair Powell’s speech and June Retail Sales data. This time, the Street expects the Retail Sales Control Group data to report near 0.3% over 0.4% forecasts.

Traders must also pay some attention to the June MoM Retail Sales and Retail Sales excluding Autos. This time, market keep a bearish stance over both these reports, expecting a 0.2% over the previous 0.5%.

No Oil-catalyst reports are coming up on Tuesday. However, there are few low volatile CAD-specific events on Foreign and Canadian Securities.

Technical Analysis

1-Day Chart

USDCAD 1 Day 16 July 2019
USDCAD 1 Day 16 July 2019

On the daily chart, the pair seemed to have difficulty in breaching the 1-month old descending slanting resistance. Even today, the pair continued to respect this strong resistance line. Hence, one can expect a rebound price action if the pair hits this resistance handle. On the downside, support lines stall near 1.2975 and 1.2923 levels. Even the Relative Strength Index (RSI) was indicating 38 levels, depicting lack of interest among the market participants.

3-Hour Chart

USDCAD 180 Min 16 July 2019
USDCAD 180 Min 16 July 2019

The Loonie pair was struggling with the 50-day and 100-day SMA confluence in order to justify the rising RSI indicator. A successful march above this resistance confluence would activate the overhead significant 200-day SMA. Before encountering this aforementioned major SMA, the pair also need to surpass the strong 1.3143 resistance. Meantime, a near-term downside remains limited as the pair appeared to clinch near its 9-month bottom.

 

US Stock Market Overview – Stocks Trade Mixed, Energy Shares Rally

US stocks were mixed on Wednesday, as both the Dow and the S&P 500 closed in the red while the Nasdaq bucked the trend. Strong earnings from Micron boosted the semi-conductor space which helped buoy the tech heavy Nasdaq. Sectors were also mixed. Energy shares led the way higher rising 2.25%, fueled by a surge in crude oil prices following a larger than expected draw in crude oil inventories. Utilities were the worst performing sector.

Energy Shares Surge

Energy shares were buoyed by a larger than expected draw in crude oil stockpiles. The Energy Information Administration reported that crude oil inventories decreased by 12.8 million barrels from the previous week. Expectations were for a 2-million barrel draw. At 469.6 million barrels, crude oil inventories are about 5% above the five year average for this time of year. Gasoline inventories decreased by 1.0 million barrels last week and are at the five year average for this time of year. Distillate fuel inventories decreased by 2.4 million barrels last week and are about 7% below the five year average for this time of year. Total commercial petroleum inventories decreased last week by 11.9 million barrels last week.

Demand remains solid. According to the EIA total demand over the last four-week period averaged 20.6 million barrels per day, up by 1.8% from the same period last year. Over the past four weeks, gasoline demand averaged 9.7 million barrels per day, up by 2.1% from the same period last year. Distillate fuel demand averaged 3.9 million barrels per day over the past four weeks, up by 2.9% from the same period last year.

The drop in inventories came from lower imports. The EIA reported that crude oil imports averaged 6.7 million barrels per day last week, down by 812,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 7.4 million barrels per day, 10.2% less than the same four-week period last year.

The G20 is This Weekend

President Trump will meet with President Xi Jinping at the G-20 summit of world leaders. The two world leaders are scheduled to meet Saturday, the second day of the two-day summit in Osaka, Japan. Officials from both countries have been careful to manage expectations ahead of the summit, playing down the possibility of completing a trade deal.

US Business Investment Rose

US made capital goods rose more than expected in May. The Commerce Department said on Wednesday orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, increased 0.4% last month amid increases in demand for machinery, and computers. Expectations were for core capital goods orders edging up 0.1% in May. Core capital goods orders rose 2.3% on a year-on-year basis. Shipments of core capital goods increased 0.7% last month after an upwardly revised 0.4% gain in the prior month. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.

GBP/USD Daily Forecast – Cable Shifts Gear as Brexit Party Holds the Lead in the EU Elections

The GBP/USD pair started near 1.2721 levels and waved upwards. The pair seemed to continue the recovery mode, which began on May 23. At around 03:00 GMT, the Fiber was hovering near 1.2737 levels.

