28 February 2013: Bernanke and data lift Wall Street


Stocks rose on Wednesday with major indexes posting their best daily gains since early January, as Federal Reserve Chairman, Ben Bernanke, gave robust support for continued stimulus policy and data pointed to modest economic improvement. In his second day before a Congressional committee, Bernanke defended FED’s buying of bonds to keep interest rates low to boost growth. Bernanke’s comments helped market rebound from its worst decline since November. Dow Jones Industrial closed at a level not seen since 2007.

A relatively smooth auction of Italian government bonds further helped temper concerns about the country’s political deadlock. The Euro held its ground against both dollar and Japanese yen on Thursday. The common currency edged up 0,1% to USD 1.3147 after steep losses following the Italian elections. The Euro hit an eight-week low on 1.3018 on Tuesday. Solid sales of Italian government bonds yesterday helped soothe the jitters that the political deadlock could destabilize Europe’s second biggest sovereign debt market.

Strong US business spending data also boosted investors’ sentiment easing worries about looming US fiscal spending cuts and prompting the yen to resume its decent after a brief spell of sharp gains earlier in the week. In Washington positions between President Barack Obama and congressional leaders over the budget crisis hardened yesterday as last ditch talks to prevent harsh automatic spending cuts beginning March 1st, failed to make substantial progress.

British sterling (GBP) is still weak trading at 1.5169 against the dollar. The Australian dollar is stronger and oil has regained some ground. Brent crude is trading above USD 112 a barrel. Also gold is somewhat stronger trading close to the critical USD 1600 level an ounce.

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27 February 2013: Berlusconi “derailed” world stock markets



Yesterday we again could not see a uniform dynamics on the world stock markets. The European indexes fell off on news on outcome of the Italian elections, having lost on the average 2,5%. At the same time the American indexes could show ascending dynamics, having added about 0,7%.

There were a few reasons for activity of buyers in the American market. First, speech of the head of the Federal Reserve System (FRS) Ben Bernanke. The banker sounded the position concerning influence of a new round of the program of quantitative easing (QE3) on economy of the USA. Bernanke focused attention of investors on advantages of QE3, among which economic recovery against control of inflation at the level of 2%. According to the head of FRS, benefit from soft monetary policy outweigh the related risks so turning of stimulating measures is not necessary at the current stage.

Besides that, another source of a positive was data coming from the market of real estate of the USA. So, sales of new houses in the country unexpectedly grew by 15,6% in annual expression. Let’s note that last year became the most successful in the housing market in the USA after 2009. In 2012 growth of sales of new buildings became maximum since 1983, having made 19,9%. It is necessary to note, that we can expect that real estate market will continue to develop this year as well, but definitely much slower.

Meanwhile, in Europe the main subject for discussion there are parliamentary elections in Italy. They caused a lot of noise and confusions in the financial markets. Profitability of the Italian bonds in the secondary market flew up to 4,8% that became a maximum level since the beginning of December, 2012. Besides, political risks in Italy led to euro exchange rate falling to a minimum level since the beginning of year. This morning, we can see EUR/USD pair traded on a level of 1.3076.

Risks of strengthening of debt crisis dragged off down world prices for oil. Brent is bargaining on a level 112.66$ and WTI on 92.78$ per barrel.

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26 February 2013: Italian elections became a reason for correction in the markets



Yesterday the world markets showed different dynamics. So, the European indexes finished Monday’s trading session moving upwards. Meanwhile, the American indexes began week with essential decrease. As a result of sales the Dow Jones and S&P 500 indexes could not keep the key levels – 14000 and 1500 points accordingly. Following the results of Monday the Dow Jones index lost 1,55%, the S&P 500 index lost 1,83%.

Markets were correcting due to the news coming from Italy. It became known that following the results of processing about 90% of bulletins two parties received identical result. The victory was won by Pierre Bersani’s left-centrist coalition and Silvio Berlusconi’s right-centrist coalition. Let’s remind that Bersani already declared commitment to the economic reforms which are carried out by the old government led by Mario Monty. Berlusconi’s victory is extremely undesirable for the Eurozone.

One of the most expected events for today is speech which will be given by the head of FRS B. Bernanke to bank committee. The head of FRS in his speech, most likely, will give an assessment to carried-out stimulating programs of FRS, namely repayment of assets as after announcement of protocols from the last meeting of FRS fears about early turning of programs increased.

USD/JPY pair yesterday has been decreasing from a level of 94.7 to a level 91, losing 4%, but at the current time is back to a level of 92.2. Most likely such movement was caused by strong weakening of euro and, respectively, a capital overflow in traditionally protective currencies – dollar and yen. EUR/USD is traded on a level 1.3062.

