Daily market overview by IFC Markets

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[IFCMarkets]

US markets rose sharply on Tuesday ahead of the Federal Reserve’s two day policy meeting statement on Wednesday. The S&P 500 added 23.42 points, or 1.2%, to 1,985.05. Broad-based gains were led by the energy and industrials sectors, which recovered some of the steep losses from Monday. The Nasdaq Composite rose 78.36 points, or 1.8%, to 4,564.29. The Dow Jones Industrial Average jumped 187.8 points, or 1.1%, to 17,005.75, closing above the 17,000 level for the first time since October 3. Investors are clearly expecting that the Fed will not adopt a hawkish stance on tightening the monetary policy and will likely reinforce its stated willingness to wait longer before raising interest rates. In its previous statement the Fed had indicated the rates will remain low for a “considerable time”, and the market consensus was the rates would not be hiked before mid 2015. The Fed forecasts have estimated the US economy will grow around 3 percent this year with inflation rising gradually to Fed’s target level of 2 percent. But slower than expected global growth presents a challenge for US economic recovery, as indicated by recent economic data. As Commerce Department reported yesterday, the demand for US made capital goods excluding aircraft fell 1.7 % in September against an expected increase of 0.6%, second month in row. It is the biggest drop in eight months. A second report indicated US home prices grew by less than forecast in August, according to S&P/Case-Shiller’s 20-city composite index. A third report by Conference Board said the index of consumer attitudes increased to 94.5 in October, the highest reading in seven years. Investors clearly discounted poor economic reports by focusing on improved consumer optimism and confidence in the short-term outlook for the economy. The weak capital goods orders and house price data indicate a slowdown in activity, further indication of unsteady US recovery. As a result of slower than expected global growth and slower US recovery investors have recently pushed their expectation for an initial interest rate hike back to next year, although some top Fed officials recently said they think the US Central Bank is still on track to bump up borrowing costs in mid 2015. Investors will be reading closely the statement the Fed will issue at 19:00 CET to see whether it continues to refer to “significant” slack in the US labor market and whether it retains language indicating rates will remain low for a “considerable time” as widely expected.

European stocks rebounded on Tuesday after yesterday’s losses as better-than-expected results from a number of blue-chips including pharmaceutical group Novartis and bank UBS helped lift sentiment. The German DAX rose 1.9 percent. The gains of French CAC and Britain's FTSE indexes were more modest at 0.4 percent and 0.6 percent respectively as a result of steep falls in French pharmaceutical Sanofi and UK-listed Standard Chartered Bank after they reported results that missed expectations. Stronger corporate reports have propped investor optimism after the market hit a low for 2014 just under two weeks ago. Asian shares advanced to one-month highs on Wednesday, helped by US market rally. Japanese stocks rose after better-than-expected industrial production data and upbeat earnings figures bouyed investor sentiment. Industrial production rose by 2.7 percent in September, the trade Ministry reported, the fastest pace since January. The Nikkei share average jumped 1.4 percent. MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.7 percent, led by a 1.2 percent rise in South Korean shares.

West Texas Intermediate crude rose as supply and recent economic data gave rise to speculation that fuel demand will increase in the US, the world’s biggest oil consumer. US crude stockpiles dropped by 3.7 million barrels, the American Petroleum Institute reported yesterday. And the data from the Conference Board showed consumer confidence in US advanced to a seven-year high in October, providing indication of better US economic outlook. WTI for December delivery rose as much as 41 cents to $81.83 a barrel in electronic trading on the New York Mercantile Exchange and was at $81.71 at 1:07 pm Seoul time. Brent Oil for December settlement gained as much as 35 cents, or 0.4 percent, to $86.38 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $4.60 to WTI, compared with $4.61 yesterday.

Gold traded above a two-week low as investors assessed the health of the US economy before the Federal Reserve concludes a policy meeting. Gold for immediate delivery dropped to $1,222.62 an ounce yesterday, the lowest price since October 15, before rebounding as US data showed durable goods orders unexpectedly declined. It traded at $1,230.01 an ounce by 12:16 pm in Singapore from $1,228.52 yesterday. Russia joined Turkey in adding bullion to reserves according to the International Monetary Fund data. Silver for immediate delivery traded at $17.235 an ounce from $17.214. Spot platinum rose 0.2 percent to $1,269.75 an ounce from $1,266.75. Palladium was little changed at $793.93 an ounce after a four-day increase.

 

[IFCMarkets]

The US markets slipped on Wednesday after the Fed statement confirmed the expected completion of the bond buying stimulus program and added language that ties the timing and pace of any future rate hike to incoming economic data. The S&P 500 closed 2.75 points, or 0.1%, lower at 1,982.30. The Nasdaq Composite Index, which was already under pressure from Internet stocks lost 15 points, or 0.3%, to 4,549.23. Meanwhile, the Dow industrials dipped 31.44 points, or 0.2%, at 16,974. While the end of Quantitative Easing was widely anticipated, investors were surprised with the Fed’s upbeat view on the labor market. The Fed’s view implies the U.S. economy is on firm footing but the markets had hoped for more signs that a low-rate policy would be maintained for an extended period. The Fed characterized the labor market conditions by stating that the range of labor market indicators suggests the underutilization of labor resources is gradually diminishing. This is an important departure from previous statement in which it had described the US labor market slack as “significant”. Conditioning the future rate hikes on US economy performance the Fed nevertheless reconfirmed that interest rates would remain low for a "considerable time" following the end of the bond purchases this month. Together with an assessment of improved labor market conditions the statement explicitly stated for the first time the Fed could raise interest rates sooner than markets have forecast, if the economy grows faster than the bank projects. Fed officials didn’t refer to recent financial turmoil or global economy weakness and the risks they pose to US economic growth, instead they repeated language from September that the likelihood of inflation running persistently below 2 percent has diminished somewhat. The statement expressed confidence the US economic recovery would remain on track despite signs of a slowdown in many parts of the global economy. The investors were clearly expecting a more dovish assessment, and were particularly surprised by the Fed’s statement of possible sooner rate hikes than currently anticipated “if incoming information indicates faster progress toward the committee's employment and inflation objective than the committee now expects”. Fed's Head Janet Yellen speaks in Washington today at 14:00 CET. And new economic data are coming out today in US: at 13:30 CET the third quarter US Gross Domestic Product estimates, the Core Personal Consumption Expenditure (QoQ) for the third quarter, Continuing Claims for the week ended October 18 and Initial Jobless Claims for the week ended October 25 will be released.

European stocks advanced on Wednesday ahead of the statement from the US Federal Open Market Committee. France’s CAC 40 index rose 0.2% to 4,120.37. Germany’s DAX 30 index gained 0.5% to 9,111.09. The U.K.’s FTSE 100 index picked up 0.8% to 6,455.85. The Stoxx Europe 600 index added 0.3% to 329.36, on track for its highest closing level in three weeks. No major economic data were expected to be released during the day and markets anticipated the FOMC statement to announce the end of the quantitative easing program and issue a dovish guidance on interest rates. Stocks in Asia rose Wednesday ahead of a U.S. Federal Reserve announcement on quantitative easing and after a rally on Wall Street on Tuesday. The Nikkei gained 1.5% to 15,553.91, helped by a stronger dollar and earnings from heavyweights such as Nomura Holdings and Hitachi Construction Machinery. On Thursday morning stocks in Japan rose as the Federal Reserve’s statement that the U.S. labor market was improving and interest rates would remain low for a "considerable time" boosted investor optimism about US economy. The Nikkei benchmark rose 0.7 percent to 15,665.24 points by mid-morning, the highest since October 9.