Brexit Party Taking up UK Seats in the EU Parliament

The Prime Minister of UK had announced her resignation which will take place on June 7. Recently, May said that she would act as lame-duck  PM until a new candidate for PM post is appointed.

Last night, the results of the recent European Parliamentary Elections came out. The UK’s Brexit Party was leading with almost 40% of significant share than other parties. Among the other parties, the Liberal Democrats, the Greens, and the Change UK came second highest. Notably, this time the Brexit Party received ten percentage points more than the UK Independence Party did in 2014.

Nigel Farage, the Brexit Party Leader, had won the MEP seats for the South East of England. His victory had set up an example for the Conservative & Labour Parties to lose grounds in the next UK General Election. Farage stands firm over UK leaving the EU before October 31 and talked about the weak Government stance on Brexit. In a recent interview, Nigel said: “that failure to implement Brexit would show Britain not to be a democracy”.

The Market might experience rigorous volatility as odds for significant Political Changes are shooting up. The dominant ones include the appointment of a new leader for the UK and his approach over resolving the Brexit deadlock. Meanwhile, the Labour’s Corbyn might continue to send approvals for a Second Referendum on the Brexit-deal with May’s departure.

The investors stay anticipated on the EU Parliamentary election results. The Greenback computed against the major six currencies slipped 0.07% in the Asian session. The US-China Tech Cold War took another diversion after the US consider to black-list Hikvision, Chinese Giant Surveillance OEM. This latest stance of Donald Trump has deepened the existing Trade tensions. In a nutshell, the GBP/USD pair benefited more from Brexit party victory and a minor slump in the USD Index in the early hours.

GBP/USD Impacting Events

The economic calendar had remained silent on the GBP-specific events Today. As the London market remains closed for Spring Bank Holiday, the currency pair stood open to any Brexit Fundamentals. As the US is celebrating Memorial Day, there are no USD-specific events today. But investor might look for tomorrow’s Inflation report hearing for the UK, as it is the only big volatile event for Tuesday.

Technical Analysis

1-Hour Chart

GBPUSD 60 Min 27 May 2019
GBPUSD 60 Min 27 May 2019

The overall sentiment remained quite flat during the early hours on Monday. The 200-days Significant SMA had crowned the moving pair halting near 1.2750 levels in the upper Bollinger Band. However, at the same time, the 100-days SMA was taking rounds near the lower boundary of the Bollinger Bands. Quite surprisingly the 50-days SMA was intersecting the medium term 100-days SMA, alluding some near term bull run. RSI had significantly dropped to 53 levels from 68 levels today morning, showing a lack of investor interest.

1-Day Chart

GBPUSD 1 Day 27 May 2019
GBPUSD 1 Day 27 May 2019

When observed from a broader scale perspective, the pair had remained capped under the 50% Fibo retracement level multiple times. Anyhow, the pair lost hold laterwards and dropped down below the 61.8% Fibo level. The plunge rally has then taken the GBP/USD pair downwards breaking even the 78.6% Fibo level. The pair was approaching to attempt testing the 78.6% Fibo level or 1.2800 levels.

Price of Gold Fundamental Daily Forecast – Dovish Fed Minutes Could Spike Prices Higher

Gold futures are trading higher on Wednesday shortly after the regular session opening. The strength is being fueled by lower Treasury yields, a weaker U.S. Dollar Index and a drop in demand for risky assets. This is the right combination for a rally today. However, gains could be limited later in the session if the dollar turns higher due to safe-haven demand.

At 12:51 GMT, June Comex gold futures are trading $1276.00, up 2.80 or +0.22%.

Technically, gold found support at $1269.00 on Tuesday, inside a major 50% to 61.8% retracement zone at $1272.70 to $1253.00 and slightly above the low for the year at $1267.30. The price action suggests that gold investors found value and were willing to step in to defend the 2019 low. The catalyst behind today’s strength are lower yields, lower stocks and a lower U.S. Dollar Index.

Stocks Lower

U.S. stock index futures are expected to open lower on Wednesday. This indicates a “risk-off” scenario could be developing. Gold could benefit from the move if investors decide to treat it as a safe-haven asset. If they decide to switch back to the dollar for protection then gold’s gains could be limited.

