Market Morning Briefing

GOOD MORNING!

STOCKS
The falling Crude oil prices are good for equity markets, and the latest drop is yet to be factored into the prices.

Nikkei (17,418.58, 0.99%) gained on falling Crude oil prices, are back to 17,500 levels. A break above should see the targets of 17,700 and 17,850.

Shanghai (2,623.39, -0.27%) consolidates today after a rise of about 8% this week. Expect the trend to resume after consolidation.

Dax (9,974.87, +0.60%) tested its crucial 10,000 resistance. We expect this resistance to be broken over next 2-3 weeks, as volumes return to market.

Nifty (8,494.20, +0.22%) has retraced 61 percent of its fall from 8534 to 8430. A move above 8500-8510 would be positive for the trend and we will expect new highs above 8534.

COMMODITIES
Yesterday, strength in U.S Dollar Index pushed Gold (1185.88) from day’s high of 1199 to 1186, trading weaker in mid Asian hours. Till the time it is able to maintain above 1170 levels we prefer to continue with our short term bullish view for the target of 1230. Silver (16.18) is coming down to retest support level of 15.80, its lower end of the prevailing range. We expect a bounce back from this level to the higher end of the range 16.80.

Brent (72.48) declined below very crucial support levels of 75 as OPEC fails to ease the supply glut. We expect Brent to trade lower, might retest support levels of 67-68 in coming sessions. Nymex WTI(68.96) is trading close to its April 2010 low around 68 levels. We suggest being cautious at this juncture as prices are moving in the extremely over supplied zone and can produce a bounce back from this level.

Copper (2.9330) ended the session at day’s low with a bearish candle. We continue our bearish view for the down side target of 2.85, its down trending channel support.

FOREX
Some amount of volatility could be induced by month-end flows in low volume environment. However the trends and ranges are expected to remain intact.

Euro (1.2455) remains in a range with no confirmed trends in short term. Expect it to trade within the range of 1.250-1.2440 over next two days.

Pound-Dollar's (1.5718) is also in range moving in a channeled formation. Its ranges are 1.5800 and 1.5700. The range extension is limited to 25 pips on either side.

Dollar-Yen (118.2) gained on lower Crude oil on thin trades. It is unlikely to break above 118.50 over next few days.

Dollar-Rupee (61.87) has continued its range trades. We expect this range of 62.10-61.65 to hold at least for next two days until the RBI meet.

We are changing the stance on Aussie-Dollar (0.8507) and now consider that this is probably not in range as expected few days back. The lower commodity prices, with Crude oil leading lower, will adversely impact Aussie and the long term decline would be inline with lower growth expectations.

INTEREST RATES
Falling Oil prices seem to drive the interest rates lower. Globally yields are all down and may fall further in the near term.

The US 5Yr (1.528%), 10Yr (2.20%) and 30Yr (2.92%) has dropped sharply. The yield rates have been falling as expected and may reach lower towards the end of this year. The 10Yr may fall as low as 2.15% in the coming weeks. Overall yields may fall in the near term.

The Japanese Yen (118.18, +0.40%) weakened yesterday leading to a decline in the Japanese bonds. The 2Yr (0.004%), 5Yr (0.107%) and the 10Yr (0.421%) have fallen a bit with the 10 Yr yield falling at a greater pace. Overall the yields are heading lower with no immediate signal of any reversal. 

The German 10 Yr (0.70%) has also fallen sharply from 0.735%. The Euro (1.2457, -0.08%) has fallen from immediate resistance near 1.25 and if that holds may fall towards 1.24-1.23 in the coming weeks. 

The Indian 10Yr GOI (8.147%) is stable for now but a fall further towards 8% cannot be negated unless we see a bounce from here immediately.

DATA TODAY

23:05 GMT or 4:35 IST UK Cons Conf 
...Expected-1 ...Previous -2 

23:30 GMT or 5:00 IST JP Unemp 
...Expected 3.6 % ...Previous 3.6 % ...Actual 3.5 %

10:00 GMT or 15:30 IST EU Unemp 
...Expected 11.50 % ...Previous 11.50 % 

12:00 GMT or 17:30 IST IN GDP 
...Previous 5.7 % 

10:00 GMT or 15:30 IST EU CPI (YoY)
...Expected 0.30 % ...Previous 0.37 % 

13:30 GMT or 19:00 IST CA GDP 
...Expected 0.40 % ...Previous -0.10 %


DATA YESTERDAY:-

EU Biz Climate 
...Expected 100.3 ...Previous 100.7 ...Actual 100.8