West Texas Intermediate Crude Oil fell from a one-week high after data from Energy Information Administration, the Energy Department’s statistical arm, showed crude stockpiles rose as output surged to a record high in the US, the world’s biggest oil consumer. WTI for December delivery dropped as much as 45 cents to $81.75 a barrel in electronic trading on the New York Mercantile Exchange, and was at $81.84 at 4:40 p.m. Seoul time. Brent Oil for December settlement declined as much as 32 cents, or 0.4 percent, to $86.80 a barrel on the London-based ICE Futures Europe exchange. The contract rose 1.3 percent yesterday.

Gold tumbled as markets priced in the reduced expectation of inflation after the Federal Reserve ended its bond purchasing program. Gold for immediate delivery dropped 1.4 percent to $1,211.68 an ounce at 3:49 pm New York time, heading for the biggest drop since October 3. Prices touched $1,208.50, the lowest since October 8. Goldman Sachs Group Inc. predicts gold prices will drop to $1,050 over the next 12 months as the US economy accelerates. Silver futures for delivery in December added 0.2 percent to $17.264 an ounce on the Comex. On the New York Mercantile Exchange, palladium futures for delivery in December advanced 0.9 percent to $800.70 an ounce. Prices rose for a ninth straight sessions, the longest rally since August 18. Platinum futures for January delivery gained 0.2 percent to $1,269.20 an ounce.

 

[IFCMarkets]

The US markets ended Monday’s session marginally lower. The stock indexes were dragged down by falling energy stocks. Investors are getting rid of energy and materials sector stocks on the backdrop of falling oil prices. The S&P 500 hit an intraday record at 2,024.54, but finished the day marginally lower at 2,017.81 with the S&P 500 energy sub sector losing 1.7%. The Dow Jones Industrial Average hit an intraday record of 17, 398.54, but ended lower, losing 24.28 points, or 0.1%, and closed at 17,366.24. Meanwhile, the Nasdaq Composite defied the general trend and finished up 8.17 points, or 0.2%, to 4,638. US economic data released on Monday were mixed and failed to boost investor sentiment. The Institute for Supply Management manufacturing survey index rose in October, but the final PMI index and construction spending fell. The ISM survey results showed the October manufacturing index jumped to 59% from a reading of 56.6% in September. At the same time the final reading of Markit’s US manufacturing purchasing managers index dropped to 55.9 in October from an advance reading of 56.2 and a September level of 57.9. The data on construction spending were also disappointing as they indicated a 0.4% fall in September against a forecasts for a 0.7% increase. Manufacturing data from Europe and China were also disappointing. At the same time, experts are optimistic about US stock market prospects, pointing to healthy earnings growth and the decision by the Japanese Government Pension Investment Fund to increase its holdings of foreign stocks to 25% of its monetary base (from roughly 16% currently). The reports of nearly 375 S&P 500 companies indicate earnings are growing at a nearly 10% pace, and revenue is up 4% to 5%, beating expectations. Furthermore, experts estimate the Japanese Government Pension Investment Fund will allocate about $60 billion for new purchases of non-Japanese stocks and that half could be invested in US stocks by the end of 2015 expansion, which would benefit US equity markets next year. A couple of economic reports are due today. Today at 14:30 CET US Trade Balance and Factory orders for September will come out. The tentative forecast is slightly negative, with the negative Trade Balance widening to an expected -$40.2 billion from -$40.1 billion in the previous month. The Factory Orders are expected to fall by 0.6% against a 10.1 % reduction in the previous month.

European stocks fell from a four-week high on disappointing euro zone and US economic data. Investors were disappointed by the results of Markit’s PMI survey for euro zone which indicated manufacturing activity in the euro zone grew slightly more slowly than thought last month and Germany recorded only marginal expansion while France and Italy contracted. The FTSEurofirst 300 index of top European shares ended 0.86 percent lower at 1,340.38 points after rising to as much as 1,355.16, the highest since early October. As experts note, the weak economic data increase the probability that the European Central Bank will take more aggressive measures to support the Eurozone economy. Stocks in Asia were mixed on Monday following the report on Saturday that China’s official manufacturing gauge came in at a five-month low of 50.8 for October. Markets in Australia and Hong Kong fell slightly while Shanghai gained. Tokyo was closed for a holiday.

Oil prices fell on Monday on weak global demand, stronger dollar and fears Saudi Arabia could announce another price cut after last month it slashed prices. December Brent crude oil, which is widely seen as the global oil benchmark, fell $1.58 to $84.28 a barrel on London’s ICE Futures exchange. Oil extended an early decline after the reported increase of Institute for Supply Management’s US October manufacturing index pushed the US dollar index up 0.5%. Stronger dollar added further pressure on oil after data over the weekend showed China’s official manufacturing PMI dropped to a five-month low of 50.8 in October from 51.1 in September, indicating China’s economy is slowing down. China is the world’s second-largest oil consumer, and sagging oil demand, due to its slowing economy, has been partly responsible for the slump in global oil prices. And today Saudi Arabian Oil Co., known as Saudi Aramco, lowered the cost of its crude to the US. Aramco increased the cost to Asia and Europe. The price cut for US importers means the largest OPEC producer wants to preserve market share in US, which was falling recently due to expanding domestic production which has increased 54 percent in the past three years.

After slumping 2.3% to finish at $1,171.60 an ounce last week, gold fell again on Monday. Gold for December delivery lost $1.80 to $1,169.80 an ounce. Rising dollar, helped by improving US economy and surprise announcement of the Bank of Japan on Friday about expanding its quantitative easing program, makes commodities more expensive. With no increase in global economic uncertainty the demand for gold and other safe haven assets has been declining recently. Elsewhere in metals trading, January platinum closed up $4.80, or 0.4% to $1,240 an ounce, while December palladium rose $11.45, or 1.45.%, to $803.25 an ounce.

 

[IFCMarkets]

Today at 14:30 (CET) we expect the release of the American and Canadian Trade Balance. This indicator is the volume ratio of exports and imports. If the difference in volume is positive, then the trade balance is positive (surplus). A surplus (or a reduction in deficit) is a favourable factor for the national currency appreciation, and it has a significant impact on the market. A simultaneous data release by two trading partners suggests a consistent interpretation. For this reason we can expect a new volatility momentum of theUSD/CAD currency pair.

Here we consider the USD/CAD on the H4 chart. The price breached the H4 bearish trend line in the direction of the green zone. New lows and highs are located above the previous ones, and that suggests the formation of a new bullish trend. After the Parabolic historical values crossed the H4 trend line, DonchianChannel reversed upwards, so this signal confirms the market sentiment. The only alarming signal comes from RSI-Bars oscillator: the last bar broke the bullish trend line downwards. The breakout can be confirmed as false only after the oscillator level crossing at 77.6035%. We expect it to happen at the same time or before the breakout of the price level at 1.13830. This mark can be used for opening a pending buy order. Currently, the bullish candlestick pattern "absorption" is formed near that level (marked in yellow). It confirms the short-term bullish trend. Stop Loss is recommended to be placed below the fractal support level at 1.12557.

