Markets Pulse BlogJust another WordPress weblog

Indices rose Friday, with the S&P closing at 1,065, a 1.7% increase. The DIJA rose by 165 points or 1.7%, ending at 10,561. The Nasdaq Composite also rose by 1.7% that Friday.

Some of our most popular technology stocks, however, have announced important 3rd quarter reports. Intel estimated sales of $11 billion for the third quarter rather than its previous estimate of $11.2 to $12 billion in sales. HP and Dell are both vying over 3Par, a company offering customized storage solutions for mid to large-size companies.

The Federal Reserve Board chairman Ben Bernanke vowed Friday to do all he can to prevent deflation in the US.
The dollar fell along with oil prices, which ended Tuesday at $72.39 a barrel. Gold ended at $1,233.40 an ounce. Wheat prices continue to rise after Russia declared a moratorium on wheat due to a drought.

The US unemployment rate remained at 9.5% this month, although the private sector added 71,000 jobs.

Home sales in the US sunk 27% in July, to their lowest level in 15 years.

World Markets
China reported a fall in growth in July for the first time in 16 months. This week China is expected to release its GDP growth for the 2nd quarter as well as balance of trade reports, which will give analysts information on future growth and investment or if the fall is a trend. India will also release growth figures. Analysts expect 8% growth to be announced. Analysts predict that India will catch up more to China in terms of growth rate this year.

The European Central Bank will unveil latest interest-rate decision on Thursday. It is likely to leave the rate unchanged, a confirmation that continue with relaxed lending policies until the end of the year.

Carrefour reported this week a net profit of Euro 82 million as it seeks to expand to markets in Brazil and China.
Vivendi, French media and telecom group also reported today a 6.6% rise in profit to 1.26 billion Euros for the first half of the year.

Currencies
The dollar fell to a 15-year low against the Yen. The euro fell to a 9-year low against the yen, and the British pound to 3-month low against the yen. The strength of the yen causes concern for exporters.

Of course, not everyone agrees that China will be growing so fast. A couple of major problems loom: China’s GDP has indeed been growing rapidly in the last 30 years, but that could be because it has a while until it reaches a high rank. Chinese GDP is still below the 100th rank in the global economy. Another factor making it difficult for China to climb to the top is the state of the current global economy, the decrease in demand for exports and the rise of unemployment.
Some experts even feel that China’s GDP will fall in the next few years. Hedging might be a great binary options and forex strategy for traders of forex and binary options for those who are cynical about the Chinese takeover of the world.

What this means for traders:
Traders might want to pay attention to the Asian currencies, in particular the yuan, the Chinese currency which the Chinese government decided earlier to peg to the dollar (see our previous post). This in turn makes Chinese exports more expensive, but imports cheaper. Be on the lookout for trades connected to rises in production expense and major companies such as Wallmart and Target, who have overseas factories. Other companies which have been cheaper alternatives to American products, such as Toyota and Honda, may also present good binary options opportunities.

What this means for trade operators:
Chinese stocks and markets are a new opportunity for traders. The Asian market will also be influenced by its #2 neighbor. Read more about online trading in the binary options market.

China has beat Japan as the second-largest economy in the world. With an average GDP growth of 10% for the last 30 years, a population of 1.4 billion, first place in the world’s and consumption and production of coal, steel and energy, and the world’s largest exporter and second-largest importer of good, the country stands a chance at becoming number one soon. (It is also ranks first-place in the world in coal production).

Other news in China is the country’s allowing foreign investors to invest in the Chinese market. A pilot program will allow foreign investors to buy bonds in the Chinese market using Chinese currency.
Shanghai is set to become a world leader in finance by 2020. As a result, they are tapping into corporate investment abroad and could allow foreign companies to sell shares in Shanghai as early as next year. Rumor persists that Shanghai may allow foreign investment in yuan-dominated private equity and venture capital funds as well in the near future.

