MARKET ANALYSIS 29/07/2016
Nikkei down, yen rises after BOJ decision
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Land of the rising yen: The Bank of Japan has announced modest stimulus measures, to go along with PM Abe’s decision to inject 268 trillion yen into the Japanese economy. The BOJ will up its annual purchase of ETFs from 3.3 trillion to 6 trillion yen, but left interest rates unchanged. The decision sent the Nikkei spiraling down, losing more than %1.5, and the yen on the rise, adding approx. 2.4% to its value against the dollar. Overnight implied volatility for the dollar-yen climbed to 53%, the highest it has been since 2008, presenting some very interesting options for traders.
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Gold climbing as paper currencies fluctuate
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Is it time for a new gold rush? With both the Fed and the BOJ making major announcements recently, many traders are looking for a sense of security found in precious metals. As July comes to a close, gold is rising modestly, and will most likely finish the month adding more than 1% to its value. Other precious metals are also affected, with platinum rising 1.2% and palladium adding 0.9% to its value. Silver also came up big in July, rising 8% overall, its second straight monthly gain. As the trend continues, some traders may be inclined to spend more on precious metals.
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Europe opens higher ahead of earnings reports
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As the month’s last day of trade opens in Europe, the market reacts to the BOJ’s decision and prepares for more European earnings reports. The London FTSE index opens 18 points higher, the German DAX is up 81 points, and the French CAC is up 30 points. Some major European companies are announcing their earnings today, including Barclays, UBS, and Banca Monte dei Paschi di Siena. Yesterday, Google'’s parent company Alphabet shared its earnings report, exceeding analysts expectations, showing $21.5 billion in revenue. More companies are expected to announce their earnings today.
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