Asian and emerging markets overnight were mixed at
best, dealing with speculation about additional easing from the
U.S. and Europe, and disappointing manufacturing data from
several Asian countries including China, which saw a .01 drop in
manufacturing.
Emerging markets behemoth China is closing in on the 50 level
that demarcates expansion or contraction with a print of
50.1.
Mainland China's Shanghai Composite Index bounced off 2009
lows on speculation the Chinese government may add additional
stimulus. China's securities regulator is attempting get
companies to buy back shares in order prop up equities.
Overnight emerging markets appeared to be bracing for the
possibility of being disappointed about additional quantitative
easing. Reports are surfacing the FOMC is not likely to come out
with QE3 today, but will wait to see how the global economy is
faring come September's meeting. This is a clear shift in
sentiment from last week. If it turns out the FOMC remains on the
sidelines, emerging markets will be focusing on the ECB for
market support.
Indian equities traded in a choppy session ahead of the
FOMC/ECB releases and after disappointing manufacturing reports.
Market leadership was basically reversed today in India, capital
goods and healthcare stocks took the lead while banking and
technology came under pressure after running hot in the previous
session.
Today's key economic data:
Key economic data as developed and emerging markets wait
for the FOMC decision.
|
10:00 a.m. EDT
|
USD
|
ISM Manufacturing Index
|
|
02:15 p.m. EDT
|
USD
|
FOMC Statement
|
|
02:15 p.m. EDT
|
USD
|
Interest Rate Decision
|
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Commodity Marker - Electronic Trading
|
Crude oil
|
$88.43
|
+0.37
|
+0.42%
|
|
Nat Gas
|
$3.176
|
-0.033
|
-1.03%
|
|
RBOB-Gasoline
|
$2.8033
|
+0.029
|
+1.05%
|
|
Brent Crude
|
$105.68
|
+0.76
|
+0.72%
|
|
Gold
|
$1,614.20
|
+3.70
|
+0.23%
|
|
Silver
|
$27.87
|
-0.044
|
+0.16%
|
|
Copper
|
$3.426
|
UCH
|
UCH
|
|
U.S. dollar index
|
82.70
|
-0.01
|
-0.01%
|
|
as of 7:35 a.m. EDT
|
Precious metals corner
Gold and silver prices lost ground for the third and second
days in a row respectively as sentiment shifted to there being no
additional easing from the FOMC, with risk aversion declining.
Sentiment has swung far enough that if we did get QE3 gold and
silver prices would skyrocket.
ETF holdings
Holdings in the world's largest gold-backed ETF, the SPDR Gold
Trust (
GLD
,
quote
) moved higher to 1,251.93 tons as of July 30 from the
previous trading day.
The iShares Silver Trust (
SLV
,
quote
) moved higher as well to 9,687.66 tons on July 30 from the
previous trading day. SLV is the world's largest silver backed
ETF.
Fundamental outlook
Gold and silver are likely to trade in a similar fashion to
yesterday as market participants wait on the FOMC statement today
at 2:15 p.m. EDT. Speculation just prior to the release will
likely push prices into a very choppy period.
Looking at the pre-market we find:
ACH
ALUMINUM CORP CHINA LTD ADR
SHPG
SHIRE PLC ADR
Upcoming earnings in the Emerging Money Index
|
MELI
|
MERCADOLIBRE INC
|
August 1
|
After the bell
|
Bottom line:
Both developed and emerging markets continue to focus on the euro
zone and whether ECB president Mario Draghi can bring together a
plan to deal with the European Union debt crisis, while
traders are looking to this afternoon's FOMC statement
at 2:15 p.m. EDT; the ECB is scheduled for Thursday at 8:30 a.m.
EDT.
Caution is the name of the game ahead of the FOMC release.