Since the yuan ended its peg against the dollar on June 19 it has risen by .5 percent. Announcement of the end of the peg causes a 4.8 percent increase in Hong Kong yuan deposits in June. China is now making it easier for yuan transactions between banks and companies in Hong Kong as well as those transferring cash in order to buy wealth-management products.
The rise of the yuan currency combined with rising sentiment about China’s future could make it a good short-term investment for binary options and forex traders.

Best Month in a Year
——————————————————————————————
One great way to make binary options work to your advantage is to trade based on monthly and quarterly earnings reports. Options can be predicted to rise or fall shortly before these news releases. If you do the research you can capitalize on these movements in the market. But more on this strategy at a later posting. Now let’s concentrate on our monthly report.
——————————————————————————————–
Stocks did better this month than they have in an entire year. Sixteen of the thirty DOW stocks ended higher at the end of July, including Home Depot (up 1.6% at $28.51) and Boeing (up 1.4% at $68.14). Intel (down 1.7% to $34.46) and Merck (down 1.7% to $34.46) ended lower than expected.

Stock Market Summary

DOW- ended at 10,466 points, rising 7.1% for the month. Earlier in the day the DOW fell almost 120 points, but it ended a point below the day’s opening. It ended with a fall of .01% for the day.

Nasdaq Composite Index– ended three points higher, at 2,255.

DAX- Germany’s DAX index rose .2%.

IBEX- Spain’s IBEX fell 1.2%.

Nikkei- Japan’s Nikkei stock average fell 1.6%.

S&P 500- ended at the same rate at 1,102, rising 6.9% for the month and .01% for the day.

News Events of the Month-

Technology News-

Research in Motion (RIMM) shares jumped 3.3% to $57.53 after announcing its plans to release a tablet competing with Apple’s iPad in November, the “Blackpad.” In addition, it will announce a rival to the iPhone next week.

Economic News-

The US government reported slow growth in the period of April to June, with a GDP of an annual rate of 2.4% in the 2nd quarter compared with the 2.5% predicted by economists.

Spain’s credit rating is likely to be cut, as it faces mounting unemployment at 20% and rising debt.

Congress voted on a $2 billion cash for clunkers program, a new program offering Americans a cash incentive for trading in gas guzzling automobile for fuel efficient alternatives. This program should help stimulate the automobile industry.

Currencies-
The dollar rose against the British pound and Euro but fell against the yen.

Savings and Consumer Spending-
Consumer sentiment for July rose to 67.8 and not the expected 66.5.

Commodity Market
Oil, gold, and copper all rose in price.
Gold- $13.30 to $1,181.70 per ounce.
Copper- up 2.15 cents to $3.3115 a pound, up 12% for July.
Oil- closed at $78.95, up 4.39% from last month.

Employment
Increased to 9.6% from 9.5% for last month for the US market.
Private employers added 90,000 jobs to the payroll, an improvement since June.

Sales and Manufacturing
Manufacturing activity slowed to its lowest level since December. Reports of Midwest manufacturing rose to 62.3 this month from 59.1 for last month.

In an unprecedented move, China announced that they would ease the peg of the Chinese yuan, or Renminbi (RMB) to the dollar and allow the currency to move more freely.

This move will increase the value of China’s currency, making exports more expensive. In the past, the lower value of the yuan and the cost of foreign workers low, making it an excellent place for American companies such as Walmart and Target to have overseas factories. Now these companies will take a hit with rising prices of production, whereas companies exporting to China, such as General Electric and Caterpillar, will see a rise in sales as their products become cheaper in the Chinese market.

Now, Western products will become more attractive as a cheaper Chinese alternative becomes unavailable. In addition, foreign worker strikes, unthinkable in the past, are occurring in various Chinese factories of American companies such as Toyota and Honda. If workers succeed in increasing worker pay, it will cause an additional rise in the cost of Chinese products.

China is continuing to monitor its currency to allow the rise to happen gradually and dissuade traders from buying currency and easily profiting.

The Chinese market is likely to rally in response to the change. It could be a good time to watch this market or options affected by it, either indirectly or directly, and come to our site and invest.

