Market Morning Briefing

GOOD MORNING!

STOCKS
Equity markets not gung ho. Eastern Hemisphere looks more vulnerable to profit-taking decline than Western Hemisphere.

Thankfully, we were mortally scared of being Long on the Shanghai (4629) over the last several days. It has already seen a low near 4431 today after its crash from 4986.50 yesterday. 4400 is an important Support. There will be serious trouble if it breaks. Even a Day Close below 4600 today will be bearish. 

Resistance at 20800 on the Nikkei (20588, +0.18%) is still to be tested. We expect it to hold and produce a corrective fall, possibly below 20400-200.

The Dow (18126, -0.2%) was relatively quiet yesterday, possibly waiting for the US Q1-GDP data today, expected to come in at -0.90%, compared to the advance estimate of +0.23%. Support at 18000 could possibly hold. 

Despite our bullishness, the Dax (11677.57, -0.79%) was not able to advance yesterday and might still need to dip towards Support at 11500-450 in order to find Buyers.

The Nifty (8319) closed flattish yesterday and continues to look mixed/ vulnerable. Small Caps and Mid Caps losing ground. A worry. 

COMMODITIES
Overall commodities have bounced from immediate support levels and may see a short upward correction next week. 

Gold (1188.96) bounced back from 1180 levels yesterday. There is a possibility of movement in the 1180-1190 region today before a short rise expected next week. Silver (16.72) also tested support near 16.54 yesterday before rising up again as expected. It may close the week below 17.00. Next week could see some positive moves for the metals.

WTI Crude (58.34) and Brent (63.11) also saw a dip yesterday to 56.54 and 61.24 as expected before bouncing back to close higher. Some short correction is expected next week but on a medium term we may see another fall towards 54 and 60 respectively. 

Copper (2.7760) continues to trade above 2.75. Movements are very small and slow. No major movement expected ; it may close the week near 2.77. An upward correction towards 2.80-2.84 may be expected in the near term. See chart:http://www.kshitij.com/graphgallery/coppercandle.shtml#candle

FOREX
The Euro (1.0954) has remained above 1.0800 over the last three days and is looking mixed now. Can range between 1.0800-1050 for a couple of days while deciding whether to fall further towards 1.06 or not. 

Dollar-Yen (123.73) rose to as much as 124.46, surpassing the Jun-2007 high of 124.16, but has come off a bit from there. If may become very bullish if it manages to break above 124.50 next week. But, the Euro-Yen (135.55) has an important Resistance at 136.00 that could cap Dollar-Yen also for some time. 

The Pound (1.5330) fell to a low of 1.5260 and remains bearish overall towards 1.5200 while below 1.5400. The Aussie (0.7660) fell to a low of 0.7616 yesterday breaking below Support at 0.7650. It is showing no immediate sign of strength, but could see some Short-covering as Gold (1190) is holding above its Support at 1185.

Dollar-Rupee has important Support at 63.70-60 today. Might get bought.

INTEREST RATES
The US bond yields are stable. The 10Yr (2.13%) and 30Yr (2.88%) are constant. The 10-5Yr differential (0.61%) is up 1bps. The 30-10YR (0.75%) and 30-5Yr (1.36%) are up today. See charts:http://www.kshitij.com/graphgallery/usddiff.shtml#sindiff

The German yields are trading lower. The 10Yr (0.526%) and 30Yr (1.12%) are down from 0.524% and 1.166% yesterday. 
The German-US 2Yr Spread (-0.86%) is up 2bps from -0.88% yesterday while the German-US 10Yr Spread (-1.61%) has fallen from -1.59%. Near term remains bearish. See chart:http://www.kshitij.com/graphgallery/eurusddiff.shtml#eurusd

The Japanese yields are trading lower. The 5Yr (0.016%), 10Yr (0.295%) and 30Yr (1.399%) are low from 0.025%, 0.325% and 1.419%) respectively. The yield differentials are also trading low. The 10-5Yr (0.279%) is down from 0.30% and the 30-5Yr (1.38%) is down from 1.39%. Near term looks bearish.

The UK Gilts have fallen sharply after few sessions of stable movement. The 5Yr (1.35%), 10Yr (1.82%) and the 20Yr (2.40%) are trading lower from 1.387%, 1.852% and 2.419% respectively. See chart: http://www.kshitij.com/graphgallery/gbpsin00.shtml#sin00

The 10YR Indian GOI yield (7.646%) has come down from 7.67% and may see some more fall towards 7.63-7.62% in the near term.

DATA TODAY

23:05 GMT or 4:35 IST UK Cons Conf 
...Expected 4.00 ...Previous 4.00 ...Actual 1.00 

23:30 GMT or 5:00 IST JP Unemp 
...Expected 3.40 % ...Previous 3.40 % ...Actual 3.30 % 

5:45 GMT or 11:15 IST CH GDP
...Expected 0.0 % ...Previous 0.60 % 

12:30 GMT or 18:00 IST US GDP 
...Expected -0.90 % ...Previous 0.23 % 

12:30 GMT or 18:00 IST CA GDP 
...Expected 0.2 % ...Previous 0.0 %


DATA YESTERDAY:-

UK GDP 
...Expected 0.40 % ...Previous 0.38 % ...Actual 0.38 %