After position opening, Stop Loss is to be moved after the Parabolic values, near the next fractal low. Updating is enough to be done every day after a new Bill Williams fractal formation (5 candlesticks). Thus, we are changing the probable profit/loss ratio to the breakeven point.

PositionBuy
Buy stopabove 1.13830
Stop lossbelow 1.12557

Dear traders. You can see the detailed report of the author’s account by clicking here.

 

[IFCMarkets]

US stocks declined on Tuesday as the sell-off of energy shares dragged the S&P500 index lower. Investor sentiment was not helped by the news that the European Commission cut its forecast for growth of domestic product for the 18-country euro zone to 0.8% in 2014, from a previous forecast of 1.2%, in the spring. The downward revision of euro zone economic growth rate is the latest indication of slowing global growth after recent data on Chinese Purchasing Managers' Index showing Chinese factory activity unexpectedly fell to a five-month low in October, reinforcing views that the country's economic growth is slowing. The unexpected decision by the Saudi Arabia on Monday to cut oil prices for US resulted in a further slide in oil prices, putting a further pressure on energy stocks. The S&P 500 finished 5.71 points, or 0.3%, lower at 2,021.10. After swinging between small gains and losses the Dow Jones Industrial Average finished the session with a 0.1% marginal gain at 17,383.84. The Nasdaq Composite shed 15.27 points, or 0.3%, to 4,623.64. Most of the companies having published their earnings reports, investors will be focusing on economic data and the ECB meeting on Thursday. The Commerce Department said on Tuesday the trade deficit increased 7.6 percent to $43.03 billion instead of narrowing as had been expected. The surprising spike in the trade deficit is likely to reduce third-quarter growth when the government revises the report later this month. Today at 13:00 CET the Mortgage Applications for the week ended October 31 will be released by Mortgage Bankers Association in US. At 14:15 CET the Automatic Data Processing, Inc publishes the Non-Farm Employment Change in US for October, the tentative forecast is positive. At 16:00 CET the ISM Non-Manufacturing Composite index for October will be released in US, the tentative outlook is positive. At 15:15 CET Fed's Kocherlakota speaks on Monetary Policy in Minnesota, and at 15:30 CET Fed's Lacker speaks on Financial Stability in Washington, while Fed's Rosengren speaks at Conference in Lima.

European stock markets retreated from earlier gains and slumped in late trading on Tuesday after reports that central bankers in the euro area planned to challenge European Central Bank President Mario Draghi over his secretive management style. Investors are concerned that the division within the ECB will negatively affect the European monetary authority’s ability to implement bold policy actions to fight deflation and stimulate economic growth in euro zone. The cut by the European Commission to its growth forecast for the euro zone didn't help bolster investment optimism either. The revised forecasts predict the euro zone economy will expand 0.8 percent this year, 1.1 percent next year and by 1.7 percent in 2016 - a level the Commission had said six months ago would be achieved next year. Across Europe, Britain's FTSE 100 fell 0.5 percent, Germany's DAX dropped 0.9 percent and France's CAC fell 1.5 percent. In Asia, Nikkei surged 2.7% to a seven-year high Tuesday, after the Bank of Japan’s surprise decision on Friday to expand bond purchasing program to ¥80 trillion (around $700 billion) annually from ¥60-¥70 trillion.

Oil continued falling as expanding supply outpaces consumption growth limited by slowing global economy. West Texas Intermediate crude oil for December delivery declined as much as 45 cents to $76.74 a barrel in electronic trading on the New York Mercantile Exchange and was at $76.81 at 3:10 pm Singapore time. The contract lost $1.59 to $77.19 yesterday, the lowest close since October 2011. Brent for December settlement slid as much as 73 cents, or 0.9 percent, to $82.09 a barrel on the London-based ICE Futures Europe exchange. Prices are down 26 percent in 2014. The major producers are not willing to cut production. According to the US Energy Information Administration, oil output in US increased to 8.97 million barrels a day through October 24, the fastest pace in more than 30 years. Saudi Arabia cut its December sales price for Arab Light crude to the US Gulf Coast by 45 cents a barrel, a company statement on November 3 showed. This move is interpreted as a signal Saudi Arabia will be fighting for his US market share, defending it from shale producers. Saudi Arabia’s Oil Minister Ali Al-Naimi is scheduled to attend a climate event in Venezuela starting on November 6, according to embassy officials in Caracas. As experts note, the Saudis are trying to bring OPEC’s smaller members in line before the group’s November 27 meeting in Vienna.

Corn dropped for a third day to reach a one-week low on speculation that dry weather in the U.S. will allow farmers to accelerate harvesting of a record crop. The contract for December delivery lost 0.7 percent to $3.62 a bushel on the Chicago Board of Trade, the lowest level since October 28. Soybeans for January delivery retreated 0.3 percent to $10.07 a bushel after dropping 1.9 percent yesterday. About 83 percent of soybeans were harvested as of November 2 from 70 percent a week earlier, matching the five-year average. Wheat for December delivery fell 0.2 percent to $5.2925 a bushel after declining 1.4 percent yesterday.

 

[IFCMarkets]

World stock markets rose yesterday. S&P 500 and DJI even hit new historical highs. In general, the sideways trend is observed on the global markets since the beginning of the week, as the US labor market data for October will be released tomorrow.

ADP Non-Farm Employment Change in October was released on Wednesday in the US. The risen number of jobs (230K) appeared to be at the highest level since June and outperformed the forecasts (220K). Currently, investors expect the official data released on Friday to be positive. The Republican Party gained the majority of votes in the US Senate yesterday. This was the reason for energy stocks to jump in prices. Market participants hope that Republicans would get the permission to export the US hydrocarbon material. Nasdaq fell slightly due to weak earnings reports of TripAdvisor and FireEye. Their stocks tumbled 14% and 15%, respectively. The trading volume on the US stock exchanges was 13% below the 5-day average and reached 6.4 billion stocks. Today we expect the release of Initial Claims and Q3 Non-Farm Payrolls at 13-30 СЕТ in the US. In general, the outlook is neutral. The US dollar index is slipping moderately. The euro is rising ahead of the next ECB meeting and its President Mario Draghi speaking at the press conference at 13-30 СЕТ. It has already been reported the issuing money volume would amount to $1 trillion euro. However, most of the market participants believe that the conditions of private bonds purchasing will be revealed at the ECB meeting in December. Today Mario Draghi’s speech is likely to be limited to the ECB forecasts of the EU economic indicators. There is a possibility if that happens, the euro may continue its upward movement and strengthen against the US dollar.

European markets upped less than the US markets. Investors deem that the delay in the ECB program of European economy stimulation would have a negative impact on the financial statements of companies. Currently the earnings reports have been published by approximately half of the European companies. The earnings of 64% of them exceeded or matched the forecasts. Now the European stock indices are falling, as investors do not expect good news and the launch of the ECB economic stimulus at 12-45 and 13-30 СЕТ. Moreover, the German growth of industrial orders in September released in the morning was worse than expected.

