The Euro (EUR) continues to press lower against the US dollar as traders wait for the latest ECB policy meeting and press conference. Tech stocks rebounded from a massive sell-off. Kakao Games’ shares started trading at 48,000 Korean won (about $40.48) apiece, twice the issue price of 24,000 won. ($20.24) They briefly surged to hit the daily permissible limit of 30%, last sitting at 62,400 won ($52.63) per share. Insurance marketplace Lloyd’s of London posted a first-half pre-tax loss of £400 million ($520.08 million) on Thursday, on the back of £2.4 billion in coronavirus-related payouts so far this year.
- EUR/USD bounces off 50-dma with another attempt expected soon.
- Thursday’s ECB meeting and press conference key to EURUSD direction.
DailyFX Economic Data and Events Calendar
Thursday’s ECB policy meeting and press conference will likely play an important role in the future direction of the single currency although it may be talk rather than action that sets the tone. The central bank is expected to leave all policy levers untouched but they may indicate that they are unhappy with the current level of the Euro which is dampening price pressures in the single-block. Recent comments from ECB chief economist Philip Lane that the EUR/USD rate ‘does matter’ has seemingly drawn a 1.2000 line in the sand for the pair and this topside is likely to be respected by the market for now.
ECB President Christine Lagarde is likely to highlight that Euro strength is weighing on both growth and inflation outlooks and that the central bank is uncomfortable with the current level of the single currency to a certain degree. The more forcefully President Lagarde makes these comments, the more the Euro will fall, while a less dovish stance will allow the single currency to recoup some of its recent losses.
EUR/USD made a decisive break below the supportive 20-day moving average at the end of last week and is now pressing down on the 50-dma for the first time since late-May when the pair traded just below 1.0900. A break and open below the shorter-dated moving average opens the way to the 1.1696 – 1.1700 area before 1.1650 comes into play. Resistance is seen at 1.1848, off the 20-dma and a pair of short-term prior highs either side of 1.1866.
IG retail trader data shows 42.89% of traders are net-long with the ratio of traders short to long at 1.33 to 1.The number of traders net-long is 4.49% lower than yesterday and 26.39% higher from last week, while the number of traders net-short is 0.56% higher than yesterday and 7.15% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/USD prices may continue to rise.Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EUR/USD trading bias.
What is your view on EUR/USD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.
Author: Nick Cawley
Stock Market Rally: Dow Jumps Over 400 Points As Tech Shares Rebound
Breaking||Sep 9, 2020,04:02pm EDT
Updated Sep 9, 2020, 04:04pm EDT
The market rebounded higher on Wednesday as tech stocks recovered some of the losses that pushed the Nasdaq into correction territory a day earlier.
The market surged as tech stocks attempted to rebound from steep losses.
The Dow Jones Industrial Average was up 1.6%, over 400 points, on Wednesday, while the S&P 500 rose 2.0% and the tech-heavy Nasdaq Composite gained 2.7%.
Tech stocks rebounded, a day after the Nasdaq fell into correction territory, with shares of Microsoft, Amazon, Facebook and Google-parent Alphabet all moving higher.
Tesla’s stock, which had its worst day ever on Tuesday—falling 21% after being snubbed from the S&P 500 index, rose over 9% on Wednesday.
Shares of Apple, which fell 14% in the previous three sessions, also rebounded somewhat, gaining over 4%.
Investors also shrugged off a setback with AstraZeneca and Oxford’s late-stage coronavirus vaccine, which has now been put on hold due to a patient in the U.K. coming down with a mysterious illness.
Despite both companies reporting better-than-expected corporate earnings, shares of athletic retailer Lululemon and workplace messaging platform Slack fell more than 7% and 13%, respectively.
“Much like there was no real reason for the drop the past three days, there was no main driver for today’s huge rally, other than stocks were quite oversold,” says Burt White, chief investment officer for LPL Financial. “As the election nears, we could see this continued volatility continue.”
“As long as the buy-the-dips mentality remains foremost in investors’ minds – and it will unless they are severely punished for it – then the bull market is likely to continue,” predicts Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
The tech sell-off which started last week continued on Tuesday, dragging the market lower as investors once again rotated out of hot Nasdaq stocks. Following the sharp losses, the Nasdaq officially entered correction territory, falling 10% in just three days of trading. Investors first began rotating out of tech stocks last Thursday, causing stocks to retreat from record highs as the market posted its worst day since June, with the Dow falling more than 800 points, the S&P 500 losing more than 3% and the Nasdaq more than 5%. Before the sell-off that started last week, stocks had made a strong start to September, despite it being a historically bad month for markets.
