Daily Market Reviews by UWCFX

Commercial Content Analysts
21

[B]US-data and earnings fight for upper hand[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

After a string of good corporate quarterly results, US- factory activities contracted for a third straight month in July as new claims for jobless aid surged last week. The tech sector with companies as IBM, eBay and Google presented strong earnings and lifted the S&P to a two and a half month high. Nasdaq gained 0,80 %. Dow Jones ended also slightly up after a mixed session where earnings were fighting dismal economic macro news for attention, raising new hopes for an injection of economic stimulus.

Asian shares were down this morning after a strong week posting its biggest weekly gain since January. Oil prices reached a 8-week high as Middle East tensions stoked supply concerns. Brent crude traded close to USD 108 barrel and NYMEX jumped to 92 on fear that the serious internal situation in Syria might spill over and tempt an Israeli/American strike on Iran. The rally in soft commodities as corn and soybean continues. Copper prices, which have traded upwards this week, fall in Asia trade. Gold is steady on 1582.

The Euro zone crisis was back in focus as the German Bundestag discussed emergency aid for the Spanish banks. Spain has tried to distinguish between their 100 Billion Euro bail-out package for their struggling banks and the country’s sovereign debt. The debate made abundantly clear that the Spanish state in the end is fully responsible for support given to its bank through different EU emergency mechanism. The demands for austerity measures have created strong reactions in Spain with mass demonstrations in Barcelona and Madrid.

The Euro is under continued pressure falling towards the USD to 1.2258. The Euro fall to a record low level against the Australian dollar. USD/JPY is keeping up its high levels trading at 78,605. The Libor scandal continues. A group of banks investigated for interest-rate rigging, are looking to pursue a group settlement with regulators. This rather than to face a Barclays style backlash. Barclay settled with British regulators paying a USD 453 million penalty.

[I]Copyright: United World Capital[/I]

22

[B]EURO/YEN at 12 years low[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

Euro fell to 12 years low against JPY in Asian trading this morning. The Euro zone sovereign debt crisis and the survival of the Euro are back in the headlines after two of Spain’s indebted regions sought financial assistance from the central government in Madrid. This comes in addition to the 100 billion Euro bail out sought for Spain’s struggling banking sector. The last developments have increased fears that the fourth biggest economy in the euro zone will be forced to follow Greece, Portugal and Ireland for sovereign bail outs. The Euro saw its lowest levels in years also against the USD trading at 1.2112. USD/JPY is at 78,191, down 0,41 %.

The troika consisting of representative from the International Monetary Fund (IMF), European Central Bank (ECB) and European Commission (EU) is back Greece today to control whether Greece has been able to live up to their austerity obligations. The new Samaras government which is supported by the former ruling party PASOK and a small center left party, has been off to a slow start since the elections a month ago. New privatizations have been announced, but nobody really believes in Greece’s intentions.

In Berlin Angela Merkel issued a strong warning, stressing that if Greece was not able to live up to its obligations the country would be forced to leave the Euro. With Spanish regions asking central aid in addition to the banks, the scene is set for a dramatic development. Madrid, Barcelona, and other big cities saw mass demonstrations and clash between demonstrators and police during the weekend. This constitutes a bad omen to the bond auction today. Last week the interest rate on long term Spanish bonds fell to 7,2 %, below the critical 7 % floor.

In Asia, stocks fall strongly on worries on the Euro zone and a renewed report of slowing Chinese growth. A central bank analyst predicted 7,4 % growth in the third quarter, lower than the 7,6 % growth in the second quarter which most observers saw as a bottom and a token that the decline in GDP is flattening out. MSCIs broadest index for Asia-Pacific shares fell two percentages. Mining stocks were especially hard hit. Oil prices also fell moderately. Brent crude is at 105,56. NYMEX at 90.51. The speculations on weaker growth in China have put commodities under pressure.

The bad news from Asia is expected to have a negative impact when markets open in Europe and USA where futures are pointing down. The earning seasons continue with Apple on Tuesday and Facebook reporting results on Thursday.

[I]Copyright: United World Capital[/I]

23

[B]Euro drops on Spanish fears[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

The Euro fall to multiyear lows versus the Yen and the dollar on Tuesday on fears that Spain shall be forced to ask for a full-scale international bailout; and renewed rumors that Greece might have to leave the Euro. The international rating agency Moody’s changed its outlook on German, Luxembourg and the Netherlands to negative, warning that Europe’s top rated AAA countries may have to increase support for indebted Spain and Italy. Euro/USD is trading at 1.21.26 after dipping even lower Monday and in Tuesday morning trade. Analysts predict that the Euro might drop as low as to 1,10 during the next half year.