Nikkei is now dipping in line with other world indices after a strong growth in last few days. In our opinion, its further rise should be confirmed by good economic data. It will come out only the next Monday late in the evening. Note that some economists have criticized the recent decision of the Bank of Japan to increase the amount of money issued, so that it caused the Nikkei growth.

Grain futures, precious metals, coffee and cocoa continued to fall as the US dollar strengthens and the Chinese economy indicates recession. Amid these events the copper price has fallen. Morgan Stanley lowered 1.1% or 250K tons the copper demand forecast in 2014/2015. According to International Copper Study Group, there was a global copper shortage of 589K tons in the first seven months of this year, and since the end of July there was an excess of 77K tons.

The rainy weather forecast in Brazil given by MDA Weather Services pushed coffee and sugar prices down. Some market participants are even planning to revise downwards their crop forecasts in this country. Cocoa price fell ahead of the rainy weather in West Africa and the Ebola situation stabilization. It has not yet spread to the main cocoa producer, the Ivory Coast.

According to China National Grain and Oils Information Centre, there would be an increase in soybean imports to China in November by 5.81 million tons (+38,3%), and in December to 6.8 million tons (+ 62%), compared to 4.2 million tons in October. There is a possibility it might boost soybean prices by the end of the year.

 

[IFCMarkets]

European markets rebounded after the falling observed last week. Such a surge was caused by the investor reaction on positive earnings reports released by major European companies: Carlsberg, Nutreco NV, Fugro NV, Kabel Deutschland and Serco Group Plc. As a result, today Stoxx Europe 600 rose 0.2% to close at 336.05.

S&P 500 hit the weekly high amid expectations of positive earnings reports and added 0.1%. A similar growth was demonstrated byDJI index. This week we expect the data released by 16 companies listed in S&P 500, including Cisco Systems Inc. and Wal-Mart Stores Inc. Excellent results were shown by the companies which have already published their reports: 80% of them have outperformed the profit expectations, 60% exceeded the expected sales turnover.
China announced the opening of Shanghai and Hong Kong exchanges for foreign investors: the asset capitalization traded on the stock exchange amounts to $4.2 trillion. The program starts on November, 17. Currently, Shanghai and Hong Kong indices upped 0.8%. Note that the market liberalization program is designed to attract additional investment funds and reduce China's dependence on exports. The country will partially re-focus its markets on domestic consumption.

Gold continued to fall on the London exchange. The investor expectation that the US economy boosting would result in loans amount increase was not justified. In general, the market of precious metals grew on November 7, after the US labor market data release. Non-farm Payrolls was below the outlook: 214000 jobs vs. the expected 235000.
Brent crude oil futures climbed to the weekly high level. Chinese exports outperformed the economic outlook, and that triggered the commodity demand reassessment. Note that China is the second largest importer, and an increase in technology products exports requires higher energy costs, which leads to a natural rise in oil prices: London’s Brent has added 1.7% today. However, we should not expect the global recovery. Kuwaiti Energy Minister said he did not expect any decision on the reduction of oil production at the next OPEC meeting on November 27.

 

[IFCMarkets]

US stock markets recorded marginal gains on Monday with investors’ optimism supported by the release of US payroll figures on Friday on the backdrop of weak global economic growth. The S&P 500 closed at a new record high, adding 6.34 points, or 0.3%, higher at 2,038.26. The The Nasdaq Composite rose 19.08 points, or 0.4%, to 4,651.62, the highest level since March 2,000. On Monday the Federal Reserve released its new monthly labor market conditions index, based on 19 separate U.S. labor market indicators, including the unemployment rate and labor force participation rate. The index showed an unchanged 4.0 level for October, providing a modest boost to investor confidence amid concerns over slow recovery in job market. Experts indicate that falling oil prices will likely provide still further momentum for US economic growth as lower gasoline prices will free up consumer spending and the increased consumption component of GDP will outweigh the loss of earnings by energy companies.

European stock markets rebounded on Monday as oil company stocks rose with rising energy prices and companies boosted acquisition activity in the oil services industry . The Stoxx Europe 600 index gained 0.2% to 335.96, after closing out last week with a 0.5% weekly slide. In a speech on Monday a senior ECB policy maker, Executive Board member Yves Mersch said the European Central Bank could examine the possibility of buying state bonds as the bloc's recovery and that of its top economy, Germany, has lost pace. Asian stocks rose today, helped by the gains on Wall Street. The MSCI Asia Pacific Index advanced 0.3 percent by 1:45 pm in Tokyo, with Hong Kong’s Hang Seng Index climbing 0.6 percent. Japanese shares outperformed in Asia on Tuesday, with the Nikkei stock average rising more than 2 percent to a 7-year high as investors expect Prime Minister Shinzo Abe may postpone a planned sales tax increase and call early elections.

West Texas Intermediate crude oil fell for a second day as forecasts for a sixth weekly gain in US crude stockpiles bolstered speculation that rising supply is outpacing demand. Brent Oil for December settlement dropped 1.3 percent to close at $82.34 yesterday, the lowest level since October 2010. The European benchmark crude traded at a premium of $5 to WTI. Amid signs that global supply is outpacing demand OPEC Secretary General Abdullah al-Badri told markets not to “panic” over low oil prices at an industry conference in Abu Dhabi. OPEC’s second-largest producer, Iraq, has joined Saudi Arabia in fighting to protect its market share. This is another indication the major oil producers are not planning to cut production in near future.

With dollar gaining strength and US economy improving gold is under pressure and was trading above the lowest level since 2010. Gold for December delivery slid 1 percent to $1,148.50 an ounce on the Comex in New York after most-active prices sank to $1,130.40 on November 7, the lowest level since April 2010. Silver for immediate delivery slid 0.7 percent to $15.507 an ounce. Spot platinumwas at $1,197.88 an ounce from $1,198 yesterday and palladium rose 0.2 percent to $764.50 an ounce.

 

[IFCMarkets]

US stocks fell on Wednesday, breaking the S&P 500's and Dow Jones Industrial Average’s 5-day record-closing streak as falling oil prices and heightened geopolitical risks turned investors cautious. After advancing 1.4% in previous five sessions the S&P 500 closed 1.43 points lower at 2,038.25 as investors sold off utilities and energy sector stocks. The Dow Jones Industrial Average slipped 2.7 points to 17,612.20. Today at 14:30 CET the Continuing Claims for the week ended November 1 and Initial Jobless Claims for the week ended November 8 will be released in US. The tentative forecast for the Continuing claims is positive, while the Initial Jobless Claims number is expected to rise marginally. At 18:45 CET Fed Chair Janet Yellen will deliver welcoming remarks at FED/ECB event.

