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Asian Shares Advance As Fed Jitters Ease

Asian stocks advanced on Tuesday after New York Fed President John Williams noted the recent inflation surge is likely a temporary phase, helping ease investor concerns about the pace of expected monetary tightening.

Chinese shares ended notably higher, with the benchmark Shanghai Composite index rising 28.23 points, or 0.80 percent, to 3,557.41. Hong Kong’s Hang Seng index dropped 179.24 points, or 0.63 percent, to 28,309.76.

Japanese shares posted strong gains on economic recovery hopes. The Nikkei average jumped 873.20 points, or 3.12 percent, to 28,884.13, marking its biggest percentage gain since June last year. The broader Topix index closed 3.2 percent higher at 1,959.53, reversing Monday’s 2.4 percent slide.

Shipping stocks surged, with Mitsui OSK Lines climbing more than 10 percent after the company more than tripled its half-yearly net profit forecast. Rivals Kawasaki Kisen and Nippon Yusen also gained more than 10 percent each.

Automaker Suzuki Motor surged 7.4 percent, Honda Motor rallied 3.6 percent and Toyota Motor added 3.3 percent as the yen fell against the dollar on improved risk sentiment.

Market heavyweight SoftBank Group advanced 1.9 percent and Uniqlo operator Fast Retailing climbed 3.1 percent.

Australian markets rallied as investors favored value stocks on hopes they will do well in an economic recovery. The benchmark S&P/ASX 200 index climbed 106.90 points, or 1.48 percent, to 7,342.20 while the broader All Ordinaries index ended up 107.50 points, or 1.44 percent, at 7,592.70.

Energy stocks such as Woodside Petroleum and Santos jumped 2-3 percent as Brent oil hit $75 a barrel for the first time in more than two years amid signs of a rapidly tightening market.

The big four banks rose 1-2 percent while mining heavyweights BHP and Rio Tinto rallied 2.4 percent and 1.6 percent, respectively. Gold miner IGO surged 6.2 percent after saying it plans to invest A$1.4 billion into its local unit.

Seoul stocks rebounded on expectations the Fed is going to be relatively slow in tapering its asset purchase program. The Kospi average inched up 23.09 points, or 0.71 percent, to 3,263.88. Automaker Hyundai Motor jumped 3.4 percent and chemical firm LG Chem advanced 2.4 percent.

Producer prices in South Korea were up 6.4 percent year-on-year in May, the Bank of Korea said – accelerating from the upwardly revised 6.0 percent increase in April.

New Zealand shares eked out modest gains, with the benchmark NZX 50 index finishing up 35.44 points, or 0.28 percent, at 12,534.80. Fisher & Paykel Healthcare gained 1.9 percent, while Trustpower slumped 4.3 percent, a day after it agreed to sell its electricity, gas, broadband and mobile retail business.

U.S. stocks advanced overnight as banks and energy companies recovered some of last week’s steep losses following the Federal Reserve policy update.

U.S. Treasury yields dropped and the dollar’s rally paused after New York Federal Reserve Bank President John Williams said that the current economic recovery may be choppy and that he isn’t ready for the U.S. central bank to dial back the support it is giving the economy.

The Dow rallied as much as 1.8 percent to snap its five-day losing streak and post its best performance since early March, while the S&P 500 climbed 1.4 percent and the tech-heavy Nasdaq Composite index rose 0.8 percent.

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Japanese bank Nomura says it’s facing a loss of $2 billion as a hedge fund blow up

  • Japanese investment bank Nomura announced on Monday it’s facing a $2 billion loss on a US client.
  • Nomura said in a press release it didn’t believe the loss would impact the company’s solvency.
  • The announcement follows a wild week for markets dominated by a reported liquidation of positions held by Archegos Capital Management.

Japanese bank Nomura announced on Monday that it is facing a $2 billion loss.

The financial hit, it said in a statement, came out of “a significant loss arising from transactions with a US client.” The firm declined to name the client.

Nomura said it would no longer be issuing planned US dollar senior notes, noting that “an event that occurred after pricing that could impact the company’s consolidated financial results,” according to Reuters.

Following the news, Nomura’s shares were trading down 15% Monday morning.

The loss follows a wild week for markets dominated by a reported liquidation of positions held by Archegos Capital Management, an investment firm led by Tiger Asia founder Bill Hwang. The liquidation appears to have been led by Goldman Sachs and Morgan Stanley.