The Spanish bond auction saw a 7,50 record high interest rate on ten years bond after two of Spain’s regions, Valencia and Catalonia sought help under a 18 billion Euro program aimed at helping regional finances. More regions are said to follow suit. The Euro also hit record lows against the Australian, Canadian, and New Zealand dollars. A European Central Bank statement stressing that Greek bonds are not eligible as collateral, did neither serve to support the euro. The Euro fall to a three and a half years low against British pounds, GDP and saw half year bottom levels against Norwegian and Swedish crowns.

The Asian stock market stabilized Tuesday after yesterday’s steep fall. The South Asian Pacific index, MSCIX, fall 0,8 % after a second negative day in New York. McDonald delivered a disappointing result and fall 2,8 %. With one third of the companies reporting quarterly results, 67 % have reported better than expected results. That helped market sentiments last week, but McDonald’s results did not change this week’s negative trend.

Oil prices fell sharply on Monday down for a second day on worries that Spain is heading for a bailout and the euro-zone debt crisis is spreading. This prompted investors to sell assets perceived as risky boosting the dollar and US treasuries. Brent fell more than 3 % to 103,50 and NYMEX to 88 USD pr. Barrel. Gold is steady on 1576. The last developments in global markets have increased the likelihood that US Federal Reserve shall undertake monetary measures to stimulate the economy. That shall probably boost precious metals as gold and silver. Statistics presented by one of the biggest global banks, HSBC, indicates better July factory numbers from China, an indication the Chinese government stimulus have started to work.

[I]Copyright: United World Capital[/I]

24

[B]Apple misses earning targets[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

Apple, the world most valuable technological company, fell short of markets expectations when it presented its quarterly results yesterday. Shares dropped more than 5 percent. A sagging European economy and a pause in iPhone sales ahead of a new version saw revenues slip from previous quarter. The rare miss highlights how the Apple brand is becoming less resistant to economic and product cycles that for a long time have plagued rivals. Net income jumped 21 % to USD 8,8 billion, 10 percent below expectations. The steepest fall was registered in Asia.

Stock markets continued to fall for a fourth day in Asia. Technology stocks were hardest hit. The fall followed stock losses in Europe and the United States. The Euro wobbled above multi-year lows against major currencies. Euro/USD fell to 1.2068 trading at 1.2074 in the morning. Spain’s ten years bonds hit a record low interest rate on 7,64 % increasing fears that Spain might need a sovereign bail-out. Greece seems unlikely to meet terms conditional to its aid package. This has led to renewed speculation of a breakup of the Euro zone.

The Japanese Nikkei fell to a seven-week low before trimming winter session losses to 1 %. Grain prices, the big commodity winner over the last weeks, have dropped on profit taking the last two days. Better weather forecasts in drought stricken areas; have given some relief to the outlook for US crops. Copper hit a month low with a further easing in NYMEX, US crude oil to USD 88,36 a barrel. Brent crude steadied around 103,50. Oil investors are following the development in the Middle East with increased fear.

The outlook for commodities is closely linked to Europe. The continued downward pressure on the Euro might, however, lead investors to seek towards traditional safe havens as precious metals, this also taking the weak state of the US economy into consideration. Gold is trading at 1582 in the morning up from yesterday’s low seventies. Silver has over the last weeks several times hit back from a technical resistance level on 26 – 26,50, trading at 27,02 in the morning.

[I]Copyright: United World Capital[/I]

25

USA: News and Quarterly Results

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

On Wednesday, July 25, the stock market of the USA showed multidirectional dynamics against an exit of weight of quarterly results, statements of representatives of FRS and European Central Bank, and also the publication of statistical data. Therefore, the representative of FRS with a vote in FOMC - Sara Raskin declared that at the next meeting the question of purchase of bonds on balance of Federal Reserve System will be considered. On this message expectation of investors, concerning introduction of the new program of quantitative mitigation inflamed with new force.

As to the Old World, here the member of executive council of the European central bank Evald Novotny reported about existence of arguments in favor of granting to the ESM banking license. This statement was apprehended by investors with a positive since increase of potential of Stabilization Fund could help to fight more effectively against debt crisis, especially in case of the request of Spain for the international financial help.

The statistics on housing sector in the USA appeared disappointing. Therefore, sales of new housing in June were reduced from 0,382 million month earlier to 0,350 million while analysts predicted decrease only to 0,370 million.

In the middle of the week, some large companies of the USA reported financial results of the past quarter. Thus, Apple and ConocoPhillips firms absolutely disappointed investors, while the reporting of Boeing pleased expectations.