European markets closed lower on Wednesday as banking shares declined after companies agreed to pay multi-billion dollar fine to settle allegations that their traders helped rig currency markets and data from European Union’s statistics agency indicated that third-quarter output in euro zone will be lower than in the second quarter. A report from the International Monetary Fund on Wednesday warned of downside risks to its growth projections for the euro zone, and urged the European Central Bank to act if prices continue falling. Declining banking stocks dragged UK’s FTSE 100 , which fell 0.3% to 6,611.04. The British pound slumped after the Bank of England cut its forecasts for growth and inflation and signaled it is unlikely to raise interest rates until the second half of next year. The Bank of England sees British inflation falling below 1 percent in the next six months and Governor Mark Carney said markets were right to rule out an interest rate hike any time soon. The pound fell to $1.5818, from $1.5918 late on Tuesday. Separately, the Organization for Economic Cooperation and Development report indicated economic growth is set to slow in the euro zone and in the UK over the coming months. The Stoxx Europe 600 index fell 1.1% to close at 335.09, falling from a five-week closing high reached on Tuesday.

In Asia, China’s stock markets closed higher as investors expect that a stock trading link between Shanghai and Hong Kong launching on Monday will bring new players to mainland China’s stock market. In Japan, the Nikkei Stock Average ended up 0.4% at 17,197.05. Investors are betting that the planned national consumption tax increase originally expected next year will be delayed by Prime Minister Abe after he evaluates economic indicators such as July-September gross domestic product, scheduled to come out November 17.

Brent crude fell further from a four-year low, trading near $80 a barrel amid signs that OPEC remains unwilling to reduce output to stem global oversupply. West Texas Intermediate was steady in New York. Saudi Arabia’s oil minister said in a public comment that talk of a price war has “no basis in reality” and they “want stable oil markets and steady prices”. Kuwaiti Oil Minister Ali Al-Omair said today OPEC won’t cut its collective output target at this month’s meeting.

Corn advanced for a fourth day, as reports of arctic air masses moving to northern and central US this week gave rise to speculation ranchers will increase feed stocks as animals will need to use more energy to stay warm.

 

[IFCMarkets]

The Japanese recession onset pushed the major European, American and Asian indices. The Q3 GDP in Japan, the world’s third largest economy, shrank 1.6% after a reduction of 7.3% in the previous quarter. The official outlook amounted to 2.3% of it’s growth. It was reported that the Bank of Japan was planning to create new incentives for Japanese exports in terms of interest rate reduction and bond issuing. This event leads to the main conclusion: the US economy is no good at coping with the global economic growth function.

Stoxx Europe 600 Index has slipped 0.5% at the London Stock Exchange opening. S&P500 futures dropped 0.4%. Industrial Production data will be released today in the United States. It is estimated to 0.2% in the past month, and that is much lower than in September (1%). MSCI Pacific index and Japan’s Topix have also fallen 1.2% and 2.5%, respectively.

WTI crude oil continued to slide and lost 1.2% after the largest retracement in the previous month: investors don’t believe there will be any decision made regarding the reduction of oil supply at the next OPEC meeting. The targeted dumping is more probable to maintain the market share. Oil prices have fallen about 30% since early June as the US oil production rose till the historical high level. As a result, OPEC failed to achieve a reduction in oil production and was forced to decrease export prices. Among the most affected countries were Venezuela, Libya, and Ecuador. WTI price slipped more than 3.6% over the past week, and 24% compared to the last year.

Gold prices rose $24.10, or 2.07%, to $1185,60 per troy ounce. Gold futures is traded at the level of one-week high: investors are still cautious at closing short positions before the today’s release of important US economic data. Note that today we expect the publication of Empire State manufacturing Index and the US Industrial Production m/m. We don’t expect a long-term price growth of precious metals as positive US economic data makes it possible to expect the monetary policy tightening in the short term.

 

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US stocks declined in the morning trade on Monday following unexpected news that Japan’s economy contracted for the second consecutive quarter. The US central bank report that nation’s industrial production fell 0.1% in October after a 0.8 percent increase in September, the second decline in the past three months didn’t help investor optimism either. Stocks recovered in afternoon trade after market sentiment was bolstered by the news report that European Central Bank president Mario Draghi stated during testimony to the European Parliament in Brussels that the central bank would be open to potentially buying government bonds, if needed. The S&P 500 posted a small gain of 1.5 points which was enough to push the index to a new record close at 2,041.43 , its 42nd this year. TheDow Jones Industrial Average added 13 points, or 0.1%, to 17,647.75. In a separate report, the New York Federal Reserve said its Empire State general business conditions index rose in November. Businesses remain upbeat about the future as an index for future business hit its highest level since January 2012.

European stocks ended Monday higher after Draghi’s testimony indicated a possible start of a new round of monetary stimulus program by the ECB to help the recovery of euror zone economy. The Stoxx 600 had been lower for much of Monday’s session after data showed real gross domestic product in Japan shrank 1.6% in the third quarter. Draghi also reiterated his view that eurozone governments must enact structural reforms to foster economic growth, particularly by enacting labor reforms that would make job markets more flexible. The Stoxx Europe 600 index closed up 0.5% at 337.25, led by telecom, tech, resources and financial stocks. The euro fell to $1.2454 Monday as investors sold euros in anticipation of expansion of the monetary easing policy by ECB after trading above $1.2500 before Draghi’s remarks.

In Japan stock market is rising today after falling by 3% on Monday as investors anticipate that Japanese Prime Minister Shinzo Abe will announce later in the day that he will delay an unpopular sales tax increase by more than a year and call a general election on December 14. Investors expect that the Bank of Japan will also announce about expansion of its monetary stimulus program as its two-day policy board meeting ends on Wednesday. The unexpected GDP contraction and the expansion of monetary easing measures by Japan’s central bank indicate that the yen will continue to weaken against US dollar.

Brent crude oil fell for a second day amid signs of weakening global demand. Futures dropped as much as 0.6 percent in London. West Texas Intermediate was steady in New York. US shale drillers have said they are planning on production growth with fewer rigs despite of falling prices. More investors believe OPEC is not likely cut its output as it doesn’t want to lose its market share to US shale producers.

Corn fell for a third day in the longest retreat this month as US farmers accelerated harvesting of a record crop. The contract for March delivery lost as much as 0.5 percent to $3.8875 a bushel on the Chicago Board of Trade and was at $3.8975 by 10:56 am in Singapore. A decline today would complete the longest such run since September 23. Soybeans also dropped. Soybeans for January delivery dropped 0.7 percent to $10.2925 a bushel.

 

[IFCMarkets]

The US stocks recorded sizable gains on Tuesday as investor optimism was boosted by upbeat housing data, as well as news of a sales tax hike delay in Japan and better-than-expected ZEW survey data from Germany. The S&P 500 rose 10.48 points, or 0.5% to close at an all-time high of 2,051.80. The Dow Jones Industrial Average added 40 points, or 0.2%, to close at a record level of 17,687.82. US home builder sentiment rose in November as the Housing Market Index released on Tuesday indicated an advance to 58 in November from 54 in October, which was led by more optimism over present and upcoming sales of single-family homes. And US producer inflation edged up 0.2 percent in October, above expectations. Nevertheless, the underlying inflation trend is weak as core PPI excluding energy, food and services rose only 0.1 percent. Today at 20:00 CET Fed releases Minutes from October 28-29 FOMC Meeting which markets will watch for any clues on when the Fed will start raising rates.