On Monday we have seen rather volatile session in the oil market where the positive news on oil import coming from China (+7% in January), have boosted price back to $115.8, but at closing price went again back and this morning Brent is losing 0.63% and traded on a level of $113.719. 

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25 February 2013: Moody’s reduced a rating of Great Britain with AAA to AA1



The trading session on Friday has passed more positively at the stock exchanges of the USA and Europe comparing to the days before. Investors returned to purchases, without having paid attention to statements of European Commission which reduced the forecast on growth of world gross domestic product in 2013 from 3,3% to 3,2%. Thus figures across Spain (-1,4% at a budget deficit on 6,7% from GDP), Italy (-1% at 2,1%), Portugal (-1.9% at 4,9%) really depress. However, this news didn’t confuse investors, and the European indexes FTSE (+0,7%), DAX (+1,03%), CAC (+2,25%), MIB (+1,4%) carried out all day in “a green zone” and finished the session of a steady growth.

The American indicators: Dow Jones +0,86%, S&P +0,88% and NASDAQ +0,97% also finished week with a rebound, without looking neither at inconsistent information from Europe, nor on rising to the USA “the fiscal cliff” to which there is only a week.

Statistics from China added a negative sentiment in the markets this morning, where the PMI index from HSBC, in February sharply decreased from the maximum reached in last month for 2 years, but remained above important level of 50 points. Thus Asian indexes began new week in “a green zone”, and NIKKEI arranged the next rally for 2% on news about planned appointment to the post of the head of Bank of Japan H. Kuroda, the known supporter of active stimulation of economy.

The situation in world economy still does not show a lot of optimism. The news coming from Moody’s published in the night from Friday to Saturday became a clear proof of it. The agency reduced a rating of Great Britain with AAA to AA1. The reason of this decision of Moody’s called weakness of the British economy which, according to agency, will keep sluggish growth rates at least till 2016.

Oil, however, moderately becomes cheaper today under pressure of a negative. Brent drifts next to a level 114.24, adding 0.12% and WTI is stable on 93.209. EUR/USD pair is traded on a 1.3216 this morning.

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22 February 2013: Weak data support continued easing



Global markets are still bewildered and confused as to further direction after the steep plunge Wednesday. Asia is marginally up in morning trade. Yesterday’s increase in jobless claims, weak factory activity and consumer data were a stark reminder on the real health of the US economy. It seems, however, overly optimistic to give up bond buying and monetary easing. Federal Reserve’s (FED) published January meeting records, turned markets upside down and raised questions whether these policies will be terminated earlier than planned.

The new data presented convincing arguments in favor of continued monetary easing. FED is currently buying USD 85 billion in bonds monthly. It has earlier stated that these purchases are going to continue until the labor market improves substantially. 6,5% unemployment has been set as a target. FED records demonstrates that its members are increasingly divided over the wisdom of these policies. The “Doves” want to go on with monetary easing. The traditionalist don’t. This division rattles global markets.

Jobless claims increased last week with 20 000 as consumer prices rose 1,6% and business activity index plunged. These numbers make it necessary for FED to think twice before giving up on the growth stimulus policies. Commodities and precious metals which along with stocks were big losers on Wednesday, have recovered as a result of technical corrections after the steep fall earlier in the week. Gold was especially strong hit and lost its shine as safe haven. Gold is trading 0,5% up at 1582. Oil prices have stabilized with technical graphs still pointing down.

USD continues to gain ground, but slower than yesterday. Euro/USD trades at 1.3216. USD/JPY is flat on 93,3075. The Scandinavian krones have lost substantially against the USD during the week. USD/NOK trades at 5,66 compared with a low on 5,43 earlier in February. The Danish krone (DK) is for the first time in weeks trading higher than the Norwegian krone (NOK).

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21 February 2013: FED minutes scare markets



Global markets turned upside down and brought the dollar back in the driver’s seat as a number of US Federal Reserve (FED) officials urged to slow down or stop buying of bonds (Q4). The minutes from last month’s meeting reveal that FED-members want to stop the buy bonding before the program’s effectiveness has been fully tested.

The prospect of a halt in bond buying sent stocks sharply lower. The S&P 500 index suffered its steepest decline since November. Investors were split and bewildered whether FED doves, eager to spur growth; or more cautious colleagues were in command. The ambitious 6,5% unemployment target originally set by FED seems at risk. The new development has turned markets extremely nervous and volatile. What Wall Street wants is an absolute sign that FED will continue with bond buying for the indefinite future.