Following the results of the trading session the indicator of “blue chip” the index of Dow Jones Industrial Average grew up for 0,465 % and was closed on a level of 12676,05 points, the index of the wide market S&P 500 went down for 0,031 % to level 1337,89 points, and the index of the hi-tech companies Nasdaq “grew thin” for 0,306 % to a level 2854,24 points.

Oil has been rising in price yesterday. This morning prices of “black gold” are slightly pointing down and traded on a level of 104.00 for Brent and 88.61 on Light a barrel. Oil has risen despite the unexpected and significant increase in its reserves in the U.S. for the last week, most probably in connection with the statements of the Ewald Nowotny – the representative of ECB on the advisability of granting the European Financial Stability Fund ESM banking license.

The euro is strengthening against dollar due to the coming news background and is traded this morning on a level of 1.2146 rebounding from the support level of 1,20 to which the pair came down the day before. But, nevertheless, the growth is sluggish and does not dispose to open “long positions” at current levels.

Today we are expecting a block of information on the U.S. labor market, the statistics on U.S. real estate market and data on orders for durable goods. As well as the season of the presentation of quarterly results continue, reports will provide Amazon.Com, Facebook Inc. which expected earnings per share are $ 0,12, France Telecom SA, New York Times Co., Rolls-Royce Holdings PLC, Starbucks Corp., Statoil ASA, Volkswagen AG.

Copyright: United World Capital

26

[B]Speech of Mario Dragi inspired the world markets, but it is not obvious for how long time.[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

On Thursday, July 26, the stock market of the United States finished trading session by considerable growth of the main indexes. Following the results of session the indicator of blue counters of Dow Jones Industrial Average raised on 1,67 % to level of 12887,93 points, the S&P500 increased by 22,13 points or 1,65 % to a mark of 1360,02 points, and the Nasdaq reached a point 2893,25 points.

The external background for the American session was extremely favorable taking into account comments of the president of European Central Bank at investment conference in London. Mario Dragi declared that all necessary measures will be taken for rescue of euro, “believe me, it will be enough”. On concepts of investment community the statement of the Dragi means that from European Central Bank it is possible to expect intervention in a situation in the debt market for the purpose of knocking down of profitability of debt papers of Spain and Italy.

The markets also count that Bernanke will keep the promise to stimulate economy growth in spite of the fact that the yesterday’s figure on unemployment could reduce this probability. The number of addresses decreased to 353 thousand while 380 thousand were expected. Meanwhile, more important figure will be presented today. Data on gross domestic product of the USA, as expected, will finally strengthen or will weaken a factor of FRS of the USA. Let’s remind that from meeting of FOMC 31 of July-1 of August investors wait for decisions, significant for the financial markets. Besides gross domestic product, figure data on consumer inflation in Germany is coming today.

The optimistic spirit on world markets remains in the morning, after yesterday’s rally, however, players will wait for new drivers of growth in case of which absence “bulls” risk to get under a wave of fixing of profit. On Friday important news can arrive from a meeting of the Greek prime minister with “Troika” of creditors. Investors in general are ready to continue purchases that only really disappointing news can change.

[I]Copyright: United World Capital[/I]

27

[B]Asia extends gains on stimulus hopes[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

Asian stocks extended their impressing gains from last week on Monday. The Asian Pacific MCSI index gained 1,1 % to reach a three week high. This after posting its biggest daily rise in a month with a 2,2 % jump on Friday. Korean, Australian, and Japanese shares all rose supported by expectations that the US Federal Reserve and the European Central Bank, ECB, will undertake stimulus measures to support its fragile economies.

The turn in global market was triggered last week when the President of ECB, Mario Draghi, pledged he would do whatever it takes to safe guard the Euro. His comments raised hopes that ECB on its meeting tomorrow, will act to ease borrowing strains for Spain which last week saw interest rates on 10 years bonds raise to 7,78 percent. Both Spain and Italian bond rates fall after Draghi’s statement.

The Euro/USD fell 0,4 % to 1,2285 after reaching a three week high on 1.2390 touched on Friday. The Euro fall as deep as 1.2042 before Draghi’s statement. The currency picture has stabilized somewhat with USD/JPY trading at 78,381. Oil prices are up with Brent crude at 106,64. Gold is at 1621 and Silver 27,61. Copper is higher and corn raises gain after technical downward corrections last week.

The hopes for a new round of quantitative easing received a new boost by dismal US growth figures at the end of last week. US growth is slowing to an annualized rate of 1,5 % in the second quarter. The pace of growth is now, too, slow to bring down unemployment, threatening both global economic recovery and President Barack Obama’s prospect for reelection.

