Market Morning Briefing

GOOD MORNING!

STOCKS
The better than expected Chinese GDP (7.4% vs 7.7% on a Quarterly basis) along with the bounce in the US market generated a positive mood in the Asian market this morning.

The Dow (16262.56, +0.55%) bounced back from 16000 levels for the third time in the last 9 weeks and as long as 16000 continue to provide support, we may expect the bounce to extend higher towards 16400-450.

The Dax (9173.71, -1.77%) crashed long before it could rise higher to 9450 levels and confirmed the inherent weakness. It may trade inside the range of 9100-9300 for a few sessions now.

In the Asia-pac, Shanghai (2104.29, +0.13%) is trading flat after the GDP data came out. It is in a corrective mode after the recent rally but it may find serious buying from 2090-80 and resume the uptrend for a target of 2170-80.

The Nikkei (14313.73, +2.26%) is testing the breakdown trendline right now and any close above 14350 may raise questions about the expected fall to 13750 levels. The bears must attack now or the bearish bias may weaken considerably.

The Nifty (6733.10, -0.64%) has broken below the support of 6745-35 to signal the loss of bullish momentum and a sideways movement in the range of 6680-6800 with a neutral bias. But keep cautious as a break below 6680-50 will threaten the uptrend and may drag it down to 6550-6500 in that case.

COMMODITIES
Metals are overall bearish while the oil market is trading higher.

Gold (1298.71) dropped sharply making an intraday low to almost near 1290 in line with our expectation as the resistance near 1331.16 strongly held. Testing Support near 1290 now movements in the next few sessions may be restricted in the 1290-1310 regions.

Silver (19.487) also dropped sharply after a sideways consolidation for the past two weeks. It needs to rise past 19.6 else it may see a fall to 18.75-18.5. Near term looks bearish for now.

Copper (2.990) fell shaply as industrial production in China fell indicating a slower pace of growth and may target the 2.95-2.90 levels again. Bears are dominant for now while the overall trend remains down since Feb’12.

Brent (109.010) has hit the trend resistance near 109.75 and has paused for now. If this holds we may see some short term moves within 108.5-110 region else a rise further towards 110-112.

Nymex WTI (103.82) is ranged within the 102.8-104.5 zone but may see correction towards 102.08-101.66 in the near term before rising again. Movements may be restricted in the 104.5-102 region for a few sessions now.

FOREX
Dollar Index (79.83) has bounced from 79.25-79 as expected but the weakness may return from 80-80.10 again. Only on a break above 80.55-60, the trend will turn from down to up.

The Euro (1.3817) faced rejection from our resistance of 1.3885-1.3900 but the short term strength may return from 1.3790-60 to take it to 1.40. From the broader perspective, for major gain it has to break above 1.40 and simultaneously Dollar Index must break below 79.

Dollar-Yen (102.24) has managed to hold above 101.50-20 so far to remain in the 10 week long broad range of 101-104. Now it may face resistance at 102.75-103.00. We keep watching the long term support at 100.75-50 for major moves.

The Euro-Yen Cross (141.27) is finding buying support from 140.50-139.50 as expected and now a break above 141.65-90 may take it higher towards the major resistance of 143.50.

Pound (1.6724) has faced some selling at 1.6780-1.6820 area as expected but after this small correction the major rally may resume towards 1.70-1.7050.

Aussie (0.9355) may trade in the range of 0.93-0.94 for some more time before making a decisive move. Bulls may attempt to push it higher from 0.9325 or even 0.9300-0.9270. Our bias is neutral for the moment.

Dollar-Rupee (60.23) bulls managed to keep it in the higher inside range of 60-60.30 for the last 2-3 days, but they must break above 60.40-60.60 immediately or the bears may come back strongly any time now.

INTEREST RATES
The US 10 Yr (2.64%) and the 5Yr (1.62%) remained stable after bouncing from the support near 2.60% and 1.60%-1.55% the day before and may now see a rise towards 2.75% and 1.75% respectively.

The German-US 2Yr spread (-0.21%) has come up a bit as the Euro (1.3817) remained stable and has come to test the 8-MA support on the 3-Day line charts and may see a bounce from here. The German-US 10Yr spread (-1.11%) is also up and may come up further to test the resistance near -1.05%. The German 10Yr (1.47%) fell below the support at 1.50% contrary to our expectation. We can expect a range of 1.45%-1.55% for now. A break beyond this range will give us further direction.

The US-Japan 10Yr spread (2.04%) has bounced from the 2.02%-2.03% levels mentioned yesterday but may find resistance near 2.05%-2.06%. But while below 2.05%-2.06% it may be vulnerable to a further fall to 2.00%. The Dollar-Yen (102.24) is also up and may find resistance at current levels as seen in the Daily candles. The Japan 10Yr (0.61%) is unchanged but the 10-5Yr yield differential (0.42%) is up slightly from the support at 0.40%-0.41%. A further bounce and the 10Yr can target 0.65%.

The Indian 10 Yr GOI yields (8.95%) remained stable after a long weekend and a weak IIP data. The WPI and the CPI figures came out at 5.70% and 8.31% we need to see how the markets react to these numbers before we can give further direction.

DATA TODAY

9:30 GMT or 15:00 IST UK Unemp
...Expected 7.20 % ...Previous 7.20 %

10:00 GMT or 15:30 IST EU CPI (YoY)
...Expected 0.50 % ...Previous 0.71 %

12:30 GMT or 18:00 IST US Housing Starts (Mln)
...Expected 968 K ...Previous 907 K

13:15 GMT or 18:45 IST US Industrial Production
...Expected 0.50 % ...Previous 0.59 %

13:15 GMT or 18:45 IST US Capacity Utilization
...Expected 78.80 % ...Previous 78.40 %

15:00 GMT or 20:30 IST BOC Meeting
...Expected 1.00 % ...Previous 1.00 %



DATA YESTERDAY


IN WPI
...Previous 4.68 % ...Actual 5.70 %

UK CPI Y/Y
...Expected 1.60 % ...Previous 1.70 % ...Actual 1.60 %

EU Trade Bal
...Expected 8.50 EUR Bln ...Previous 0.80 EUR Bln ...Actual 13.60 EUR Bln

IN CPI (Mar'14)
...Previous 8.10 % ...Actual 8.31 %

US Core CPI (MoM)
...Expected 0.10 % ...Previous 0.10 % ...Actual 0.35 %

US TICS (Net foreign purch of long-term Sec)
...Expected 14.60 $ Bln ...Previous 7.70 $ Bln ...Actual 85.70 $ Bln