Market Morning Briefing

GOOD MORNING!

EQUITIES
Dow Jones (13880.62, -0.34%) dipped further lower in the 13850-14050 range. 13800 will be key support to be watched, which if broken can take Dow lower towards 13150-100 levels. It is time to be cautious. Existing home sales came at 4.92Mln against expected of 4.89Mln.

A-Pac is trading mixed with Australia (5049.30, +1.01%), Hang Seng (22808.46, -0.43%) and Taiwan (7923, -0.43%).

Shanghai (2321.22, -0.20%) fell sharply yesterday and the way it has fallen there are good chances that a break of 2300 can be seen in the next week. Further dip to 2255-50 then becomes likely.

Nikkei (11191.64, -1.04%) has dipped in its 11000-500 range. Both the index and the Dollar-Yen are ranged.

Nifty (5852.25, -1.53%) had a Bad day as it saw a strong Sell off. It seems to be targeting 5750 in the coming days. If we do go down to these levels and the Dollar-Rupee rises the only hiding place in the stocks is likely to be the IT space.

COMMODITIES
Commodities have weakened. Nymex and Brent both can see further losses; Gold, Silver and Copper can all dip in the coming days.

Nymex Crude (93.22, +0.41%) dipped further and is likely to see a further slide towards 90.00 in the coming days. Levels of 84 on the break of 90.00 also cannot be ruled out.

Brent (114.13, +0.53%) is likely to dip towards 111.00 in the near term. If 111.00 is broken then a further cut towards 102.00 also becomes a possibility.

Gold (1581, +0.16%) was up just a bit yesterday but the near/medium term trend remains down and a further dip towards 1515-00 is on the cards.

Silver (28.78, +0.30%) is at the support on the weekly charts but the long term 27-35 range is still in place and a dip to 27.00 can now be seen.

Copper (3.57, +0.72%) in the near term has support near 3.50-45, a break of this support if seen will push it further lower towards 3.30 and 3.15.

CURRENCIES
The Dollar Index (81.36) has registered a solid gain over the last three weeks, especially this week, breaking above 80.70. But, while the downtrend has been broken, there can be chances of wide sideways range trade.

The Euro (1.3197) remains weak, but found Support at 1.3161. A rise past 1.3225, if seen, would be supportive. The really crucial Support to watch is 1.3115-05. Dollar-Yen (93.15) came down to as much as 92.77 yesterday, likely pulled down by the Euro-Yen (122.90), which itself fell to 122.25. How the Euro-Yen does is going to be crucial. The Support to watch now is 121.85. In case it breaks, we can see a decline towards 119.

There's a lot of Eurozone data out today, including German GDP, IFO and Euro CPI. So, a lot of action is likely to take place.

The Pound (1.5250) has bounced sharply from yesterday's low of 1.5131. While a short-covering rally to 1.5375 could be seen, the longer term trend is quite bearish now. The Aussie (1.0305) fell to 1.0221, but has bounced from there. The outlook is unclear now for the next few days at least.

Dollar-Swiss (0.9293) rose to 0.9333 yesterday, but has come off slightly from there. The EURCHF Cross (1.2271) has also come off sharply over the last three days. It was looking bullish earlier in the week.

Dollar-Rupee closed near 54.4750 yesterday. It can be expected to follow the Euro during the day. A rise to 54.75-55.00 cannot be ruled out.

INTEREST RATES

The Spain-Germany 10-Yr (3.63%) has gone up a bit instead of coming down towards 3.40%. The Spain 10-Yr is steady near 5.2%.The Italian 10-Yr (4.5%) is looking up, targeting 4.62%. This is not very good news. The Italian elections will be closely watched.

The US 10-Yr (1.98%) has fallen back below 2.0%, even though the core CPI showed a solid rise of 0.31% MoM and the Existing Home Sales rose to 4.92 mln against expectation of 4.89-4.91 Mln. The Fed might have debated the QE and the market may have got spooked, but it seems unlikely that the Fed will step back from it.

DATA TODAY
12:30 GMT or 19:00 IST CA Inflation Y/Y
...Expected 0.70 % ...Previous 0.8 %

8:00 GMT or 14:30 IST GER IFO Business Climate
...Expected 105.00 ...Previous 104.20

8:00 GMT or 14:30 IST GER IFO Business Situations
...Expected 108.50 ...Previous 108.00

8:00 GMT or 14:30 IST GER IFO Business Expectations
...Expected 101.30 ...Previous 100.50

DATA YESTERDAY

US Core CPI (MoM)
...Actual 0.31 % ...Previous 0.12 %

US Philifed Index
...Actual -12.5 ...Previous -5.80

US Existing Home Sales
...Actual 4.92 Mln ...Previous 4.90 Mln