The two investment banks sold billions of dollars worth media and Chinese stocks, with ViacomCBS and Discovery dropping as much as 35% on the heavy selling. Chinese companies Tencent, Baidu, and Vipshop also saw a major drop. Market watchers told The Wall Street Journal the “size and speed” of the sell-off was “unprecedented.”

Despite the sell-off, the market saw a last-minute rally on Friday, with the Dow ending up 450 points and the S&P 500 closing at a record high.

Nomura said the $2 billion loss shouldn’t impact operations.

“As of the end of December 2020, Nomura maintained a consolidated Common Equity Tier 1 ratio of over 17 percent, which is substantially higher than the minimum regulatory requirement,” the statement continued. “Accordingly, there will be no issues related to the operations or financial soundness of Nomura Holdings or its US subsidiary.”

Nomura operates in 30 countries worldwide, as has total assets of $432.2 billion.

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Massive ship blocking the Suez Canal has been freed

  • After being stuck since Tuesday, the Ever Given is now afloat.
  • The massive cargo vessel caused a blockage in the Suez Canal, straining global trade.
  • It’s still not known when the canal will be open the hundreds of ships waiting to enter.

A massive container ship stuck in the Suez Canal has been refloated, Bloomberg News reported, citing shipping services provider Inchcape. Inchcape said in a tweet the boat is now being “secured.”

The Ever Given had been stuck sideways across Egypt’s canal since Tuesday, clogging a vital artery for the global economy and forcing multiple ships to turn around and reroute through Africa.

Tugboats are now working on straitening the vessel’s course so it can continue moving up the canal, the Wall Street Journal reported.

“It is good news,” Osama Rabie, chairman of the Suez Canal Authority, told The Journal. “We are not finished yet, but it has moved.”

It’s unclear how soon the canal would be opened up to the hundreds of ships that are stuck waiting for it to clear.

The 1,300 foot-long cargo ship, one of the world’s largest, became wedged in the Suez Canal early Tuesday morning. Egyptian officials initially blamed the weather, including strong winds and a dust storm. But on Saturday, officials said the logjam could be the result of “technical or human errors.”

The nearly six-day blockage forced some ships to take a costly, dangerous detour thousands of miles around the southern tip of Africa, and was reportedly costing the global economy $400 million an hour in delayed goods.

Tugboats and dredgers had been working to free the ship for days with little success.

In video shared on Twitter, boats could be heard honking after the ship was freed. Another clip appeared to show the ship moving again as the sun was rising.

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European Economics Preview: Germany Industrial Production Data Due

Industrial production data from Germany and investor confidence survey results from euro area are due on Monday, headlining a light day for the European economic news.

At 1.45 am ET, the State Secretariat for Economic Affairs is scheduled to release Swiss unemployment data for February. The jobless rate is seen at 3.6 percent, up from 3.5 percent in January.

At 2.00 am ET, Destatis is slated to issue Germany’s industrial production data for January. Economists forecast output to grow 0.2 percent on month after staying flat in December.

In the meantime, industrial output figures are due from Norway and Denmark.

At 3.00 am ET, Spain’s INE publishes industrial production figures for January. Output is expected to drop 0.7 percent on year, following a 0.6 percent fall in December.

At 4.30 am ET, Eurozone Sentix investor confidence survey results are due. Economists forecast the sentiment index to rise to 1.9 in March from -0.2 in February.

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Today’s Tech Headlines

1. A Black AWS manager is suing Amazon. Her lawsuit alleges Amazon routinely pays and promotes Black employees less and accuses a former Amazon public-policy director of sexual harassment and assault.

2. Joe Biden supported Alabama workers in an Amazon union vote. Biden also called for no “anti-union propaganda.” More on what the president said about the historic effort. 

3. DraftKings will soon make a huge acquisition, per insiders. The sports-betting industry is abuzz with chatter that DraftKings is in M&A talks with potential targets.

4. Klarna is now Europe’s most valuable private startup. The Swedish “buy now, pay later” company tripled its valuation in less than six months, bringing its worth to $31 billion. 

5. Amazon will soon open the UK’s first checkout-free grocery store. The Mirror reported that Amazon Go is set to open this week in West London.

6. Grimes made $5.8 million by selling crypto-based artwork – in 20 minutes. The singer’s digital art collection marks the latest non-fungible token, or NFT, that’s taken off.

7. Lime’s new e-bikes are coming. The mobility startup announced it will be investing $50 million to bring electric bicycles to 25 cities across the globe by this summer. More details on the expansion.