Dollar Index Falls on Safe-Haven Buying, Slightly Better Euro

The U.S. Dollar is trading lower against a basket of major currencies, led by a rally in the Japanese Yen and Swiss Franc, which are garnering support from safe-haven buying, due to renewed selling pressure on higher-risk assets.

The dollar could also be under pressure due to position-squaring ahead of the release of the Fed minutes from its May monetary policy meeting at 18:00 GMT. The dollar could weaken if the minutes show policymakers discussed cutting interest rates later in the year and if they discussed the economic conditions that would trigger such a move.

Daily Forecast

Gold prices could surge today if the three main influences:  the dollar, yields and stocks, continue to trade lower. Gains could be limited if safe-haven buying supports the dollar.

The Fed minutes could provide support for gold if they show the Federal Open Market Committee discussed an interest rate cut and outlined the conditions that would encourage policymakers to cut rates.

NZD/USD Huge Inverted SHS Pattern Suggests Bullish Reversal

Dear Traders,

The NZD/USD has formed a bullish SHS pattern so we might see another bullish reaction from the POC zone –>

The NZD is gaining momentum vs USD just a day prior to FOMC statement and FED cash rate decision. Equities remain solid, so a sense of a mild risk-on sentiment is in play, which may see some capital move into other currencies outside the USD. 0.6650-60 is the zone where fresh buyers are and as long as 0.6628 holds, bulls should be safe. Targets are 0.6648 and 0.6697 with 0.6719 as the final target. Only a drop below 0.6628 could cause a temporary relief where the price might reach 0.6589.

The analysis has been done with the
CAMMACD.MTF template.

For more daily technical and wave analysis and updates, sign-up up to our ecs.LIVE channel.

Many green pips,
Nenad Kerkez aka Tarantula FX
Elite CurrenSea

Free Online Course: Trading from A to Z

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 86.59% of retail investor accounts lose money with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Be Aware: You can lose all, but not more than the balance of your Trading Account. These products may not be suitable for all clients, therefore, ensure you understand the risks and seek independent advice. This material does not constitute an offer of, or solicitation for, a transaction in any financial instrument. Fortrade accepts no responsibility for any use that may be made of the information and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information, consequently, any person acting on it does so entirely at their own risk.

Weather Aftermaths in the Financial Markets

Hurricanes, Monsoons, Wildfires, Landslides, Draughts and Floods hit hard. And not just in human lives, but also the financial markets.

From the obvious agricultural commodities to metals, energies, all the way to airline companies, we’ll see some of the most impressing weather conditions moving the markets one way or another.

Blizzards, low temperatures and overall bad weather conditions marked the beginning of this year. For Natural Gas it meant an immediate spike of about $0.50, with the sudden increase in demand and productions delays.

However, low temperatures are not the only aspect to impact Natural Gas prices. Hotter than expected weather, in the summer of 2016, led to a spike in prices, given the AC use of Natural Gas. In the summer of 2005, a series of Hurricanes along the US Gulf Coast caused a shutdown in Natural Gas production, supporting an uptrend of about $8.

The weather is no different than the financial markets

Severe Blizzards don’t just mean good news for the financial markets, as in the winter of 2017 various airline companies had plenty to lose because of cancelled flights during those seasonal storms. Amongst them Swiss, British Airways, Aer Lingus, Brussels Airlines and even the German Lufthansa.

The same event caused an unexpected decrease in the December 2017 NFP result, with people being unable to go for job interviews.

The El Niño phenomenon, along with its sidekick La Niña also impact the markets every few years. If El Niño results in low water levels and strong sunlight, it’s bad for coffee production; if it brings high water levels and poor sunlight, it’s good for the coffee crops.

La Niña, on the other hand, is considered far worse for the entire coffee tree. It makes the soil highly damp and makes disease worse and more frequent. These two events affecting Columbia are considered nocive also for the tea and sugar production.

Not all is good under the sun

It’s not only bad weather that can influence the financial markets, but also the aftermath of severe weather conditions. Because of the extreme heat during the summer of 2017, 2013 or even 2009 the African Armyworm spread – for which a pesticide doesn’t exist – causing a lot of damage in the Corn production, thus pushing prices up.

Another hot weather repercussion occurred in May 2016 with the Fort McMurray wildfire, leading to a 2% increase in Oil prices due to production delays. Other times, Hurricanes – like Katrina – made it impossible for sea transportation, leading to a shortage of Oil.