The dollar skyrocketed after the minutes were published and gold and silver prices fell to its lowest level since July. Simultaneously it was rumored that a major hedge fund has liquidated large commodity positions. London copper fell to its lowest level in two months. Asian stock markets also tumbled as oil prices fell. Brent crude is down USD 2 a barrel. The MSCI index of Asia-Pacific stocks fell 1,3% after weeks shining.

One of the hardest hit currencies were once again Sterling Pound (GBP) which continues to slide. During the week USD/GBP is down from 1.5475 to close to 1.52. Euro/USD has dropped to 1.3250. USD/JPY, both currencies regarded as “safe havens” when markets are volatile, traded marginally higher at 93.55.

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20 February 2013: Mergers keep US-stocks high



Both Dow Industrial and the Standard & Poor’s 500 index gained during yesterday’s session, and closed near all-time highs. Dow tipped over the 14 000 mark and ended at 14 035. The technology index, Nasdaq, was up 0,68%. A surge in mergers have stimulated market activity. There have lately been several acquisitions in a capital strong market. Fourth quarter earnings for S&P rose 5,6%. Tuesday it was rumored that the second biggest office retailer, Office Depot, was in merger talks with a smaller rival. 

Asian stocks rose to its highest level since August 2011 on improved global economic outlook and increased risk appetite. The South East Asian MSCI-index added 0,7% and rose for a third day in row spurred by a strong technology sector. Corporate earnings have been generally positive. A shift from defensive to cyclical stocks have also helped stock markets. Australian stocks continue to rise on better commodity perspectives.

The Japanese yen regained some ground, but remained jittery. USD/JPY was swinging in a narrow range between 93,50 and 94 on concerns whether Japan may be able to pursue its strong advocated reflationary policies. The one week delay in the appointment of a new Governor for Bank of Japan, has also raised concerns. The Euro has gained ground both against yen and USD. Euro/USD trades again above 1.34.

British Sterling (GBP) is under continuous pressure. GBP lunged to a  seven-month low at 1.5414 yesterday. USD/GBP trades at 1.5444. The records from the last meeting in Bank of England (BOE) are expected to be released later in the week. It is said that the records contain willingness to higher inflation and monetary easing. This comes among speculation that United Kingdom soon could lose its triple A-rating.

The trend in the commodity markets is positive. Copper is up. US crude steadied at USD 96,70 a barrel. Brent eased 0,2% to 117,34. Precious metals are under  strong downward pressure after one of the leading market makers, George Soros, last week sold substantial quantities of gold.

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MAYZUS website is now available in French


MAYZUS Investment Company is happy to announce that our corporate website and client cabinet are now available in French. For our clients it also means access to daily market reviews, email notifications and corporate news in their native language.

At the moment, Mayzus.com is available in English, German, Russian, Spanish, Portuguese, Latvian, Czech, Chinese, Malay, Swedish, Polish and now French. Arabic, Estonian and Lithuanian are within our next plans.

We will be glad to hear your feedback or questions via LiveChat or support@mayzus.com. Follow us on the website and corporate Facebook page in order to stay informed about the Company’s latest news and promotions.

19 February 2013: No currency war, Draghi claims


In the aftermath of the G-20 meeting in Moscow leading central bankers along with the International Monetary Fund (IMF), have strongly dismissed that there is a currency war. European Central Bank President Mario Draghi tried his best to take the heat of the debate, talking to European lawmakers in Brussels yesterday; ECB is closely following the strength of the Euro, but here is no currency war, Draghi claimed.

He admitted, however, that Euro’s exchange rate is important for growth and inflation in the euro zone. He feared that inflation may be pulled down, too, far. The exchange rate’s impact on inflation is closely watched. In its statement Saturday G-20 stated that there are none competitive devaluations between leading economic powers. Japan escaped open criticism for its expansive policies. Along with the US Japan has been under fire for conducting loose monetary policies.

Draghi stressed that the exchange rate movements were not explicitly targeted against competitors. They are mainly results of macroeconomic policies to boost domestic economies. Japan is trying to create growth and turn decade’s stagnation around. Draghi demonstrated understanding for such moves, but urged on the other hand world partners to exercise a very, very strong verbal discipline.

Whether such verbal constraint would work is early to say. But over the last 24 hours at least currency fluctuations have been minimal. Euro/USD is trading at 1.3354. USD/JPY is hovering below 94 and USD/GDP, another big loser over the last days, stays flat at 1.5475. There are small changes in oil and commodity prices. Stock markets in US was closed yesterday due to George Washington ’s Birthday. Asian shares barely moved. The Japanese Nikkei fell 0,5% eyeing appointment of a new BOJ director and risks in the euro zone.