Friday’s figures were broadly in line with market expectations. It shall add to Federal Reserve’s fear on unemployment, but may not be alarming enough to force immediate action for monetary easing during the FED is meeting this week.

[I]Copyright: United World Capital[/I]

28

[B]Stimulus hopes keep markets rise[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

Hopes for further stimulus when the European Central Bank, ECB, and US Federal Reserve meet during this week, helped the Asian markets rise for the third day in row. After impressing gains both at Friday and yesterday, the South Asian Pacific Index, MSCI, added 0,8 percent this morning. Skepticism about any long-term effect of ECB actions, however, capped the euro. Euro/USD trades at 1.2280, down from Friday’s high of 1.2390, but well above 1.2042 reached last week.

ECB President, Mario Draghi, stated last Friday that saving the Euro was an overriding concern. However, markets are waiting to see what this mean in practical terms, and hope for a clear indication when ECB meets later this week. It is presumed that the ECB considers continuing its controversial bond-buying program and even starting printing money. This type of quantitative easing is probably still weeks away. It is neither expected that the Federal Reserve will make any move towards stimulus before after the holidays in September. The interest rate of Spain’s ten years bond fall to 6,61 % yesterday.

President Barack Obama added his voice to the Euro debate on Monday. Predicting continued months of headwinds for the US economy, Obama stressed that he thinks the EURO shall remain intact. He admitted, however, that Europe’s debt still poses a big challenge to the world economy.

Brent crude fell back to USD 106 a barrel on Monday. That in spite of lower OPEC production in July. Worries that expected stimulus may not be enough to lift slowing economies, overshadowed signs of reduced oil production.

While most attention is focused on the Euro/USD, both Australian and New Zealand dollars continue their positive upward trend. USD/JPY is at 78,18 with the yen getting stronger. Gold (1623) and silver (28,24) are inching up eying the FED meeting.

The US-markets ended flat yesterday. Intel posted weaker results than expected,. That weighed on the high technology index, Nasdaq, which closed in red. HSBC, one of the world’s leading banks, are reporting results today. It announced simultaneously that it has set aside USD 2 Billion to meet claims following a string of scandals lately, including accepting money from a Mexican drug cartel.

[I]Copyright: United World Capital[/I]

29

[B]Oil and shares fall as stimulus hope fade[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

China’s official factory purchasing managers’ index fell to an eight-month low in July, underscoring that the world’s second-biggest economy is losing momentum. Oil prices are down for a second straight day with Brent crude trading at USD 104 a barrel as markets in Asia also fell. Brent has nevertheless gained more than 7 percent in July after a three months decline, due mainly to increased tension between Iran and western countries on Teheran’s nuclear program. This as markets hopes for sufficient stimulus to revive economic growth faded.

Stocks fell both in Europe and the US on Tuesday on growing realization that neither the European Central Bank (ECB) or the US Federal Reserve (FED) during their meetings this week, will come up with a new round of stimulus that seriously shall turn markets around. ECB president, Mario Draghi, succeeded to lift the Euro with his strong commitment to the common currency up last week. However, markets are expecting concrete deeds more than words, and most analysts seem to have given up believing in active measures in August and point to September as the conclusive month.

This has dampened market sentiments as all the major indexes fell. Dow Jones was, nevertheless, able to stay above the 13 000 mark while Nasdaq was saved by a 2,6 percent rise in Apple on rumors that a new product will be launched in September. The bad fortunes for Facebook continue. The quarterly results were far below expectations, and the stock price fell to USD 21 meaning a 50 % fall in its value since the IPO was introduced some few months ago.

EURO/USD stays stabile at 1.2294. The reduced expectations for forceful actions from ECB and FED along with new worrying signals that the Chinese economy is still declining weakened the Australian dollar in early trade. Japanese yen continues up. USD/JPY stands at 78,04. Hopes for forceful stimulus gave a boost as well to precious metals. Gold is falling back from 1630 during trading on Tuesday and stands at 1614. Silver is 27.94.

[I]Copyright: United World Capital[/I]

30

[B]Market hopes stay with ECB[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

The US Federal Reserve stopped short of offering new monetary stimulus when it met yesterday. In a carefully worded statement, FED left the door open for further bond buying to help a struggling US-economy losing its momentum. Markets reacted mutely. The US exchanges ended flat after initially sending Dow and Nasdaq down on the FED’s inaction. Asia eased 0,2 percent in morning trade. While surprisingly, strong Australian retail and trade balances’ figures helped strengthen both stocks and the Aussie dollar. The Japanese Yen is falling to USD/JPY 78,51.