However, weather events don’t always have an impact on the financial markets. For example, a typhoon followed by a large landslide in September 2018, in the Philippines, ended the activity in the Gold mining town of Itogon. Although many lost their lives, Gold price was barely touched.

To expect the unexpected

Weather not-impacting production or demand can still impact the markets. At the beginning of October, the news that Hurricane Michael won’t affect the Oil-producing areas pushed prices to near 2-weeks lows. All because energy economist – James Williams called it a “non-event for Oil production”.

In some cultures, bad weather is desired – in India, people pray for monsoons since farmers buy Gold with the money from their rich harvests, during rainy seasons.

Aside from all the above, there are proven psychological effects debated in many books about bad weather influencing investors to sell, as opposed to sunny days that might push them to buy. Nobel economist Richard Thaler describes these as Sifs – supposedly irrelevant factors.

If you know of other similar events or are ready to trade with some or all of the assets we’ve mentioned in this article under fair trading conditions, check Stratton Markets.

Risk Warning: CFDs are complex instruments that come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts, lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

Winter is Coming

And bringing with it high volatility in the markets. But what I really want to know is: How normal a 51% ($1.70) monthly increase in Natural Gas price is?

Because you don’t really get that on a monthly basis. And you know what else you don’t get? One big intraday uptrend of 20% ($0.88), followed by an 18% ($0.96) fall, the next day.

So how do we explain the madness that’s taking over Natural Gas price?

One quick analysis of the past 15 years of Natural Gas charts will reveal that until 2009, large movements in its price of up to $6.40 were somewhat of a norm. In fact, in February 2003, Gas prices were pushed this way to the staggering quotation of $11.90. This was then topped by the historically high $15.78, in December 2005.

The good times for Natural Gas large intraday movements ended with the last uptrend from July 2008, settling at $13.69. Past this moment of high volatility, Natural Gas prices seemed to have toned down a notch, becoming more appealing for long-term investments, as it settled in a channel between $1.61 and $6.36.

But why the $9.50 drop during July 2008 and August 2009? As surprising at it might seem, market analysts blamed it on the US recession and that Natural Gas storages had reached a record high. This led to a decrease in demand from factories and homes. Weather conditions along with a large increase in domestic production, during the years before 2009, didn’t help much in stabilizing or supporting the prices.

Looking back at the past nine years, Natural Gas prices only reached three peaks at $6.10 (January 2010), $6.36 (February 2014), $4.96(November 2018).

What is happening with the big Natural Gas players?

Before rushing to conclusions, we might want to check the status of the largest players from the Natural Gas industry.

It might not take you by surprise, but the largest Natural Gas producer is in fact Russia, with its publicly listed Gazprom. The Russian Natural Gas producing company is accountable for approximately 12% of the whole world production, with about 36 billion cubic feet daily. Their plans for the moment regard large expansions, giving no signs of drawbacks in production.

The second largest Natural Gas producer in the world is the New York Stock Exchange (NYSE) listed company, Exxon Mobil Corp. It became one of the biggest global companies in any industry, producing about 1.2 billion cubic feet of Natural Gas per day, according to investopedia.com.

China National Petroleum Corporation – China’s largest Natural Gas producer – follows them closely, with a production of over 3.5 billion cubic feet of Natural Gas yearly.

So, how do you think the tensions of three of the world’s greatest powers – with the US in a Trade War with China and pulling from the Nuclear Weapons Pact with Russia – could impact the Natural Gas price?

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What could we expect next?

We know that Natural Gas can be triggered by: weather conditions, competition, crude oil prices, supply and demand, transport, storage, geopolitical events along with the trends of the currencies it’s being traded against.

From the charts, we can see that during the months of June to January, there was a large increase in Natural Gas demand – mostly due to its use for both ACs cooling and heating. Between February and March, the Natural Gas price slowdown can be assigned to a substantial increase in storage and most likely different weather than anticipated.

If we’re to follow previous years’ movement in Natural Gas prices, at the moment we are in the middle of the seasonal demand increase. It might be safe to assume that if external factors won’t interfere, Natural Gas price might continue to increase, until the break of spring.