European markets were buoyed by the better-than-expected German ZEW survey, showing the lead economic-sentiment indicator rose to 11.5 in November from a negative 3.6 in October. The survey eased concerns about Europe’s biggest economy by providing grounds for optimism after data released last week showed Germany narrowly avoided recession in the third quarter. The DAX equity index jumped 1.6% to 9,456.53, the strongest close since September 30. The UK’s FTSE 100 index rose 0.6% to 6,709.13, and in Paris, the CAC 40 gained 0.9% to end at 4,262.38. The euro rose against the dollar following the ZEW data, but will likely remain under pressure as the European Central Bank has indicated it is considering purchasing government bonds as the next stage of its monetary easing policy measures. The dollar fell against the pound after a report that inflation in the UK accelerated in October to 1.3%, from 1.2% in September. Yesterday afternoon Japanese Prime Minister Shinzo Abe called for snap elections in December and delayed a planned sales-tax hike delay for a year and a half. Japanese stocks started modestly higher today but quickly added to gains as the yen continued falling ahead of Bank of Japan’s Interest Rate Statement and the central bank’s Governor Haruhiko Kuroda’s press conference later in the day.

Oil continued falling amid speculation that OPEC will resist production cuts sought by some of its smaller members. Ecuador and Venezuela will ask members of the Organization of Petroleum Exporting Countries to reduce excess output, an Ecuador official said. Brent for January settlement fell 84 cents to $78.47 a barrel yesterday on the London-based ICE Futures Europe exchange.

Gold prices jumped Tuesday as the dollar fell against major currencies amid economic and political news. The US currency fell against the yen after Japanese Prime Minister Shinzo Abe said Tuesday the government will delay by 18 months a planned increase in sales tax. He will dissolve the lower house of parliament and has called for a snap election to be held in December. Gold has been falling against the backdrop of improving US economy and stronger dollar as central banks outside US expand monetary easing policy measures to stimulate faltering economies. Gold for December delivery gained $13.60, or 1.2%, to settle at $1,197.10 an ounce. December silver gained 12 cents, or 0.7%, settling at $16.17 an ounce.

 

[IFCMarkets]

The US stocks traded in a narrow range on Wednesday as the latest minutes from the October meeting of the Federal Open Market Committee were published and closed marginally lower. The S&P 500 closed 3.1 points lower at 2,048.72, ending its four-day winning streak and posting its 43rd record high previous day. The Dow Jones Industrial Average ticked down 2.1 points to 17,685.73. The Nasdaq Composite finished down 26.73 points, or 0.6%, at 4,675.71. The Fed minutes revealed that several Federal Reserve officials pushed colleagues to say more publicly about the pace of interest rate increases, suggesting that the central bank is still planning to raise rates next year despite low inflation and weak global economic outlook. No additional information was revealed about when interest rates would be hiked. It is expected Fed will increase rates near the end of 2015. Earlier Wednesday the Commerce Department reported that construction started on new US homes fell in October as multifamily-home construction dropped 15.5%, while single family home construction actually rose 4.2% to its highest pace since November 2013. Today at 14:30 CET the Consumer Price Index for October (YoY) will be released in US, the tentative forecast is 1.6% against 1.7 percent in the previous month. At the same time the Continuing Claims and Initial Jobless Claims for the weeks ended November 8 and 15 will be released, and the tentative forecast is positive. At 15:45 CET Markit releases preliminary US Manufacturing PMI for November. And at 16:00 CET Existing Home Sales for October, the Leading Indicators for October and Philadelphia Fed Manufacturing Index will be released, which are expected to come out lower compared with the previous month.

European stock markets posted marginal gains after hitting a seven-week high earlier on Wednesday as investors adopted cautious stance ahead of minutes of Fed’s October policy meeting. The stocks were also under pressure as mining shares fell following a 5% drop in China’s iron ore futures, indicating a supply glut and weak demand. Germany's DAX rose 0.17 percent and France's CAC was up 0.09 percent. UK’s FTSE 100 index fell 0.2% to 6,696.60. The euro moved higher against the dollar for the second consecutive session, briefly climbing to $1.2605 immediately after the FOMC minutes before falling back to $1.2543. Japan’s exports rose the most in eight months in October, as data from finance ministry indicated overseas shipments rose 9.6 percent from a year earlier to the highest level since October 2008. The Bank of Japan yesterday maintained record stimulus after the economy slipped into recession. China’s preliminary Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics fell to 50, the borderline between expansion and contraction and the lowest in six months.

Crude-oil futures extended losses to a third straight session on the backdrop of the US Energy Information Administration report earlier Wednesday showing a surprise increase in supplies. January Brent crude on London’s ICE Futures exchange fell 0.5%, to finish at $78.10 a barrel. Brent prices slid 1.7% in the last three sessions. Gold declined on reports Wednesday that support for a Swiss November 30 referendum to require the country’s central bank to hold 20% of its reserves in gold will likely not secure more than 50% support to pass. Gold for December delivery slid $3.20 to settle at 1,193.90 an ounce.

 

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The British pound continued slipping against other liquid currencies. The UK Independence party (UKIP), which goes for the country’s exit from the EU, won the European Parliament elections held in Britain on Thursday. This event casts doubt on the cooperation outlook with the largest trading partner. If the decision of the UK leaving the EU is taken, we would expect the pound to weaken no less than 10%. It dipped 0.3%, falling to $1.5645 on London Exchange. This is the most severe weakening of the national currency over the entire week.

Stocks of European companies rose after Mario Draghi had spoken on inflation rate. Today Stoxx Europe 600 has upped 0.9% at the trading session opening on London Stock Exchange, approaching the weekly high +1.7%. The growth was also demonstrated by oil and gas companies: oil price boosted during the week for the first time since September. S&P 500 and MSCI Pacific showed weak growth by 0.3%, which has no significant fundamental reasons.

Analysts are not consistent in their opinion after the OPEC meeting of 12 member-states: there is no single opinion on possible oil supply cuts. Therefore, slightly risen oil prices this week are likely to be explained as the price retreat in the face of uncertainty. Nevertheless, members of the organization recognize that the demand will be significantly lower next year. Brent crude oil fell 30% since June as US oil production was increasing for three consecutive quarters. However, weak global economic growth does not guarantee the expected demand. Opinions of OPEC members are also divided: if Saudi Arabia is resisting the demand cut, Venezuela and other countries are looking for ways to support the market before the meeting on November 27.
The world’s largest meat company JBS announced its plans to increase exports to Asia. It happened after the Primo Group purchase, the largest meat producer in Australia and New Zealand. That gives the opportunity to increase the share of more expensive products and expand the market. Currently, Australia can not export about 20% of pork due to the lack of certification in the Chinese market. However, this restriction would be overleaped as the free trade agreement between the two countries enters into force beginning in 2018. The prospects for meat supply hike on the biggest Asian market resulted in F-CATTLE price drop: today the price has dropped 0.7% on Chicago Mercantile Exchange and indicated further reduction outlook.

 

[IFCMarkets]

US markets closed higher on Monday. The S&P 500 closed 5.91 points, or 0.3%, higher at 2,069.41, the 46th time it closed at record level this year. The heaviest-weighted company on the index, Apple, Inc. rose 1.9%, helping lift the benchmark. The Dow Jones Industrial Average dipped in an out of negative territory but closed marginally higher at 17,817, a record high for the 29th time this year. Analysts expect that revised third-quarter gross domestic product figures expected to be released today at 14:30 CET, followed by the consumer confidence index for November will indicate an improved outlook for the US.