FED’s inability to offer new stimulus, left the burden of markets hopes on the shoulders of the European Central Bank, ECB. The USD reached a one-week high in Asia with EURO under new pressure. EURO/USD trades at 1.2247. The dollar index saw its highest level since July 26th, keeping the bar low for additional monetary easing when the FED meets in September. The spot light today on ECB President, Mario Draghi, who last week created strong expectations, stating to do whatever it takes to protect the Euro.

The most likely outcome of the ECB meeting today is new statement declaring ECB’s willingness to use all available tools if deemed necessary. This will stop short of any concrete action, and most probably mean that ECB will postpone any concerted actions to purchase sovereign debt from Spain and Italy until September. Such steps are deemed necessary to push down the borrowing costs for these two most exposed Euro zone economies. A new strongly worded statement will, however, not be regarded as satisfactory for markets being optimistic for concrete actions.

Such inaction also from the ECB, shall surely send stock markets down and put a striving Euro under renewed downward pressure. Oil prices have picked up a dollar a barrel since yesterday with Brent crude trading at 105,90. Precious metal traders are sending gold (1602) and silver (26,45) down disappointed by FED’s decision to postpone any concrete action to stimulate the economy.

[I]Copyright: United World Capital[/I]

31

[B]Euro and shares fall on ECB inaction[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

The US and the European central banks had created strong market expectations prior to their meetings this week. Both failed to deliver. The Federal Reserve presented a vaguely formulated statement, which fell short of any clear indications of active monetary steps to stimulus to boost a stagnating US-economy. The European Central Bank, ECB, followed up with an equally dubious statement leaving to anybody guess, whether Europe has the will or intentions to come to grip with the sovereign debt crisis. Interest rates on Spanish and Italian bonds fell.

The markets reacted as expected by sending global stocks down and putting the Euro under new downward pressure. ECB President Mario Draghi’s powerful statement last Friday saved the Euro for one week. After ECB’s inaction, EURO/USD sniffed on the bottom level from last week, 1.2125, to trade at 1.2176 in opening hours in Asia. Draghi’s tactics to try force action from other ECB members had obviously failed. This week has again demonstrated that Germany is the European economic powerhouse. Germany is pulling the string regardless of policy statements.

After steep falls in Europe and US; Dow Jones fell 0,71 % and Nasdaq 0,36%, Asian stock exchanges were down for the third day in row. Reports on falling oil storages in US keeps Brent crude above USD 106 a barrel. Gold (1590) and silver (27,18) are as other commodities under renewed downward pressure after the one week mini “expectation’s” rally. Japanese yen is the winner in the currencies market. USD/JPY trading at 78,1955. British Pounds, GDP, is falling against USD. USD/GDP trades close to 1.55 after 3long being stabile around the 1,57 mark against the dollar.

Today’s trading in Europe and US shall give an indication on whether global markets shall continue to fall through August to build up new expectations for active FED and ECB economic stimulus after the holidays in September. The slow trend towards parity between USD and Euro is expected to continue.

Facebook’s share price came under new pressure yesterday and fell 4 % to USD 20 a share. This after doubts on the real FB number of subscribers. FB has a high number of duplicate accounts many clients registering cats, dogs, and pets.

[I]Copyright: United World Capital[/I]

32

[B]Shares rally on US jobs[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

Asian markets rallied in the morning hours today, following stronger than expected US jobs data and renewed optimism for European action on the debt crisis. The Euro touched a one-month high against USD reaching 1.2415, before falling back and trading on 1.2391. Oil prices also jumped on 63 000 new jobs added in US in July. Brent crude is trading at 108,48. Precious metals are stronger: Gold is at 1605.

The US jobs data gave US and European stocks a strong boost Friday after disappointing news from US Federal Reserve and the European Central bank, ECB, earlier in the week.
The overwhelming positive reaction on the US jobs data underscores global markets nervousness and volatility. A deeper look into Friday’s figures show that after job’s losing months, July’s employment kept track with jobs lost. The unemployment increased from 8,1 to 8,2 percent, and gives no reason for long standing jubilation in a market hungry for any news which can be interpreted as positive.

The jobs data has given the market a relief and bigger risk appetite for now with expectations once more building up for possible FED and ECB actions in September. However, caution shall likely remain until concrete measures are taken. The ECB statement last week demonstrated that Germany and the German Central Bank still are firmly in control, allowing no experiments from neither Francoise Holland nor Mario Draghi. Italian Prime Minister, Mario Monti, with his background as former EU-commissioner, expressed his frustration with the present development. In an interview with German Der Spiegel, Monti stated that the infighting between member countries has a devastating impact on the feeling of European unity.

