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DAILY MARKET REVIEW: 20 JANUARY 2015

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Daily Market Review on STOCK.com

DAILY MARKET REVIEW: 20 JANUARY 2015

Jan 20 2015, 08.39am GMT

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STOCK.com   Indices

On Tuesday, the stocks in Tokyo rose 1.48 percent. This came in response to better than expected data out of China as well as a weakening Japanese yen (JPY) while investors are now focusing on when the European Central Bank will launch fresh stimulus measures. According to data released by the National Bureau of Statistics, full year growth rose 7.4% in 2014 in China and while this was the slowest pace in twenty four years, the quarterly data beat analyst expectations. In December, value-added industrial output in China rose 7.9 percent from a year earlier, up from a 7.2 percent increase in November. Analysts were expecting a rise of 7.5%. Industrial production also increased in December by 0.75% while for the entire year of 2014, industrial output rose 8.3 percent. This was down from growth of 9.7 percent in 2013. As a result, in Japan, the Nikkei 225 index was at 17,265.40, up 251.11 points while the Shanghai Composite index advanced 1.81%. This came a day after the index declined by more than 7 percent as a result of new margin rules. Meanwhile in the U.S., markets were closed for the Martin Luther King Jr memorial holiday.

STOCK.com   Currencies

On Tuesday, in Asian trading, the Japanese yen (JPY) trader weaker. This came in response to better than expected data out of China on industrial output, retail sales and GDP. The USD/JPY traded up 0.56 percent at 118.22 while the AUD/USD traded down 0.16% at 0.8198. According to the data, the fourth quarter GDP in China rose 7.3 percent while retails sales also increased by 11.9 percent. Also on the upside was industrial production which advanced 7.9 percent, beating analyst expectations. In other currency trading, the U.S. dollar (USD) traded higher against other major currencies on Monday though trading was thin due to a national holiday in the country. Meanwhile, the euro (EUR) remained under pressure as investors turn their focus on the European Central Bank and expectations that the central bank will launch a government bond-buying program at its meeting on Thursday. This move is expected to prevent the threat of deflation in the euro area. In Asia, the EUR/USD currency pair traded up 0.19 percent at 1.1582.

STOCK.com   Stocks

On Tuesday, South Korean Samsung Electronics Co. (KS:005930) stated that they might consider splitting stocks to ensure a more affordable share price. This move will be done in the hopes of appeasing existing investors while attracting new investors to the world’s largest smartphone maker. According to Robert Yi, the head of investor relations at Samsung, the company has been debating the split move for a considerable time but that they are still considering both the short and long term effects of this move. In recent months, Samsung has released a series of poor quarterly profits and as a result shareholder returns have been minimized. In November last year, Samsung started a $2.0 billion share buyback process in order to appease their unhappy shareholders. On Tuesday, Samsung shares traded at $1,250 or 1.356 million won (KRW) which is considerably lower than a high of 1.470 million won reached in June last year. This South Korean tech giant also accounts for almost 17% of the weighting on the Kospi composite index.

STOCK.com   Commodities

If you are expecting good news regarding oil prices, you will be disappointed. On Tuesday, oil prices dropped in response to China hitting its weakest annual expansion in 24 years. This added to investor concerns regarding demand for the commodity as well as a global supply glut. U.S. crude oil traded at $47.37 a barrel, down $1.32 while Brent crude also declined by 13 cents to trade at $48.71 per barrel. With the recent decline in oil prices, the price difference between barrels of oil for supply at a later date and immediate delivery has increased and this is referred to as contango. The contango for Brent crude for delivery in March this year and in March next year is already at $10 a battle.

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