Market Morning Briefing
EQUITIES
The equities have seen some correction last week. The Dow corrected nearly 2.5% on the back of bad economic data including personal income and durable goods. Though the economy grew by 3.5% p.a. in the third quarter, concerns over personal spending and housing market still prevails. Also, bankruptcy filed by CIT is another concern which might grip the financial stocks going forward. This week, the eyes would be glued on to the Manufacturing ISM (today), FOMC Meeting (Wed) and the NFP (Fri).
The Asian equities too have corrected sharply last week. The Shanghai closed 3.6% lower last week and Nikkei nearly 2.5% lower. The Sensex (15896.28), too, has seen some major correction last week. It crashed nearly 5.5% and has found some Support near 15800. We shall have to see, if this Support continues to be honoured. Else, the next prominent Support is at 15000. Today, the stock markets in India are closed on account of Guru Nanak Jayanti.
COMMODITIES
Crude (76.83) fell sharply and is now trading below 77 following the weak US consumer sentiment and the consumer spending data released on Friday, which still holds the concerns about the economic recovery and the energy demand. If it continues to trade lower we might see a downmove towards 75.50-75 in the coming days.
Gold (1043.70) closed lower on Friday as the dollar continued to strengthen thereby reducing the precious metal's hedge value. As mentioned earlier Support is seen in the region 1030-20 which we expect to hold as the broader picture continues to remain bullish.
CURRENCIES
Whether last week's corrective fall in the Euro and Aussie has some more way to go or not is the big question facing the market this week. Chances are even either way.
News of CIT filing for Chapter 11 bankruptcy saw the Dollar gain further in early morning trade today. It has retreated a bit since then. The Euro (1.4752) has recovered a bit after seeing an early morning dip below 1.47, to a low near 1.4684. The Aussie (0.9020) too has bounced a bit from an early morning low near 0.8950. Dollar-Yen (89.94) has rallied from a low near 89.42 to almost 90 now. The Pound (1.6443) continues to be mixed. Dollar-Swiss (1.0231) has come off from a high near 1.0289 and may gain further towards 1.02 today.
In Asia, the Sing Dollar trades relatively strong near 1.40 and has chances of gaining further. The Korean Won (1185) is also relatively strong compared to the weakness it has seen last week. Dollar-Rupee is closed for Nanak Jayanti today. It had closed near 46.96/97 on Friday.
INTEREST RATES
3M USD LIBOR was left unchanged throughout last week at 0.28%. It has been at this level for nearly a month. The US Treasuries are quoting higher today which has brought the yields down by over 9 bps for maturities over 5Y. The 10Y yields are quoting at 3.41% and the 2Y yields at 0.90%.
This week there are host of central bank meetings lined up. The RBA rate announcement tomorrow (3rd-Nov), FOMC Mtg on Wednesday, BoE and ECB meetings on Thursday. Among these only RBA is expected to increase rates by another 25 bps. Last month, RBA became the first G-8 central bankers to raise its key interest rate from 3.00% to 3.25%.
Kshitij Consultancy Service
http://www.fxthoughts.com
Legal disclaimer and risk disclosure
These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsibly for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.
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