S&P 500 (Sep 10) INTRADAY
Review European stocks retreated from a four-week high, as declines by financial and basic-resources shares overshadowed a rally in Nokia Oyj. U.S. index futures and Asian shares fell. BHP Billiton Ltd. and Rio Tinto Group slipped as Australian Prime Minister Julia Gillard clinched a deal to keep power. Barclays Plc fell 1.5 percent after naming Robert Diamond as chief executive officer. The Stoxx Europe 600 Index lost 0.3 percent to 260.16 at 8:26 a.m. in London. The index, which advanced the most since July last week as reports showed accelerating growth in U.S. and Chinese manufacturing and increased hiring by American companies, is still trading 4.4 percent below this year’s high.
Strategy Looking ahead we are expecting some profit taking after last week’s strong rally. Financials may also be effected by news this morning of a European bank needing emergency funding. The main event for this week is Obama’s proposal to expand tax relief for businesses and boost federal spending on the nation’s transporta-tion system to help bolster an economy that’s losing jobs heading into the November congressional elections. We are expecting a qui-et session as there are no U.S. economic data due today. This may limit the risk appetite and reduce investors' exposure to Equities.
Alternative Scenario Positive fundamental news flow could lead to a break-out of R3 at 1,112.25 open-ing the way for a more aggressive move to the 61.80% Fib Level at 1,131.50.
EUR/USD INTRADAY
Review The euro fell the most in a week on concern sovereign-debt risk will hinder the fiscal health of Eu-ropean banks, denting prospects for the region’s recovery. The 16-nation currency weakened against 14 of its 16 major counterparts after an industry group said Germany’s 10 largest lenders may need fresh capital to meet new regulations. The euro dropped 0.5 percent to $1.2811 as of 7:56 a.m. in London from $1.2876 in New York yesterday, the biggest decline since Aug. 30.
Strategy Looking ahead we are expecting some profit taking after last week’s strong rally. Renewed concerns over fund-raising by European banks and governments may add some pressure to the euro. European Union finance ministers weighed ideas for im-proving national budget management, monitoring countries at risk and imposing sanctions on rule-breakers, EU President Herman Van Rompuy said in a statement yesterday after leading a brain-storming session in Brussels. Also, we are expecting a pull back in German industrial orders that may negatively affect the euro.
Alternative Scenario Positive euro-zone fundamental news flow could lead to a break-out of R1 at 1.2891 opening the way for a more aggressive move to R2 at 1.2964.
Crude Oil (Oct 10) INTRADAY
Review Oil dropped for a second day in New York on speculation fuel demand will decline as the U.S. summer peak consumption season ends. Yesterday’s Labour Day holiday marked the end of the peak driving season. Refiners often idle units for maintenance in September and October as gasoline demand drops and before heating-oil use increases. U.S. crude inventories last week rose to the highest level since June, the En-ergy Department said. Motor fuel supplies are about 10 percent higher than last year.
Strategy Looking ahead we are expecting a consolidation of the recent downtrend as concerns about an increase in oil inventories in conjunction with a strong dollar may add some pressure to the oil price. Crude failed to break out the $75.00 handle last week and this represents a bearish technical signal in our view. Also, gasoline and motor fuel supplies have reached very high levels to justify a crude price above $75.00. We are expecting a quiet session for to-day as there are no economic data due in the U.S. This may limit the risk appetite and reduce investors' exposure to commodities.
Alternative Scenario Positive fundamental news flow could lead to a break-out of R2 at $74.80 opening the way for a more aggressive move to last week’s high at $75.60.