Risk Warning: CFDs are complex instruments that come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts, lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

NEM’s XEM Technical Analysis – Eyeing Support Levels – 05/11/18

Key Highlights

  • NEM’s XEM gained 2.92% on Sunday, reversing a 0.46% fall on Saturday, to end the week up 2.58% at $0.09614.
  • An early morning intraday low $0.09216 saw NEM’s XEM fall through the first major support level at $0.0922 before finding support from the broader market.
  • A late intraday day high $0.09732 saw NEM’s XEM break through the first major resistance level at $0.0954 and second major resistance level at $0.09670 before easing back.
  • The extended bearish trend formed at late April’s swing hi $0.46546 remained intact, NEM’s XEM continuing to fall well short of the 23.6% FIB Retracement Level of $0.1695.

How to Buy NEM’s XEM

NEM’s XEM Price Resistance

NEM’s XEM gained 2.92% on Sunday, following a 0.46% fall on Saturday, to end the day at $0.09614, the Sunday recovery taking NEM’s XEM into positive territory and a gain of 2.58% for the week.

A bearish start to the day saw NEM’s XEM fall through the first major support level at $0.0922 to an early morning intraday low $0.09216, steering clear of sub-$0.09 levels before finding support from a broader cryptomarket rally through the afternoon.

The afternoon rally saw NEM’s XEM break through the first major resistance level at $0.0954 and second major resistance level at $0.0967 to a late in the day intraday high $0.09732 before easing back through the second major resistance level by the day’s end.

In spite of the weekly gain, coming off the back of relatively heavy losses in October, the extended bearish trend remained firmly intact, with NEM’s XEM continuing to fall well short of the 23.6% FIB Retracement Level of $0.1695.

At the time of writing, NEM’s XEM was down 0.78% to $0.0954, with a relatively choppy start to the day seeing NEM’s XEM strike a start of a day morning high $0.09725 before succumbing to pressure from across the broader market, NEM’s XEM falling to an early morning low $0.09457, the early moves leaving the day’s major support and resistance levels untested.

For the day ahead, holding onto $0.095 levels through the morning would support a move back through the morning high $0.09725 to bring the first major resistance level at $0.0983 into play before any pullback, with any run at $0.10 levels and the second major support level at $0.1004 in the hands of sentiment across the broader market on the day.

Failure to hold onto $0.095 levels through the morning could see NEM’s XEM slide back through the morning low $0.09457 to bring $0.093 levels and the day’s first major support level at $0.0931 into play before any recovery, a visit to $0.092 levels a possibility should the morning sell-off continue into the afternoon.

 

XEM/USD 05/11/18 Daily Chart

Looking at the Technical Indicators

Major Support Level: $0.0931

Major Resistance Level: $0.983

Fib 23.6% Retracement Level: $0.1695

Fib 38% Retracement Level: $0.226

Fib 62% Retracement Level: $0.3174

The Pot of Gold From the Financial Markets – Part I

Or is it? Considered one of the first plants to be cultivated – cannabis –  made quite a journey. It started from being used as raw material for ropes and was discovered to have medicinal purposes. Later on, it got banned and flagged as a drug, went back to being known for medicinal purposes and lately it became recreational.

Whether you call it marijuana, cannabis, herb, grass, Mary Jane or pot, you should know that WEED made it in the financial markets. And it’s making quite a fuss. Some market analysts even went as far as calling it the “The asset of the moment” or even “the new Bitcoin”. But will it be just a bubble, or stay true to its trend?

Before you start investing in this asset you should probably know a couple of things about its background in the US, Canada, and Europe.

The land of all possibilities takes down the marijuana wall

Currently, 30 US states legalized the medicinal cannabis – nine of which also legalized the recreational use. Whereas, 21 decriminalized the use of marijuana. The seeds of legalization in the US started with California, back in 1996. It was then followed by Oregon, Alaska and Washington.

Just 12 years later, Colorado and Washington became the first two states to legalize recreational cannabis. By now, seven other states joined them in legalizing recreational marijuana, the latest being Vermont (2018).

Canada joined the marijuana party and legalized recreational use and almost run out of it, four days after. A shortage of stamp glue needed for ordering cannabis caused a marijuana shortage. Canopy Growth Corp. that prides itself to be the first publicly traded cannabis company in North America, has taken quite a hit in its shares price when this news reached the markets. It lost about 10CAD, during the intraday trading session.

