Market Morning Briefing

GOOD MORNING!

STOCKS
Dow (17,180.84, -0.58%) took support at 17,100 its important support. Downside targets for now have been achieved. 17,100-16,900 are strong support zones and are likely to hold in present situation. Tough caution much be exercised as this is not a buy signal but a pause before next move. 

Nikkei (16,789.99.13, -1.81%) has broken below the psychological support of 17,000. The immediate targets are at 16,500 and 16,400. The range of 16,300-16,400 is zone of strong support and is unlikely to be breached. It is likely to be a good entry point for longer term investors. Only point of concern is lower inflation and how it will be tackled by BOJ and new govt.

Shanghai (2,974.53, +0.72%) has run up against expectations. However the setup is not bullish until 2,980 is crossed on closing basis. A close above 2,980 would be bullish and will void current bearish outlook.

Dax (9,334.01, -2.72%) closed at the lows of the day near 9,300. Our second target of 9,250 remains intact. 9,200-9,000 is a very good support zone, a break of which would see a much sharper fall. We expect 9,200 to hold as long as ECB's QE is under consideration. It would be a good buy zone in short to medium term.


Nifty (8,219.60, -0.05%) though it bounced from support of 8,150, the closing was weak. We are likely to retest 8,150 today. The immediate bias remains to the downtrend as profit-booking and negative global cues cap the up moves.

COMMODITIES
Resistances for both Gold and Silver has held well keeping prices lower for quite some time. Oil market continue to slump. Copper is also trading low.

Gold (1197.14) has dropped sharply to levels below 1200 before the FED meeting today indicating that the strength of the bears are not over yet. But we may soon see some recovery from 1175-1180. 

Silver (16.209) also dropped loosing the rise seen last week, coming to earlier levels of 16-16.75. 

Nymex WTI (55.70)is falling at a great pace and it would be no exaggeration to expect a fall towards 44-40 levels in the coming weeks. Near germ remains strongly bearish.

Brent (60.83) is no exception to the already falling prices. We may expect a fall to 55.7-55.9 in the coming weeks.

Copper (2.892)also saw a sharp fall yesterday, falling from 2.95 levels. As said earlier, the 2.80-2.95 region may hold for sometime now.

FOREX
The highlight of the day was the capitulation of Russian Ruble which was down about 9.5% closing at 64.85 (previous 58.05). It later recovered some losses as Central Bank hiked rates.

Euro (1.2442) has been resisted at 200MA at 1.2450 now on hourly charts for an entire weak now. Only ray of hope for bulls is that 100MA (1.2407, hourly) is holding for now. The breakout on either side should be sharp but the bias is for a break below. FOMC minutes would be a clear trigger for the breakout.

Pound-Dollar's (1.5646) traded at both upper and lower end of the range yesterday (1.5600-1.5750). The range has been sustained for a month now. Break out would most likely be on the downside.

Dollar-Yen (117.76) is showing clear signs of top out in near term on multitude of factors. 117.20-117.50 is an important support zone, followed by 115.50 and 114.00. 119.00 is the resistance for now.

Dollar-RUPEE (62.94) spiked to close near the target levels of 63.00. The bullish momentum likely to continue in short term. The next targets are 63.00 and 63.20.

Aussie-Dollar (0.8222) took support at 0.8200 and is likely to break below 0.82 in short to medium term. The deteriorating fiscal situation in Australia and drop in mineral exports are likely to pressureAussie into 7-handles in 2015.

INTEREST RATES
Emerging markets are in a similar situation last seen in 1998 with falling Oil prices and /russia sinking into a debt defalt and devaluation. 

The US bond yields have risen before the FED meeting today.The 5Yr(1.563%), 10Yr(2.118%) and 30Yr(2.746%) have risen from 1.512%, 2.083% and 2.740% respectively while the overall yields are in a downtrend. 

Russian central bank anounced to increase rates to 17% from 10.5% effective from today and saw immediate gain in the Rouble (61.234). The Russian 5Yr (13.59%) and the 10Yr(13.135%) has risen from 13.085% and 12.92% respectively. 

Indian 10 Yr GOI yield (7.8329%) remained stable yesterday. But as said earlier it is heading downwards targeting 7.80% before starting a rise afresh.

DATA TODAY

9:30 GMT or 15:00 IST UK CPI Y/Y 
...Expected 1.20 % ...Previous 1.26 % 

10:00 GMT or 15:30 IST EU Trade Bal EUR Bln 
...Previous 17.70 

13:30 GMT or 19:00 IST US Housing Starts 
...Expected 1025 K ...Previous 1009 K


DATA YESTERDAY:-  

JP Tankan Large Manufacturers Index 
...Expected 13 ...Previous 13 ...Actual 12

IN WPI 
...Previous 1.8 % ...Actual 0.0 %

US Industrial Production 
...Expected 0.80 % ...Previous 0.1 % ...Actual 1.3 %

US Capacity Utilization 
...Expected 79.4 % ...Previous 79.3 % ...Actual 80.1 %

US TICS (Net foreign purch of long-term Sec) 
...Expected 72.80 $ Bln ...Previous 164.30 $ Bln ...Actual -1.4 $ Bln