European stocks rose Monday building on last week’s momentum after the ECB revealed plans for further stimulus and announced Friday that it had begun purchases of asset-backed securities, marking a second stage of its quantitative easing measures. The Stoxx Europe 600 closed 0.1% higher, pulling back from bigger gains during the session after reports of unexpected improvement of German business sentiment provided some reason to expect the ECB will likely reconsider the urgency of immediate action in light of improving outlook in Europe’s biggest economy. On Monday the Ifo institute reported German business confidence survey results which indicated the monthly index rose unexpectedly to 104.7 points in November from 103.2 points in October, after declining for six months in a row. Euro rose against other major currencies, climbing to $1.2409, up from $1.2392 late Friday. The gains for euro could have been higher if it were not for the European Central Bank President Mario Draghi’s remark last week that it was necessary to bring euro zone inflation up to the ECB’s target “without delay.” The comment reinforced Investor expectations that the ECB will implement a full-scale quantitative easing program, which likely would weaken the euro. In other currency pairs, the yen fell against the dollar to ¥118.245 from ¥117.72 Friday. Investors are looking forward to the release of minutes from October’s Bank of Japan meeting Monday evening to see if it will reveal any details for central bank’s monetary easing program. Russia’s ruble , which has fallen almost 37% so far this year against the dollar rose around 2.1% against the greenback.

Oil futures declined in choppy trade Monday as investors awaited the results of talks over Iran’s nuclear program. A deal would end sanctions on Iranian oil exports, further increasing the supply and adding pressure on oil in a global market suffering from low demand and increased output by major producers. ICE January Brent futures dropped 68 cents, or 0.9%, to end at $79.68 a barrel, after two sessions of gains. As the Organization of the Petroleum Exporting Countries is planning a meeting on Thursday, investors expect no major cut to be announced. The cartel wants to preserve its market share therefore leave production as is, and a large cut would enable US shale producers to keep their own production levels high.

Gold futures declined as US inflation concerns eased and the dollar climbed to the highest level since March 2009 against a basket of 10 currencies as Japan and Europe added to monetary stimulus. In 2014, gold has declined 0.5 percent. The metal in 2013 tumbled 28 percent, ending a 12-year bull run. A second straight annual drop would mark the longest slump since 1998.

 

[IFCMarkets]

The US stocks traded in a narrow range on Tuesday and closed marginally lower snapping a three day run on the S&P 500 andDow Jones Industrial Average. The Commerce Department upgraded its reading on third quarter gross domestic product (GDP) growth to 3.9 percent on Tuesday from 3.5 percent reported last month. The raised estimates reflected upward revisions to business and consumer spending, At the same time The Conference Board report released on Tuesday indicated that US consumer confidence fell unexpectedly in November to its lowest level since June as optimism waned in the short-term outlook for business conditions and jobs. The S&P 500 set an intraday high, but closed 0.1% lower at 2,067.04. The Dow Jones Industrial Average slipped 3 points to 17,814.94.

In Europe, Germany’s Federal Statistics Office confirmed an earlier preliminary estimate showing a 0.1 percent rise in seasonally-adjusted GDP in the third quarter, indicating that Europe’s biggest economy narrowly avoided recession after contraction in the second quarter. Germany’s DAX 30 index climbed 0.8% to 6,731.14, pushing the index’s month-to-date gain to 5.7%. The Stoxx Europe 600 rose 0.2% to 346.28. The European Commission agreed on Tuesday to set up a new fund with $26 billion of capital to act as a catalyst for 300 billion euros of private investment into infrastructure projects to revive growth. The Commission hopes it will create a million jobs over three years. The Nikkei Average rose 0.3% to 17,407.62 on Tuesday. Bank of Japan Governor Haruhiko Kuroda said on Tuesday that the central bank would continue to take actions to achieve its 2% inflation target. On Tuesday, the People’s Bank of China lowered its 14-day repurchase-agreement rate by 20 basis points after a surprise interest rate cut on Friday.



Oil futures slumped to their lowest close in more than four years Tuesday after a meeting between OPEC members Saudi Arabia and Venezuela with major oil producers Russia and Mexico failed to reach an agreement on output cuts. ICE January Brent dropped $1.35, or 1.7%, to $78.33 a barrel. Analysts expect Saudi Arabia is likely to adhere to calls for the cartel to stick closer to its production ceiling of 30 million barrels which could provide some near-term support, but have argued it would likely take a bigger reduction to provide a more sustainable increase in the price. The cartel has been exceeding its existing production ceiling of 30 million barrels a day, producing around 30.7 million barrels a day in September.


Gold inched higher on Tuesday after reports US confidence index fell unexpectedly in November. December gold futures settled up 0.1% at $1,197.10 an ounce. December silver settled higher 1% at $16.55 an ounce. China will begin to buy corn from farmers this week under an annual intervention program as it seeks to support the domestic market and boost rural incomes, and plans to buy 40 million tons of corn in 2014/2015. And falling soymeal prices in China are threatening to cut China's booming demand for US beans as processing margins have started turning negative. A slowdown in imports by China, which buys more than 60 percent of globally traded beans, could add to pressure on global prices that rallied to a four-month high earlier this month on the back of strong demand.

 

[IFCMarkets]

US stocks ended Wednesday session marginally higher as investors discounted mostly disappointing economic news. The S&P 500 and Dow Jones Industrial Average scored their 47th and 30th record closes this year at 2072.77 and 17827.75 respectively. Trading was thin ahead of Thanksgiving holiday. The Commerce Department said Wednesday consumer spending climbed a seasonally adjusted 0.2% in October after being flat in September. Core capital goods orders excluding aircraft fell 1.3 percent for a second straight month, a closely watched proxy for business spending plans. The drop in core capital goods suggests the economy is not fully immune to Japan's recession and cooling growth in China and Europe. A separate report from the Labor Department showed initial claims for state unemployment benefits last week were above 300,000 for the first time since early September. The Chicago purchasing-managers index and the University of Michigan Consumer sentiment index for November fell slightly. Sales of new single-family homes rose 0.7% in October, while a gauge of pending home sales fell 1.1% in October, signaling that upcoming deals could slow down.

Vitor Constancio, the European Central Bank’s vice president, said on Wednesday the ECB might decide as early as the first quarter of next year whether to begin buying sovereign bonds, starting the so called quantitative easing program. Equities across Europe rose after this news but ended essentially flat as The Stoxx Europe 600 index closed unchanged at 346.28. The euro declined after Constancio’s comments , but recovered later against the dollar to buy $1.2502 compared with $1.2473 in late Tuesday as the dollar lost ground after a round of weak US economic data.



Oil futures declined further on Wednesday on expectations the Organization of the Petroleum Exporting Countries will not decide to cut significantly oil production at its meeting on Thursday. January Brent crude on London’s ICE Futures exchange slid 54 cents to $77.80 a barrel. Nymex crude has dropped nearly 3.7% since the beginning of the week. Oil futures are down more than 30% from their midyear high. Saudi Arabia’s oil minister, Ali Al-Naimi, said Wednesday that he believes the crude market “will stabilize itself,” while Iran’s oil minister said OPEC should comply with its output ceiling. As analysts point out, lowering the production limit is not in OPEC’s long term interest as by limiting its own output it would concede more market share to shale oil producers. At the same time, current low oil prices are to the benefit of some larger OPEC members like Saudi Arabia as this will undoubtedly put pressure on smaller and inefficient oil producers.