Europeans battle between rope and smoke

Countries as UK, Ireland or France, along with nine other European countries consider both, medical or recreational marijuana to be illegal. Currently, Malta is the only EU country to have legalized medical marijuana.

11 European countries view marijuana as illegal, but decriminalized it. Italy, Belgium and Netherlands share with Switzerland the idea that possession might not be a criminal offense, but could be fined, or punished with a short jail time.

On the other hand, Denmark, Finland, Germany, and Poland treat marijuana as illegal but often unenforced. Meaning that various types of medical marijuana can be legally purchased with a prescription. It could also mean that possession of a small amount, which can vary from six to 15 grams – from country to country – might not be punishable.

Medicinal Purposes

Keep in mind that some of the EU countries, even though see marijuana as being illegal, but decriminalized or unenforced, continue growing the medicinal herb mostly for research purposes.

The medical use of marijuana still remains highly debated. Many online videos show its almost sudden effect in treating Parkinson, or Amnesia. Patients often requested marijuana for treating or ailing pain. It may also be recommended to treat some of the following:

  • Muscle spasms caused by multiple sclerosis,
  • Nausea caused by cancer chemotherapy,
  • Poor appetite and weight loss due to chronic illness (HIV, nerve pain)
  • Seizure disorders,
  • Crohn’s disease.

How to deal WEED under the strict eye of the law

Marijuana plays an important role in the economy of the countries that legalise it. Market analysts are calculating the money economies are wasting by not doing so. What is also interesting about cannabis, is that you can trade it from every country. Even if retail is not yet legalised.

Stratton Markets is one of the regulated brokers that adopted trading with marijuana shares, like Canopy Growth Corp. In addition to that, they also specialize in training before trading.

Trade safe, and always remember: CFDs are complex instruments that come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts, lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Star CEOs’ Impact on the Markets

With the spawn of an idea, they managed to get rich. They influenced the markets with their actions. And can still continue to do so. Whether they stay or go, their actions will continue to echo on the companies they represent. Find out more about the world’s most successful CEOs, their presence and their weight on the financial markets. Let’s see what happened.

Recently J.C. Penney shares have jumped up more than 10% after a new CEO was nominated. Now the talks regarding the future of the company linger on whether or not, Jill Soltau, the new chief executive, will manage to hold onto a good strategy.

J.C. Penney’s new CEO has an experience of over ten years in the retail industry and received very good reviews so far. But in the first week after her nomination, J.C. Penney shares have dropped to a historically low $1.55.

The one that left us in wow

Another good example of CEOs’ power to make or break a company, is Elon Musk. Especially since the Securities and Exchange Commission (SEC) lawsuit. Who appeared to be Tesla’s role-model CEO, ended up pushing Tesla shares to drop more than $100, in the past three months.

Sure, he still remains co-founder, and product architect of Tesla while continuing to taunt the S.E.C. trough various tweets. And after all, that happened, the markets still we can’t manage to paint him as the villain. At least not after he just went ahead with a long time promise, and delivered clean water to Flint School.

The one where Facebook gets dumped

One more case worth bringing up is the great split-up between Mark Zuckerberg and the duo Kevin Systrom and Mike Krieger, who co-founded Instagram. The moment the last two left Facebook (Instagram’s parent company) had an impact on Facebook shares.

Instagram’s co-founders have decided to take a sabbatical, to change-up with new ideas. Of course, the news didn’t pass unobserved and Facebook shares have shed approximately $20, and quickly recovered from it. At least Mark Zuckerberg still has Facebook’s back. The famous CEO is also the world’s 5th richest man.

The one about the second runner-up

Speaking about the richest man alive, Bill Gates beats Zuck’ by being the second richest man, according to Forbes. Nonetheless, Microsoft shares weren’t spared of downtrends. A noticeable bad moment took place during the 14 years of Steve Ballmer’s era.

That was a really bad period for Microsoft shares, that seemed to simply stay flat, ranging from the highest level of $52, and as little as $17. The shares finally went back to $38, right before Ballmer left, in February 2014.

Luckily for Microsoft, Satya Nadella, the current CEO has successfully managed to shift the performance, and bring shares to an amazing $116, in just 4 years. Imagine what he could’ve done with 10 more years.

