GOOD MORNING! STOCKS
Muted price action all around. The US market was closed yesterday but may reflect some of the energies shown by Dax (11320.77, +1.35%) today. In spite of the enthusiastic European markets discounting a possible ECB QE, the Asian markets are not bubbling with energy.
China saw a decline in industrial profits reflected in the 4.6% slide in the industrial companiesí earnings, dragging Shanghai (3602.79, -0.90%). Nikkei (19894.88, -0.25%) didnít take the lowest unemployment rate of 3.1%, the lowest jobless rate in the last 20 years as a good news as it reflected a shrinking of the labour force. Nifty keeps trading around the higher end of the range of 7700-7900 but yet to confirm any real strength.
A speculation over China supporting the industrious metals came in the aid of Copper (March, 2.09) as it spiked above 2.12. The probability of another dip towards 2.00, as mentioned yesterday, canít be ruled out yet. Both Gold (Spot, 1068.59) and Silver (Spot, 14.15) re trading sideways in narrow ranges for the moment but the chance of another pullback looks stronger on the charts of these precious metals.
Brent (45.46) and WTI (42.525) saw the first correction after 5-6 consecutive positive days. We repeat - one more down-leg towards 38-36 might still have to be allowed for while below 49 and 46 respectively.
The options markets are signaling a 70% chance of Euro (1.0611) hitting the levels of 1.046 by the year end. The expectations from the ECB chairman are high and a lot of easing or rate cut is hoped for in the 3rd December meeting.
With Dollar (99.83) trading around its multi-year high, the shorts in the other majors like Pound (1.5094) are yet to see any covering. Aussie (0.7225) is finding strength from the much improved performance of industrious metals like Copper and Iron ore. Dollar Rupee may wait for global cues today and may trade with an upward bias if manages to trade above 66.70. In that case, we may expect 67.20 in the next few session.
The ECB Meeting on 3rd December is eagerly awaited to provide major clues and no major volatility is expected till then.
German 2yr (-0.42%) remained unchanged with the negative bias intact, possibly the US holiday affecting it too. We are still watching the German-US 2yr Spread (-1.35%) trying to hold the support at 1.35% but a failure at this level may drag it down to -1.50%. See - http://www.kshitij.com/graphgallery/eurusddiff.shtml#eurusd
23:30 GMT or 5:00 IST JP Unemp
...Expected 3.40 % ...Previous 3.40 % ...Actual 3.1 %
9:30 GMT or 15:00 IST UK GDP
...Expected 0.50 % ...Previous 0.56 %
No major data release yesterday.