Gold declined on Wednesday with December gold finishing down less than 0.1% at $1,196.60 an ounce as the mixed US economic data indicating some slowing in the pace of economic growth were discounted by investors and didn’t cause an increase for the safe haven asset demand. Gold is up 2.1% in the month to date, having dipped just 0.1% so far in this holiday-shortened week. Meanwhile, December silver settled unchanged at $16.55 an ounce. Corn futures rose for a second day in Chicago on demand for the grain to make ethanol as US output of the fuel climbed to an all-time high. Yesterday, corn futures for March delivery gained 1.8 percent. With 94 percent of the crop harvested as of November 23, many farmers are storing corn until prices rise.

 

[IFCMarkets]

Yesterday the United States celebrated the public holiday, Thanksgiving Day. European markets rose. Market participants had a positive reaction to OPEC’s decision to leave oil output as it was. Oil prices have tumbled about $6 per barrel: it would reduce significantly the expenses of European companies.

An additional growth factor was the fallen German inflation rate in November. This improves the chances of an early start of the ECB money printing. Investors believe that part of that money would flood into the stock market one way or another. Therefore, euro has slipped. This morning European markets are slightly down expecting the data on inflation and unemployment for the EU. The data will be released at 10-00 СЕТ. It was also caused by the negative stock price change of European oil and energy companies, and Aurubis AG stocks slumped 7% due to the Goldman Sachs forecast revised downward. Note that significant macroeconomic data is not expected today in the US.

Nikkei dipped on Thursday as it was traded before the OPEC decision. Today it has climbed. It added 6.4% in November, the most significant rise over 12 months. Another positive factor for the Japanese stock market was the yen weakening and the economic data released this morning. Industrial production in October increased 0.2% compared to September. It was expected to fall 0.6%. Unemployment rate was 3.5%, slightly better than expected. Inflation rate in October fell to 2.9% yoy, compared to 3% in September. Growth in consumer prices in Tokyo in November was also less than expected. In theory, this allows the Bank of Japan to continue money issuing, which depreciates the yen. According to the BOJ, if not taking the sales tax hike in April into account, CPI was only 0.9% last month, instead of 2.9% stated in official statistics. The BOJ inflation target amounts to 2%. Note that yen weakening was moderate yesterday as the Bank of Japan announced plans to cut the purchases of short-term government bonds in December.

Previously, we have repeatedly pointed out that fallen world crude oil prices is coherent with anti-Russian Western sanctions. The US increased its own oil output up to 9.08 million barrels per day, the record high since 1983. Oil priced tumbled 37% since June. The CEO of Russia's largest oil company Rosneft Igor Sechin accept the possibility of Brent crude oil prices may be falling to $60 per barrel and lower by the middle of next year. In this case, Russia can reduce the production by 200-300 thousand barrels per day. Note that at the last OPEC meeting, Venezuela and Algeria called for the output cut of 2 million barrels per day. That means Russia is unlikely to affect oil prices without OPEC. The organization produces 30.97 million barrels per day and provides 40% of world exports. Russian ruble falls against the US dollar as global oil prices are going down: it can be used for trading.

According to Olam International forecast, the global shortage of cocoa in 2014/2015 would reach the level of 120 thousand tons due to the reduced crop in Ivory Coast to 1.15 million tons, compared to 1.23 million a season earlier, and in Ghana – 625 thousand tons vs. 735 thousand.

Gold prices drop for three days in a row. Meanwhile, a Swiss referendum on increasing gold in state reserves from 8% to 20% will be held in Switzerland on Sunday, November 30.

Note that Bloomberg Commodity Index slumped to the record low since July 2009. Some investors deem that cheap oil may cause deflation and have a negative impact on commodity prices.

 

[IFCMarkets]

World stock markets were mixed on Friday. As OPEC left the output level unchanged, the daily drop in oil prices was the largest since May 2011 and reached 7%. Amid this data, S&P energy index tumbled 6.3%. Stocks of oil companies Exxon Mobil and Chevron fell 4.2% and 5.4%, respectively. Stocks of shale oil companies such as Denbury Resources, QEP Resources and Newfield Exploration dropped about 15%. Cheap oil reduces expenses of transportation and aviation companies, as well as retailers. Stocks of Delta Air Lines rose 5.5%. S&P 500 Retailing upped 1.4%.

Followed up the week and November, the US stock indices rose. Today at 14-45 СЕТ Markit Manufacturing PMI is to be released in the US. At 15-00 СЕТ we expect the release of ISM Manufacturing index. The forecast for the first index is slightly positive, for the second one – moderately negative. Two Fed officials will be delivering their speeches at 17-15 and 18-00 СЕТ. For more information about macroeconomic data for this week, please watch our weekly video overview. According to the US National Retail Federation, the volume of retail sales in the United States over the weekend and Thanksgiving Day slipped 11.3%, compared to last year. It may hammer stock indices.

As released on Friday, inflation and unemployment in the euro zone remained unchanged in October compared to November. This morning European indices have dipped as the Chinese Manufacturing PMI in November hit the 8-month low (50.3 points). Market participants are concerned that it may reduce the demand for European goods. Another negative factor that affected European markets was the weak Markit Manufacturing PMI performance in Germany, France and Italy. At 9-00 СЕТ the same indicator for the euro zone will come out. There will be no macroeconomic data releases for today.

Nikkei has risen in the morning as yen hit the 7-year high, a bit above 119 yen per US dollar. Moody's Investors Service lowered the credit rating of Japan to A1 from AA3. Now Nikkei is going down under the pressure of weak data from China. Other Asian stock indices fell altogether. Note that a weak exchange rate of the national currency provides substantial support for Japanese exporters and bolsters the stock rise. The same as in Europe, due to falling oil prices stocks of airlines were traded higher.

A slowdown in Chinese industrial growth affected commodity futures. The most affected resulted to be copper prices. In China copper is used as a guaranty for commercial loans.

As expected, oil prices continued to fall. OPEC members have begun to revise their budgets for next year. Some investors deem that Brent crude oil would stay in the range of $64-68 per barrel, as the lowered price will make the oil production unprofitable at the most part of world’s oil fields. Note that the next OPEC meeting is scheduled for June.

Precious metals have fallen in price, as the Swiss referendum didn’t approve the decision to increase the share of gold reserves of the country. In our opinion, the prices may stop falling for some time, since the majority of players had already sold gold. Gold stockpiles of SPDR Gold Trust reached a 6-year low of 717.6 tons. Pure gold imports into China via Hong Kong in October rose to 77.6 tons from 68.6 tons in September. The Reserve Bank of India cancelled unexpectedly the existing requirements for gold importers. For this reason, according to Indian Bullion and Jewellers Association outlook, gold demand in India would rise up to 900 tons per year.

Wheat prices have climbed after the announcement of possible export cuts from Russia due to phytosanitary control tightening. We believe it is likely to happen as mutual economic sanctions were imposed.