8. Reddit will continue hosting porn. CEO Steve Huffman said he had no plans to ban pornography on the social media site. Watch Huffman’s explanation here.

9. 67 Black women CEOs and executives discuss their time in corporate America. Execs from companies like Amazon, Google and Salesforce share career advice –  and reveal how they “made it” in white, male-dominated industries.

10. The US government wants to turn VCs into informants who will snitch on China. The Committee on Foreign Investment is encouraging investors and startup founders to blow the whistle on suspicious investments into American tech firms.

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Ether futures product overview

Ether futures (ticker symbol: ETH) from CME Group are cash-settled contracts based on the CME C-F Ether-Dollar Reference Rate. Launched in 2018, ETHUSD_RR is a daily reference rate that aggregates Ether US dollar transactions on the constituent Ether spot exchanges during a one-hour calculation window into the US dollar price of one ether as of 4 p.m. GMT/BST.   

In order to determine the Ether Dollar Reference Price, the one-hour calculation window is partitioned into 12 five-minute intervals, where the volume-weighted median is calculated for each five-minute partition, and then, all twelve medians are equal-weight averaged to one price that becomes the ETHUSD_RR for the day.

Contract specifications

Each futures contract has a value of 50 ether and is quoted in US dollars per one ether. For example, if the CME CF Ether Dollar Reference Rate is $400, one Ether futures contract will have a notional value of $20,000 US dollars. 

Ether futures will tick in increments of one-quarter index point, meaning a one-tick move of ETH futures is equal to $12.50.

The tick size for spread trades will be $0.05 per index point per ether or $2.50 per contract. The Ether futures contract trades on CME Globex from Sunday through Friday from 5 p.m. to 4 p.m. Central Time (CT). Additionally, the contracts are block trade eligible with a minimum size of five contracts. 

Ether futures are also eligible for exchange for physical (EFP) transactions. EFPs are privately negotiated trades between two counterparties allowing them to simultaneously transfer a futures position for an equivalent spot market position or vice versa. In this case, a market participant may exchange a position in physical ether for an equivalent position in CME Group Ether futures and vice versa.

ETH futures expire on the last Friday of the contract month and are listed on the nearest six consecutive monthly contracts, inclusive of the nearest two December contracts.

An example

For example, assume it’s January and the six consecutive contract months are January, February, March, April, May, and June. In addition, that year’s December contract plus next year’s December contract will also be listed.

As one contract expires, the next contract to complete the six-month lineup is added. 

When the December contract expires, the June contract becomes active, in addition to the December contract for the next year. So, at any time, there are six consecutive monthly contracts and only two December contracts listed. This process continues throughout each year.

Ether futures are joining the expanding suite of cryptocurrency products from CME Group – providing an additional tool for market participants to hedge their digital asset risk.

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Defining Ether and Ethereum

Created in 2015, Ether is known as the fuel for operating the Ethereum platform.  Ether, like other digital currencies, can be used to pay for goods and services. But it is also used to support the development of applications on the Ethereum network.

Oftentimes, the word Ethereum is used to represent both the network as well as Ether.

To better understand the uses of Ether, let’s first look at the Ethereum platform.

Ethereum

Ethereum is an open-ended, decentralized, blockchain-based, public software platform that facilitates peer-to-peer contracts, known as Smart Contracts, as well as Decentralized Applications, known as DApps.

Smart contracts allow users to exchange value without requiring an intermediary.  Smart contracts are agreements with defined terms and protocols in place to enforce them.

But unlike traditional contracts, written in human languages and enforced by courts of law, smart contracts are written in code that a computer can execute, which eliminates ambiguity.

The Ethereum network acts as a single decentralized computer that runs the smart contract code. This means that all computers participating in the Ethereum network will come to consensus on the outcome of each smart contract.

Traditional software applications often rely on central authorities to store data and perform operations on that data. This requires trust in the central authority.

DApps can make use of smart contracts on the Ethereum network to achieve decentralization. Smart contracts can store data. The Ethereum network enforces that all operations on the data happen according to the smart contract code. In other words, the data maintains its integrity without a central trusted party.

Ether

In order to support the Ethereum network, developers need the cryptocurrency, Ether, to create and run applications. Ether is used to pay for transaction fees and computational services. 

Users can send Ether to other users, and developers can write smart contracts that receive, hold, and send Ether.

Ether comes into existence by the validation of transactions on the Ethereum platform, through a process called mining.  Those performing this validation are referred to as “miners”.