The focus in global markets would probably this week be more on Asia than US and a holiday month Europe. China is fine-tuning its monetary policies, and trade, bank loans, and investment figures would give an indication on whether China has reached the bottom and is back on the path to economic growth. Australian dollar continue to be strong. The dollar is weaker against most currencies, and USD/Yen is trading at 78,4622.

[I]Copyright: United World Capital[/I]

33

[B]EURO hits month high[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

The Euro/USD hits its highest level in one month reaching 1.2444 during yesterday’s trade. The currency kept steady at 1.24 in Asian trading this morning. The Euro is supported by hopes that the European Central Bank, ECB, soon will take action to lower borrowing costs for Spain and Italy. Interest rate on both Spain and Italian bond fell yesterday on expectations that ECB may again start to buy government bonds. USD is as on Monday falling against most currencies on bigger risk appetite. USD/JPY trades at 78,256.

Oil prices rose for a second straight session closing at its highest level in 11 weeks. Brent crude is trading close to USD 109 a barrel as US stock markets extended its strong Friday rally on supportive US jobs data calmed concerns about a slowing economy, and hopes that Europe will be able to effectively address its debt crisis. Violence in Syria and Iran’s dispute with Western countries over Tehran’s nuclear program continued to worry investors about the potential threat to the oil supplies from the region.

Shares in Asia were again up on expectations that Europe will take actions to tackle the debt crisis and further hopes that China and the United States will adopt stimulus measures to boost economic growth. The Australian dollar continues to trade up. Major Chinese data are expected on Thursday, giving investors a better idea to judge whether the world’s second-largest economy is back on the strong growth path after a lackluster first half year. The South Asian Pacific index, MSCI, inched marginally up in trading Tuesday morning.

[I]Copyright: United World Capital[/I]

34

[B]Markets rally; stabile currencies[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

Stock markets in Europe, United States continued to rally through yesterday and in Asia this morning as investors bet on policymakers willingness to act decisively on the euro zone debt crisis and undertake measures to boost economic growth.
Oil prices rose, and reached a 12-week high. Brent crude jumped two dollar to 111. Copper, a growth barometer, is up while the Euro stabilized around 1.24 against the USD. Safe haven bonds suffered from weakening demands. Gold (1610) and Silver (28,05) are trading higher.

The more optimistic market sentiments gave equities a boost globally. The US S&P rose to its highest level since early May and was close to breaking through the technical resistance on 1400. A convincing break through 1400 will signal further buying.
The Asian MICS-index is up for its fourth day in row. The Australian dollar, strongly influenced by commodity prices and economic growth reached a four-month high yesterday. USD has weakened on greater risk appetite as investors again gamble on smaller currencies. The Japanese yen seen as a safe haven is also weaker.

Last week US regulators accused HSBC, the Hong Kong Shanghai banking giant, for money laundering presumably accepting funds from Mexican drug cartels to be white washed. Yesterday New York banking regulators directed a blistering attack on the British Standard Chartered Bank. According to the regulators, the bank had allegedly money laundered over USD 250 Billion in transactions tied to Iran in violation of US sanctions.

These new accusations have raised eyebrows. The initiative against Standard Charter was according to informed sources, taken by an over-zealous freshman. The regulator did neither consult the US Treasury department nor the Federal Reserve before the decision was taken. This has created irritations and also questions whether the action might be politically motivated.
Standard Charter is the third bank after Berkley and HSBC, which US regulators have lashed out against in the last month. This has created questions whether this may be regarded as a witch-hunt against foreign banks competing in the US market.

[I]Copyright: United World Capital[/I]

35

[B]Standard hits back on a “lonely” cowboy[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

Standard hits back on a “lonely” cowboy

Standard Charter bank accused of laundering of Iran-funds in violation of US sanctions, hit back on New York banking regulator, Benjamin Lawsky yesterday. Critics claimed Lawsky had acted as “ a lonely cowboy” revealing information from an ongoing investigation. The Bank was supported by Mervin King of the British Central Bank, who accused Lawsky to march to his own tune, out of step with federal Washington regulators.

The stock prices of Standard Charter tumbled, but recovered when Standard Charter countered the allegations finding them “wholly disproportionate”. This is the third attack by US regulators on major British and international banks within a short period. This has raised eyebrows and led to double standard suspicions that US authorities are treating their own banks differently than their competitors. Back in 2006 a Standard Bank executive director according to leaked information, lashed out at the US and told: “who are you tell us and the rest of the world how to deal with the Iranians”.

