STOCK PRICES AND NEWS
NASDAQ 100 slumps for third straight day: GOOGL, BTC, QQQ, EL, NDX Premium
It's not looking good out there for markets this week. Poor US jobs numbers contributed to a spreading fear that the US labor market is faltering. US JOLTS Job Openings data for December fell from 6.9 million in November to 6.5 million.
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US EQUITY INDICES
The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30 most-traded stocks traded in the United States (US). It is often viewed as representative of “old economy” stocks and is considered a leading indicator for international investment.
While the Dow reflects the big money, the Standard and Poor’s 500 (S&P 500) is often the preferred gauge of equity markets due to its broad market coverage. The S&P 500 is a market value-weighted index comprising 500 large US stocks, covering about 75% of the US equity market.
The Nasdaq Composite is highly followed in the US as a performance indicator for technology and growth companies. The Nasdaq-100, which includes 100 of the largest non-financial companies in the Nasdaq Composite, accounts for about 80% of the index weighting of the Nasdaq Composite. The Nasdaq Composite is a capitalization-weighted index and it includes both US and non-US companies listed on the Nasdaq stock market. The NASDAQ represents the speculative retail money.
Generally speaking, a rise in the US equity markets tends to increase investors' risk appetite attracting foreign investment to the US equity market and pumping the US Dollar (USD) higher.
EUROPEAN EQUITY INDICES
Germany DAX - Daily
UK FTSE 100 - Daily
The DAX is a stock market index consisting of the 40 major German blue chip companies trading on the Frankfurt Stock Exchange. It is a total return index and prices are taken from the Xetra trading venue.
The Financial Times Stock Exchange 100 (FTSE 100), informally known as the “Footsie”, is a market capitalization-weighted index representing the top 100 blue-chip companies on the London Stock Exchange. The index represents over 80% of the total market capitalization in the United Kingdom (UK). Stocks in the FTSE 100 are free-float weighted, ensuring that only the investable opportunity set is included in the index.
JAPANESE EQUITY INDICES
The Nikkei 225, commonly called the Nikkei, is a stock market index for the Tokyo Stock Exchange (TSE). It is a price-weighted index, operating in Japanese Yen (JPY), that measures the performance of 225 highly capitalized and liquid publicly owned companies in Japan. It has been calculated daily by the Nihon Keizai Shimbun (Nikkei) newspaper since 1970.
Nikkei225 - Daily
Relationships between stocks and currencies
Currencies are probably the most difficult asset class to fit into a consistent intermarket model. For instance, when investors purchase stocks from a particular country, they must pay in the local currency, increasing the demand for that currency. Conversely, a strong currency can make bonds and stocks more attractive to foreign investors.
However, the correlation between stocks and currencies is not always clear. There are often response lags between the reactions of Forex and equities markets, leaving investors holding foreign equities exposed to exchange rate fluctuations.
This correlation is also fragile among international equity markets. The so-called global divergences occur when the stock market in one country starts performing better than the stock market in another country. This is often driven by currency capital flows from the country with the weaker stock market to the country with the stronger one.
US Dollar Index - Daily
Latest STOCK INDICES Analysis
Editors' picks
USD/JPY gathers strength to near 157.50 as Takaichi’s party wins snap elections
The USD/JPY pair attracts some buyers to around 157.45 during the early Asian session on Monday. The Japanese Yen weakens against the US Dollar after Japan’s ruling Liberal Democratic Party won an outright majority in Sunday’s lower house election, opening the door to more fiscal stimulus by Prime Minister Sanae Takaichi.
Gold: Volatility persists in commodity space
After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.
AUD/USD eyes 0.7050 hurdle amid supportive fundamental backdrop
AUD/USD builds on Friday's goodish rebound from sub-0.6900 levels and kicks off the new week on a positive note, with bulls awaiting a sustained move and acceptance above mid-0.7000s before placing fresh bets. The widening RBA-Fed divergence, along with the upbeat market mood, acts as a tailwind for the risk-sensitive Aussie amid some follow-through US Dollar selling for the second straight day.
Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms
US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.
Three scenarios for Japanese Yen ahead of snap election Premium
The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.