When miners successfully verify a group of transactions, they are awarded Ether.  Miners follow a set of cryptographic rules which keep the network stable, safe and secure. 

Ether transactions are recorded and verified on a digital public ledger called blockchain. 

HOW DO YOU OBTAIN ETHER?

There are multiple ways for an individual to obtain Ether.

  • It can be purchased on an exchange using a fiat currency under the symbol ETH.
  • It can be exchanged for Bitcoin on exchanges that offer a BTC-ETH pair.
  • It can be transferred to you from another person or entity.
  • It can be earned as a miner, through joining a mining pool or by purchasing a cloud mining contract

ETHEREUM WALLETS

Before taking possession of Ether, an individual must have an Ethereum wallet. 

Secure Ethereum wallets can be downloaded and set up onto a computer, smartphone or other mobile device. 

Each Ethereum wallet stores an individual’s private key which allows the wallet owner to sign transactions that send Ether to other parties.

WHY WOULD YOU BE INTERESTED IN OWNING ETHER?

As previously mentioned, Ether is needed by developers to create Smart Contracts and DApps on the Ethereum network.

Additionally, Ether can be used as an investment whose value can go up or down.  It can be owned or used as a tradable instrument.

Ether is a critical component to keeping the Ethereum platform growing and evolving in the digital asset environment.

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Asian Markets Slip As Bond Yields Rise

Asian stock markets are mixed on Wednesday following the lackluster cues overnight from Wall Street. There are also continuing concerns over an uptick in bond yields and worries over higher inflation affecting valuations. Asian stocks ended mixed on Tuesday.

The Australian stock market is declining following the weak cues overnight from Wall Street. Worries over higher inflation affecting valuations also weighed on the market.

The benchmark S&P/ASX 200 Index is losing 60.80 points or 0.89 percent to 6,778.40 and the broader All Ordinaries Index is lower by 60.20 points or 0.85 percent to 7,050.60. In the tech space, Appen is falling almost 2 percent, Nanosonics is down nearly 4 percent, Afterpay is lower by more than 7 percent and WiseTech Global is losing more than 3 percent.

Gold miners are higher as gold prices are firmer, with Evolution Mining adding more than 1 percent and Newcrest Mining gaining more than 4 percent.

Meanwhile, the major miners are notably higher, with BHP Group rising more than 3 percent, Fortescue Metals higher by 0.4 percent and Rio Tinto advancing nearly 2 percent.

Oil stocks are also higher, with Oil Search gaining more than 6 percent, while Woodside Petroleum and Santos are gaining nearly 6 percent each.

Among the big four banks, ANZ Banking and National Australia Bank are advancing more than 1 percent, while Commonwealth Bank and Westpac are gaining nearly 2 percent.

Shares of supermarket retailer Woolworths are up more than a percent after it reported a 28 percent jump in net profit after tax for the first half of 2021 to A$1.14 billion from last year. Total revenue grew over 10 per cent to $38.85 billion. It also declared a 15.2 percent higher interim dividend of 53 cents per share.

In economic news, the Australian Bureau of Statistics (ABS) said that the total value of construction work done in Australia was unexpectedly down a seasonally adjusted 0.9 percent on quarter in the fourth quarter of 2020, coming in at A$51.171 billion. That missed expectations for a growth of 1.0 percent following the 2.6 percent decline in the previous three months.

Additionally, the seasonally adjusted Wage Price Index (WPI) rose 0.6 per cent in the fourth quarter 2020 and maintained the historically low annual growth rate of 1.4 per cent for a second quarter compared with market forecasts of 1.1 percent annually, according to figures released by the ABS. The latest reading remained the weakest growth on record.

The Japanese stock market is lower on Wednesday with the benchmark Nikkei 225 falling below the 30,000 level as gains in real estate stocks was offset by losses in technology stocks. However, optimism on economic recovery after the pandemic prompted fresh buying in value and cyclical stocks. The benchmark Nikkei 225 Index is declining 232.21 points or 0.77 percent to 29,923.82, after touching a low of 29,846.17 in early trades.

Market heavyweight SoftBank Group is declining more than 2 percent while Uniqlo operator Fast Retailing is up 0.4 percent. Among automakers, Honda is adding almost 1 percent, while Toyota is down 0.2 percent.

In the tech space, Tokyo Electron is lower by more than 2 percent and Advantest is down nearly 3 percent. In the banking sector, Sumitomo Mitsui Financial is adding 1.2 percent and Mitsubishi UFJ Financial is gaining 1.4 percent.