The banking rhetoric somewhat overshadowed yesterdays market news. Equity markets in Europe and US were flat, while Asia was up for the fourth day in row helped by strong jobs data and reduced unemployment in Australia. The Japanese Central Bank stated willingness to undertake growth measures. The MSCI Asia Pacific Index is up 3,5 % in three trading days hitting its highest level in three months. Stimulus expectations are driving the upturn.

The Euro slipped back against the USD yesterday trading down from the 1.24 level to 1.2350. EURO/USD is at present at 1.2379. USD/JPY is at 78,4625 marginally up from Tuesday. Oil prices are high with Brent crude trading at 112. Gold and silver are as copper up.

[I]Copyright: United World Capital[/I]

36

[B]Chinese trade data disappoints markets[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

The European debt crisis and global fear for sluggish economic growth in China are back in the headlines. The Euro came yesterday under renewed pressure. EURO/USD lost more than 100 points from its 1.24 level; to recover in Asia trading at 1.2295. A four day stocks rally in Asia came to an abrupt halt as China’s export and import data for July fell short of expectations. The same did trade figures from other Asian countries influenced by the negative growth and recession in Europe.

China’s export in July were up only one percent from previous year, while markets had expected a 8,6 % increase. Imports were marginally lower than the forecast of 7,4 % growth and posted 7,2 percent. The data had a negative impact on commodities, the China reliant Australian dollar and equities. Brent crude is down, but still trading at 112,95 after reaching 113 on Wednesday. Gold lost some dollars and fell to 1612 an ounce. Jobless claims in the US came in better than expected. 361 000 filed claims against the expected 370 000. The US trade balances were also marginally better than forecasts.

The recent data shall raise expectations for concerted economic stimulus measures after the summer holidays in May. After creating a short August rally more based on hopes and wishful thinking than realities and fundamentals, markets are this morning back in a sober mood. Analysts are expressing serious doubts on whether new European summits would be able to get Europe out of its present impasse. The new Greek government seems unable to come to grip with its debt situation.

In spite of the fact that ECB President, Mario Monti, for a short time was able to talk interest rates on Italian and Spanish bonds down, the Euro zone has not even inched closer to solving its sovereign debt and banking crisis. The upward pressure on interest rates levels on the exposed southern European countries shall probably be back in the headlines within soon.

The technical resistance level on Euro/USD is around 1.18 which it reached during the 2008 – 2009 financial crisis, is going to come under new pressure. As long as words are not substituted by concrete measures the downward trend on EURO/USD is most likely going to continue. Don’t be surprised to see 1.10 during the next months; inching towards parity in 2013.

[I]Copyright: United World Capital[/I]

37

[B]Oil hits USD 114 on Israeli comments[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

Oil prices hit a 3-month high in early Asian trading. Brent crude rose above USD 114 a barrel on worries of supply disruption from the Middle East. Israeli Prime Minister, Benjamin Netanyahu, stated yesterday that Israel’s security was threatened by the prospect of Iran obtaining nuclear weaponry. His comments are seen as a direct threat for a possible Israeli strike against Iran’s installations to stop it’s disputed nuclear program. The prospect of an imminent Israeli strike keeps oil markets at bay.

In spite of forecasts of a further slowdown in oil demand due to weaker economic growth in the United States, Europe and China, Brent reached a three month peak of USD 114,28 in early Asian trading to retreat to the 114 mark. Precious metals as Gold and Silver are also trading higher, and the Euro/USD inched marginally up, helped by expectations of monetary easing from the European (ECB) and the US (FED) central banks.

The Japanese Yen is keeping strong, USD/JPY at 78,25. Weak Japanese GDP figures had no negative impact on the Yen. Japan’s economy expanded just 0,3% in second quarter of 2012 as a rebound in consumer spending lose momentum and Europe’s debt crisis weighs on global demand. China, US and Japan have reported weaker growth in the April – June quarter compared with previous quarter figures.

Global stock markets have been rallying in August on raising expectations in financial markets that policymakers will take actions to lift their economies. However, hopes remain dark. The situation is especially troublesome in Europe. As one commentator stated: “Each time I am looking at Europe, the picture is more gloomy. Neither the sovereign and banking crisis, nor the problems facing the EURO, disappear by strong words. As a dark omen news tell that new Greek government again has failed to deliver on its austerity measures, and that German patience – once again - is running out”.

[I]Copyright: United World Capital[/I]

38

[B]Euro/USD gains on speculation[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

EURO/USD rose 50 points to 1.2343 from yesterday as investors hunted for bargains and waited for new economic figures from Europe and the US. Traders halted their bets for a further drop in the Euro. They were also influenced by a lack of fresh news. Recent data have shown that the Euro zone’s debt crisis is eroding global activity. Asian shares rose in morning trade in Asia with the MSCI South Asian Pacific index marginally up 0,3%. Gold is falling on faltering hopes for central bank monetary easing. Brent crude stays above USD 113 a barrel.