Stock Market Sell-Off: Dow Falls Over 600 Points As Tech Shares Plunge Again (Forbes)
Stock Market Sell-Off: Dow Falls 150 Points Despite Late Rally (Forbes)
Stock Market Sell-Off: Dow Plunges 800 Points, S&P 500 Falls 3.5% (Forbes)
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Author: Sergei Klebnikov
South Korea’s Kakao Games soars 30% in market debut, hitting daily limit
Passengers use smartphones inside a subway train in Seoul, South Korea, in 2015.
Woohae Cho/Bloomberg | Bloomberg | Getty Images
SINGAPORE — South Korea’s Kakao Games surged in their Thursday market debut on the Kosdaq, more than doubling from their listing price shortly after trading began.
Kakao Games’ shares started trading at 48,000 Korean won (about $40.48) apiece, twice the issue price of 24,000 won. ($20.24) They briefly surged to hit the daily permissible limit of 30%, finishing the trading day at 62,400 won ($52.63) per share.
Meanwhile, parent company Kakao Corp. also saw its stock get a slight boost as it advanced 0.39% on Thursday.
The initial public offering (IPO) brought in about 384 billion Korean won (approx. $323.7 million) for Kakao Games, according to local news agency Yonhap. Prior to its market debut, Kakao Games reportedly set a new record for the country’s IPO subscription rate.
EY’s Ringo Choi told CNBC’s “Squawk Box Asia” that the coronavirus pandemic, which has “really changed the economy,” could be a factor behind enthusiasm for Kakao Games.
“A lot of people are staying at home and, also, they sometimes will play games,” said Choi, who is Asia-Pacific IPO leader at EY.
Coupled with “more confidence” in the video game sector and South Korea being one of the largest markets in the space, Choi said it was “reasonable” for Kakao Games to be “so hot at the moment.”
Beyond Kakao Games, Yum China also made its debut in Hong Kong on Thursday.
Choi said that companies are still choosing to debut because they “really need to have high liquidity” in a time of unprecedented economic uncertainty stemming from the coronavirus pandemic and U.S.-China tensions.
“It is reasonable to believe that most of the (companies) want to have more cash on hand,” he said.
This would also allow them to have a higher chance of buying out “good companies” that may have run into liquidity problems, at a lower price than before, he added.
“That’s why I think that a lot of (companies) will … continue to raise capital if the market can stand for it,” Choi said.
Author: Eustance Huang
Insurance market Lloyd’s of London swings to loss after $3 billion in coronavirus claims
The interior of Lloyd’s of London, the centuries-old insurance market, is pictured in central London on April 27, 2016.
Leon Neal | AFP | Getty Images
Insurance marketplace Lloyd’s of London posted a first-half pre-tax loss of £400 million ($520.08 million) on Thursday, on the back of £2.4 billion in coronavirus-related payouts so far this year.
The loss compares with a profit of £2.3 million for the same period last year.
Combined ratio, a key measure of underwriting profitability, hit 110.4% for the first six months the this year, compared to 98.8% for the first half of 2019. Anything below 100% represents profitability. Payments for Covid-19 related claims accounted for 18.7% of this ratio, in what CEO John Neal called an “exceptionally challenging period” for the market.
Insurers around the world have been hammered by the pandemic, with Lloyd’s estimating earlier this year that non-life insurers would face a global bill of more than $100 billion in payouts for disruption to travel, business, events, trade and more.
The company’s Chairman Bruce Carnegie-Brown told CNBC on Thursday that Lloyd’s’, whose results are an aggregate of more than 90 syndicate members, expects to pay around £5 billion in coronavirus-related claims over the course of the year.
British regulator the Financial Conduct Authority (FCA) has brought a test case to the High Court to seek legal clarity over insurers’ liability for business interruption claims in the context of Covid-19, following widespread criticism from businesses unable to claim back losses caused by the pandemic.
“Where pandemic and notifiable diseases are specifically covered in insurance policies, then they will pay, and we’ve been paying claims on those, but they are typically bought as an extension to a standard policy that requires physical damage to a premises before a claim can be made,” Carnegie-Brown told CNBC’s “Squawk Box Europe.”
“It is that second category that is proving complex around the issue of whether Covid-19 is creating physical damage in the workplace, and that is the issue that is being tested in the High Court and we are very supportive of getting this to an early decision.”
Author: Elliot Smith