GOOD MORNING! STOCKS
Equities are down across the globe. The Dow (16528.03, -0.69%) and Dax (10259.46, -0.38%) are down relatively modestly. But the Nikkei (18440, -2.38%) and Shanghai (3146, -1.86%) are down a goodish bit. Even the Nifty (7971.30, -0.4%) closed below the crucial level of 8000 yesterday.
Of these, the Dow looks the strongest, relatively, reflecting the better economic data from the USA. The Month Close above 16250 gives it a chance to rise towards 17000-250. The Dax comes in second as it has important Support near 9900-9800.
The Asians are not performing as well. We remain bearish on the Shanghai of course, targeting 2900 and lower. The Nikkei might want to dip towards 17900 before it finds Support.
What the Nifty (7971) does today will be crucial. On the one hand, Q1-GDP has come in at 7.0% yesterday, lower than the expected 7.4%. On the other hand, HDFC Bank has reduced Base Rates. So, we have to see how the market reacts. If it rises past 8000, it may acquire some strength.
Commodities continue to recover, with Crude rising the most. Copper is underperforming both Crude and Gold.
Gold (1140) is sustaining well above 1125 so far, but it also has important 21-week MA Resistance at 1159 overhead. It's at a crucial "where should I go?" juncture. It continues to look attractive against Equities, but has lost ground against Crude.
The Gold-WTI ratio (23.89) has come down sharply from 30.16 (24-Aug) and may dip some more towards 21 and then bounce from there.
Contrary to expectation, WTI (47.69) and Brent (52.63) have not fallen. Instead they can rise some more. WTI can test long-term Resistance near 52 and then come off from there. Similarly, Brent (52.63) has Resistance near 56 that is likely to hold, pushing the price back down towards 48.
Copper (2.3360) has Support at 2.30 in the near term and might try to move up towards 2.40 while that Support holds.
Currencies are almost stable today with no major moves. May see some consolidation in the near term. Euro, Pound and Yen are slightly strong against the Dollar today.
Euro (1.1268) is almost stable, trading just below the 200-day MA near 1.1294. As mentioned yesterday if it breaks above 1.13-1.136 we may expect a rally to 1.15 else a fall towards 1.10-1.9 cannot be negated in the medium term. Note there is important support near 1.1125-1.1135 which seems likely to hold.
Pound (1.5390) has slightly bounced from an intra-day low of 1.5337 seen yesterday. Support at 1.53 is likely to hold for now taking prices back to 1.55 in the near term. See important long term resistance on the 3rd chart: http://www.kshitij.com/graphgallery/gbpma.shtml#ma
Dollar- Yen (120.62) has come down again in the last 2-sessions but while above 120, there is a fair possibility of a rise towards 123-124 in the coming sessions. There is a long term channel support on the weekly charts. See: http://www.kshitij.com/graphgallery/jpycandle.shtml#candle
Dollar-Rupee (66.48) is maintaining well above 66 levels and looks weak against the US Dollar. While the momentum continues we may see movements in the broad 66.6-66.0 region. The downward bias towards 65.80 may be negated while price is above 66.10.
US yields are up. The 10Yr (2.19% and 30Yr (2.94%) are up from 2.17% and 2.88% respectively. But we may soon see a down move in the medium term as the yields may test resistance in the coming sessions. See: http://www.kshitij.com/graphgallery/usdsin00.shtml#sin00
German yields have moved up. The 5YR (0.133%), 10Yr (0.806%) and 30Yr (1.529%) are up from 0.088%, 0.722% and 1.529% respectively. Yields may rise for a few sessions before testing resistance. See: http://www.kshitij.com/graphgallery/eursin00.shtml#sin00
The German-US 10 Yr (-1.38%) has risen from -1.45% and may remain choppy in the near term. See 2nd chart: http://www.kshitij.com/graphgallery/eurusddiff.shtml#eurusd
Japan yield are trading low. The 5Yr (0.014%), 10 Yr (.265%) and 30 Yr (1.34%) are down from 0.021%, 0.269% and 1.355% respectively. See charts: http://www.kshitij.com/graphgallery/jpysin00.shtml#sin00
HDFC bank has cut base rate by 35 bps which may be followed by other banks also. The 10 Yr GOI yield (7.78%) is slightly up and may trade in the 7.8-7.75% in the near term.
23:30 GMT or 5:00 IST AU PMI
...Previous 50.4 ...Actual 51.7
1:00 GMT or 6:30 IST CN PMI
...Expected 49.8 ...Previous 50.0 ...Actual 49.7
1:35 GMT or 7:05 IST JP PMI
...Expected 51.9 ...Previous 51.9 ...Actual 51.7
4:30 GMT or 10:00 IST RBA Meeting
...Expected 2.0 % ...Previous 2.0 %
7:30 GMT or 13:00 IST CH PMI
...Expected 49.9 ...Previous 48.7
8:00 GMT or 13:30 IST EU PMI
...Expected 52.4 ...Previous 52.4
8:30 GMT or 14:00 IST UK PMI
...Expected 51.9 ...Previous 51.9
9:00 GMT or 14:30 IST EU Unemp
...Expected 11.1 % ...Previous 11.1 %
12:30 GMT or 18:00 IST CA GDP
...Expected 0.2 % ...Previous 0.2 % -
14:00 GMT or 19:30 IST US Manufacturing ISM
...Expected 52.6 ...Previous 52.7
...Expected 7.4 % ...Previous 7.5 % ...Actual 7.0 %