New economic figures released this morning show that also German economy is stagnating strongly impacted by the Euro zone crisis. GDP, Gross Domestic Production, figures for Greece show a 6,2 % contraction in the last quarter. It is telling that these serious recessionary figures are hailed for being better than expected! Shares in Europe and the United States were down yesterday on deteriorating global growth prospects. Market volumes are weak. Expectations for further central bank growth stimulus seem for the moment to be the only real factor that supports investor’s sentiment and keep up the stock markets.

Soaring grain prices caused by the worst US drought in more than 50 years and poor crops from the breadbasket in the Black Sea area are simultaneously creating global worries for a serious food crisis. The G-20 (the group of the twenty leading industrialized countries) is planning for an emergency meeting in the end of the month. The global society is eager to avoid a repetition of the pike in food prices, which triggered riots in poor countries in 2008.

The G-20 has, however, no sanction means at its disposal. The G-20 can to try convincing member countries like the US to halt its ethanol production, and urge upon Russia not to impose an export ban on corn as it did two years ago. There is nevertheless little hope for concerted actions. The group is severely split big consumers and producers interests.

[I]Copyright: United World Capital[/I]

39

[B]Dollar higher on upbeat retail data[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

The dollar traded near a one-month high against the Japanese yen on Wednesday spurred by surprisingly strong US retail sales. Together with the better employment numbers presented in the beginning of August, the new data have at least for now dampened talk of more monetary stimulus from the US Federal Reserve, FED. The reduced likelihood for monetary easing had an immediate impact on the Asian markets, which fall in morning trades. The Chinese markets were especially hard hit. The Hang Sheng Stock index fall more than 1%. USD/JP trades at 78.75 after reaching 78.93.

The broad based expansion in retail sales helped bolster the view that the slowdown seen in US economic growth during the second quarter of 2012, was only temporary. The retail data led to a jump in a US Treasury yields. If the US consumer inflation and industrial data presented later today, are positive, the dollar is likely to continue up against yen and other currencies.

The Euro was little affected by the newest US-data. Euro/USD is trading at 1.2325. The Euro has been supported by expectations that the European Central Bank, ECB, will take measures to reduce the crippling borrowing costs for Spain and Italy. Short term technical charts look favorable to the Euro, trading in an upward channel between the 1.2042 low reached in the end of July and the 1.2444 high reached last week.

There are, however, no changes in the longer term Euro picture. Capital continues to flow out from Greece. The New Greek government has neither been able to carry through promised austerities. Many observers therefore see a Greek Euro-exit as a foregone conclusion which European policy makers already are relating to. The big test for the Euro is Spain, and how the country shall handle their debt. In the medium perspective the Euro is heading by year’s end heading towards 1.15 against the dollar. The trend towards parity is equally clear in a year’s time.

[I]Copyright: United World Capital[/I]

40

[B]Israeli attack rumors have oil skyrocketing[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

Brent crude rose to a three month high above 116 yesterday on concerns over disruptions to supply from the Middle East. Oil storages in the United States, the world’s top consumer, fell also more than expected. Worries about a conflict over Iran’s disputed nuclear program have escalated with reports on plans for an imminent Israeli attack on Iranian nuclear reactors. Rumors telling that Israel would attack prior to the US elections, had oil prices to jump more than two dollars a barrel. There are also growing concerns that the Syrian situation shall seriously affect neighbor countries. Saudi Arabia yesterday ordered its citizens to leave Lebanon.

US stocks, the dollar and most commodities rose on Wednesday while the Euro and US Treasury bills fell the US industry output rose 0,6% in July. The report followed strong July retail sales and employment data released earlier. Although US economic data remain mixed, signs of stabilization and a slow upward trend continue to emerge. This development has scaled back expectations for new economic stimulus from the US Federal Reserve, FED, on its meeting in September.

Asian stocks were flat in today’s morning trading. The Chinese government indicated new stimulus measures. Prime Minister Wen Jiabao stated that slowing inflation had given China more room for economic growth stimulus measures. This lifted stocks and after new published figures had shown that foreign investments in China dropped with 8,7 % in July.

USD continued to raise against Japanese yen. JPY fell to 79,25 losing more than one percent to dollar over the first days of the week. Gold prices are stabile on 1605. EURO/USD is stabile at 1.2280 with continued downward pressure on Italian and Spanish bond’s interest rate levels.

[I]Copyright: United World Capital[/I]