Currencies

Slowing German inflation pressures Euro

German inflation accelerated more slowly than expected in March, suggesting that price pressures in Europe’s largest economy remain fairly moderate despite a broad-based upswing, rising wages and unprecedented monetary stimulus. German consumer prices, harmonized to make them comparable with inflation data from other European Union countries, rose by 1.5 percent year-on-year after an increase of 1.2 percent in the previous month, the Federal Statistics Office said. The preliminary numbers also showed that EU-harmonized prices were up by 0.4 percent compared to February. This was also weaker than the 0.5 percent expected by analysts. We expect Euro to get weak on the above mentioned data.

USD/JPY bounces from support

The US dollar rallied against the Japanese yen during the week, reaching as high as the 107 handle. There is strong support for the pair at 105 level, and at the weekly uptrend line marked on the chart. With strong support below, we could find buyers every time we dip. On Wednesday, 21st of March, China announced that Kim Jong-un met with the Premier of the State Council of the People’s Republic of China, Li Keqiang. The Japanese yen may seem to present a downtrend due to the signs of possible improvements in the geopolitical scene of North Korea. Also Japanese Prime Minister, Shinzo Abe remarked that he will raise the country’s sales tax in the next year and that he will not change his initial plan. This could cause a slide in USD/JPY.

Equities

Markets end a choppy week positively

Thursday was the first time in three sessions the major averages closed the day in positive territory. Stocks finished up about 2% in a holiday-shortened week of choppy action that ended Thursday. A late rebound of technology shares put the market in the green for the week. Trading ended early in observance of Good Friday. Tech hasn't had it easy in recent weeks, but the recent selloff hasn't been enough to knock it into the red, given its strong start to the year on the heels of a robust 2017. It's still a favorite among investors, even if sentiment is cooling for some. According to Ryan Detrick, senior market strategist at LPL Financial, April could be a solid month. He notes that April has been positive for nine of the past 10 years, with an average gain of 2.2%. With abatement of trade war concerns, markets could pull back this week.

Strong consumer sentiment supports expansion

German consumer sentiment rose unexpectedly heading into April as shoppers became more upbeat about their income and grew more willing to spend, indicating Europe’s biggest economy is on course for further expansion. Consumer spending has become the main source of economic growth in Germany in recent years, backed by record employment, increased job security, above-inflation pay rises, low borrowing costs and a growing population. In another positive sign for domestic demand, the number of babies born in Germany in 2016 rose to the highest level in two decades, reflecting a booming economy, government incentives and a surge in migration. We are fundamentally bullish on German equities.

General Mills looks cheap

As recently as 2016 investors were paying a 20% to 30% premium to the broad market for General Mills shares, based on forward price/earnings ratios. Now they’re getting a 13% discount. Low interest rates once flattered big dividend payers, but the Federal Reserve has been raising rates. Amazon (AMZN) and Walmart (WMT) have set off a grocery price war. Consumers have generally been shifting their preference toward fresh food from packaged. But the malaise around food stocks looks overdone, and General Mills in particular looks cheap. Recent share gains in snacks and cereal, potential for a rebound in margins, a modest valuation and with General Mills recently paying a 4.3% dividend yield are all building optimism around the stock.

Metals

Korean tensions and trade war concerns wane

The unpredictable leader of North Korea shows clues of willingness to end this crazy nuclear game. Kim Jong-un stated that “The issue of denuclearisation of the Korean Peninsula can be resolved, if South Korea and the United States respond to our efforts with goodwill, create an atmosphere of peace and stability while taking progressive and synchronous measures for the realization of peace”. Also, concerns of a trade war seem to be diminishing. With concerns of trade war and conflict in Korean peninsula waning, Gold seems bearish.

Energies

Prospects of new deal bullish

The main event of last week in the oil market has been talks between Saudi Arabia and Russia about a 10 to 20-year alliance in order to support oil prices. Many analysts referred to it as an “unparalleled oil deal.” Earlier in the week, the key indicator for oil, the EIA Crude Oil Stockpile report, showed a build of 1.643 million barrels against a draw of -0.287 million forecasted. On Thursday the US Baker Hughes Oil Rig decelerated to 798 from 804 last week. Prospects of a new oil supplier deal and stagnation in rig count is bullish for oil.

Lower sowing figures bullish

Last Friday, corn contract rose 3.8 percent, the biggest single-day climb since July, after the USDA forecast U.S. corn plantings for 2018 at 88.026 million acres, down 2 percent from 2017 and below an average of trade expectations. That’s nearly 1.5 million acres below the average trade guess of 89.48 million acres, including a projection of 90 million acres by major Analysts. Based on conservative acreage forecasts, strong demand profile for old crop and proximity to seasonal lows price risk is to the upside.

 

About Century Financial Brokers

Established in 1989, Century Financial Brokers L.L.C.is the region’s leading financial brokerage firm and a well reputed online trading service provider in the United Arab Emirates. Since inception, Century continues to have a strong commitment and dedication towards providing superior and personalized customer experience, and empowering its customers through education, training and support, in line with the values and beliefs of its founder, Mr. Sulaiman Baqer Mohebi, a dynamic and visionary business leader.

Century operates on the world’s leading platform which also provides a wide-range of financial instruments, covering 6 asset classes, across 100 markets worldwide with products ranging from Currencies, Commodities, Indices, Metals, Energies, and Inter-Bank Money Markets for both local and expatriate investors, to meet their diverse trading and investment needs.

 

Source: Matrix PR