Market analysts speculate that gold could be the next bubble, as large investors continue to buy gold along with other commodities as a safe investment against the rising economic instability in Europe and now Asia.

Developing countries have simultaneously been buying gold as a safe and secure place to store monetary assets.

Both reactions have caused a rise in the price of gold over in the last week of May even though demand has fallen in the first quarter of 2010. But what is more interesting is that gold prices are extremely sensitive to sentiment, or people’s perception of the value of the commodity.

Financial investors are largely responsible for the market price of gold, who decide whether they believe the price of gold will rise, and then invest in gold. This causes the price of gold to rise even further, as investor sentiment rises.

The price of gold has been known to fall in times of wealth and economic prosperity, however.  In times of severe economic hardship, as in ware or economic collapse, it has been known to be a fairly liquid investment which can be easily traded for money.

North Korea announced Tuesday that it would sever ties with South Korea and no longer continue to adhere to the non-aggression pact with Seoul.

In response, the Asian markets fell – Japan’s Nikkei Stock Average by 3.1%, Hong Kong’s Hang Seng Index by 3.5%, Taiwan’s Taiex by 3.2%, Thailand’s SET Index gave up 3.1%, and Singapore’s Straits Times Index by 2.7%. Other indices throughout the world also fell, including Australia’s S&P/ASX 200, India’s Sensex, and Indonesia’s JSX.

But by Wednesday many of these markets had recovered, at least for the short-term. Many market analysts explained the rise of world markets as a reaction of investors looking to buy investments cheaply due to the fall in stock prices.

It remains to be seen how the market will continue to react with the rising political tensions in Korea and the continued economic turmoil in Europe. These political tensions can be a good time to invest in binary options, especially in currencies like the Euro and yen.

In the last 10 years,  gold has risen steadily (see chart on side), breaking an all-time previous high of $1,241 an ounce on May 12. Due to the Greek crisis, foreign investors are cautious about investing in the Euro and prefer to invest in the seemingly more stable commodity of gold.

The price of gold, like other commodities is affected by demand and supply. However, since the total amount of gold in the world is already mined and currently in existence, the price of gold is affected more by demand than other commodities. For the right price, market suppliers can sell gold in the marketplace.

But the sudden growth in demand for gold could also contribute to global inflation, especially in light of the current global crisis and the European Central’s bank’s surprising decision to buy bonds of weak government economies. Investors are currently speculating as to whether gold will continue to rise, or if it truly did hit the breaking point on Wednesday.

Gold and other commodities are offered as investment options on our binary options platform.

Greece has been spending more as a country than it has been earning for decades, now burdened with a debt of €300 billion. Past governments covered up the problems and the debt continued to mount.  Recently rating agencies decided that Greek government bonds are worth even less than junk bonds, creating a drop in world markets as investors sold Greek bonds and went for greener and seemingly safer pastures of the UK, Germany, and US government investments.

Countries could lend to Greece to bailout the country, at a rate of 14 percent, a very expensive rate for borrowing. Greece will need to fiercely cutting the budget and create a long-term plan for growth.

As of April 11, Greece is being offered a Eurozone relief package of over €30 billion, of which Germany will pay €8.5 billion, and the IMF €15 billion. Now it looks like a sum of four times that much will be needed to get the Greek economy back on track.

If Greek defaults and declares bankruptcy, this could cause the Euro to fall and also discourage investment in other developing economies of the eurozone states, namely Portugal and Ireland.

Another option is for Greece to  exit the Euro for a temporary amount of time, avoiding massive unemployment and possibly boost the economy by using a devalued currency.

Now world markets are speculating that Portugal, with its large deficit and weak economy,  may be the next market to declare dire financial problems. Ireland is also suffering from a large deficit but has taken measures to reduce spending and is not currently being forecast for declaring bankruptcy.

Germany public option Is against contributing to Greek’s overspending, arguing that they should not have to pay for another country’s pension policy that is better that their own. It needs to pass the package in the German parliament before the money is distributed.

All of this provides ample opportunity to wage bets on the direction of the Euro in the future.