Among major exporters, Panasonic is declining almost 1 percent, Sony is losing nearly 3 percent and Mitsubishi Electric is down more than 1 percent, while Canon is edging up 0.5 percent.

Among the other major gainers, Yokohama Rubber is gaining almost 9 percent, Pacific Metals is adding nearly 8 percent, Sumitomo Metal Mining is up over 7 percent and Shinsei Bank is gaining 6 percent, while Mitsui Mining and Smelting, Fujikura, ANA Holdings, Mitsui OSKLines and DOWA are rising more than 5 percent each.

Conversely, Olympus is losing nearly 5 percent, while Konica Minolta and Terumo are lower by more than 4 percent each and Daikin Industries in down nearly 4 percent.

In the currency market, the U.S. dollar is trading in the lower 105 yen-range on Wednesday.

Elsewhere in Asia, Hong Kong is declining more than 1 percent, while China, Singapore, New Zealand and Taiwan are also lower. Singapore is rising more than 1 percent, while Malaysia and Indonesia are also higher. On Wall Street, stocks showed a substantial recovery over the course of the trading day on Tuesday after moving sharply lower early in the session. The major averages climbed well off their early lows, with the Dow and the S&P 500 reaching positive territory. The Dow plunged by more than 360 points in early trading but ended the day up 15.66 points or 0.1 percent at 31,537.35. The S&P 500 also inched up 4.87 points or 0.1 percent to 3,881.37 after tumbling by as much as 71 points. Meanwhile, the tech-heavy Nasdaq finished the session down 67.85 points or 0.5 percent at 13,465.20 but was well off the nearly one-month intraday low set in early trading.

The major European markets also finished the day mixed. While the German DAX Index fell by 0.6 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index both inched up by 0.2 percent.

Crude oil prices ended slightly lower on Tuesday after surging in the previous session. West Texas Intermediate Crude oil futures for April ended down $0.03 at $61.67 a barrel.

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Danish Retail Sales Decline At Softer Pace

Denmark retail sales declined for the third month in a row in January, albeit at a softer pace, figures from the Statistics Denmark showed on Wednesday.

Retail sales declined a seasonally adjusted 5.0 percent month-on-month in January, following a 8.3 percent decrease in December.

Sales of clothing and other goods decreased 43.3 percent monthly in January and those of other consumables decreased 7.1 percent.

Meanwhile, sales of food and grocery grew 2.8 percent.

On an annual basis, retail sales dropped 7.6 percent in January, after a 1.3 percent gain in the previous month.

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Mixed Open Seen in European Markets

European stocks are seen opening on a mixed note Wednesday after Federal Reserve Chairman Jerome Powell’s remarks to U.S. lawmakers contained no surprises.

Powell will have another opportunity to address several issues such as interest rates, job losses and stimulus during his second day of testimony in Congress later today.

Asian markets are moving lower as reflation fears persisted and Iran rejected direct negotiations with the U.S. on the nuclear deal as long as American sanctions remain in place.

Chinese and Hong Kong stocks led regional losses as U.S. President Joe Biden showed readiness to meddle the Canadian citizens’ evacuation from Beijing.

There is some positive news on the vaccine front, with two separate studies published in the U.K. revealing that vaccines against Covid-19 are effective in cutting disease transmission and hospitalizations from the first dose.

The dollar hovered near a three-year low against the British pound while oil prices fell after industry data showed U.S. crude inventories unexpectedly rose last week.

Revised quarterly national accounts from Germany and business sentiment figures from France are due later in the session, headlining a light day for the European economic news.

Across the Atlantic, Powell’s second day of testimony may attract some attention along with a report on new home sales in the month of January.

U.S. stocks pared earlier losses to end mixed overnight as investors cheered reassuring comments from Powell on inflation and interest rates.

Powell reiterated interest rates will remain at near-zero levels and the Fed will continue its asset purchases at the current rate until “substantial further progress” has been made toward its goals of maximum employment and price stability.

The Dow Jones Industrial Average and the S&P 500 edged up around 0.1 percent, while the tech-heavy Nasdaq Composite slipped half a percent.

European markets closed mostly lower on Tuesday after a choppy session on concerns over rising bond yields.

The pan European Stoxx 600 eased 0.4 percent. The German DAX dropped 0.6 percent, while France’s CAC 40 index and the U.K.’s FTSE 100 both inched up 0.2 percent.