The one that pulled a “Crapner”

You might be tempted to say that what Ballmer did is pretty bad, given the potential that Microsoft has proven during the past years, but wait till you hear the next happening.

The story took place in the early 90’s and spoke of a man that had everything and lost it all to a joke. If you ever heard the phrase “to pull a Ratner”, you should know we’re talking about Gerald Ratner, Ratner Group’s CEO.

Gerald was the son of the man that built the great jewelry empire. His famous joke summed up that a prawn sandwich might last longer than a pair of crap golden earrings, they sold. As expected, the Ratners Group shares took a great hit and Gerald lost even the right to his own name.

If you’re pragmatic, with an already developed idea about what might happen next with the shares or their futures, you might want to check Stratton. The new, regulated broker is breaking into the markets with very decent trading conditions and a solid education media center.

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of the retail investor, accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Who could follow Amazon in the Trillion Dollar Wall of Fame?

A flashback of this year’s peaks

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The race continues between Microsoft and Alphabet, as Apple and Amazon have already reached the Trillion Dollar market capitalization. The four magnets have been competing since the beginning of the year in an attempt to overthrow one another at becoming one of world’s Trillion Dollar Company. Could there be a third Trillion Dollar Company in the close future? Let’s look at the facts.

At the half of May, Apple had quite a large advantage of about $140 billion in front of the remaining three companies. The race was tight for the second runner up between Alphabet, Amazon, and Microsoft with only a couple of tens of billions between them. In fact, the 2nd of August, Apple became the first ever company in the world to reach a market value of over $1 Trillion. Shortly after, Amazon managed to get a great head start and just a month later became the world’s second Trillion Dollar Company. Before we can debate which might be the world’s next Trillion Dollar Company, let’s get an overview of Amazon’s financial year so far.

The second Trillion Dollar baby, Amazon was closer to the next runners up – Microsoft and Alphabet – than to Apple, managed to cover $100 billion – more than 10% of its value – in just a month. From heavy drone delivery concept to proprietary package delivery, all the way to the insertion in the food industry, 2018 seems to have been a really good year for Amazon.

The company scored a trifecta this year by having:

  • doubled in share value by Q3,
  • surpassed the $2,000 psychological barrier,
  • reached the Trillion Dollar market capitalization.

The chart below illustrates some of the most important events that influenced its shares this year.

Financial data and research provided by Stratton Markets

We’d be tempted to say that it couldn’t get any better, but there is more to it than meets the eye, and analysts are already making great forecasts for Amazon’s upcoming months.

The chase for bronze

Microsoft’s current market cap is of $856.61 billion and counting, down from the peak of $861.37 billion. The company has dedicated this year to innovation, foraying the world of blockchain technology, acquiring Artificial Intelligence start-up – Bonsai, all the way to investing in GitHub – a leading software development platform. Following the chart below we can see how it stands so far, compared to its main challenger Alphabet.

Financial data and research provided by Stratton Markets

On the other hand, Alphabet’s market value reached $815.05 billion, down from $869 billion. Based on the chart from above we might say that it followed Microsoft’s trend. However, Alphabet focused this year on diversity by investing in experimental fields like mobile payments, artificial intelligence, and Waymo – self driving car company.

Upcoming events that might shake giant companies market quotation

Since the end of August, neither of the two tech giants seemed to get any good vibes from the markets. In addition, Senator Bernie Sanders is preparing a new tax bill for giant companies. The so called “Bezos bill” is apparently focused on pushing companies with over 500 employees to either pay them well enough to not qualify for benefits or pay for their benefits if they do qualify.

If Bernie Sanders’s bill will not affect Microsoft and Alphabet in any way, on October 25th we might see a stir in the markets, as on this date both magnets are due to publish Q3 earnings report.

In a speculative market knowledge is king

Which of the future market events might cause more volatility, enough to skyrocket one of the two companies in the 13 digits market cap? Knowing before might make all the difference, or it could make a great event pass unobservable.

A better chance at speculating on future market events, aside from the use of fundamental analysis, could be revolving to the technical one. It has proven to be using multiple times if used with caution. If you’re interested in learning more about this, you can access for free the webinars offered by Stratton Markets.