In overnight trading developed and emerging markets
moved higher on continued hope of central bank intervention.
Emerging markets such as Hong Kong along with Japan rallied in
the bottom half of trading on better than expected GDP growth
from Germany.
Overnight economic data from the euro zone was mixed, placating
both pro-easing and no-easing camps. Pro-easing remain convinced
both developed and emerging markets' central banks will need to
step into the game and begin easing by their next scheduled
meetings.
The no-easing camp are looking to defensive names to ride out
the storm. This can be seen by looking at which sectors saw the
most upside. Many of these sectors such as consumer staples names
outperform in defensive times.
This sentiment can be found in the emerging markets
subcontinent of India. India's wholesale price index (WPI) a
measure of inflation, climbed to 6.87% but this was surprisingly
less than the expected rate of 7.37%. This fueled speculation
that India's central bank has sufficient room to ease.
The renewed speculation sent the NIFTY and the Sensex both
higher by 0.61% and 0.54% respectively on the day.
The NIFTY's move higher pushed the emerging markets index 30
points above the five month resistance level of 5350. Whether the
speculation is warranted or not, the NIFTY is technically now in
a positive up swing for at least the near term, with 5350
now acting as near term support.
The lower inflation, mainly in food, should come as some
relief to Indian consumers, at least until such time as India's
central bank intervenes. Looking at WPI from a banking
standpoint, India's banking sector stands to gain the most as
traders speculate on another rate cut. ICICI Bank Limited (
IBN
,
quote
) moved higher by 2.20% on speculation of an upcoming cut. The
U.S. ADR quoted above is higher by 7.59% in pre-market trading.
Other sectors to watch for are big ticket items that would
benefit from rate cuts such as Tata Motors (
TTM
,
quote
).
Traders should be mindful that India's U.S.-based ADRs will
not have the benefit of India's equity markets for guidance
tomorrow. Our overnight is India's Independence Day, which means
Indian exchanges will be closed for the day.
|
08:30 a.m. EDT
|
USD
|
PPI (YoY)
|
|
08:30 a.m. EDT
|
USD
|
Core PPI (YoY)
|
|
08:30 a.m. EDT
|
USD
|
PPI (MoM)
|
|
08:30 a.m. EDT
|
USD
|
Retail Sales (MoM)
|
|
08:30 a.m. EDT
|
USD
|
Core PPI (MoM)
|
|
08:30 a.m. EDT
|
USD
|
Core Retail Sales (MoM)
|
|
Wednesday
|
|
04:30 a.m. EDT
|
GBP
|
MPC Meeting Minutes
|
|
04:30 a.m. EDT
|
GBP
|
Claimant Count Change
|
|
04:30 a.m. EDT
|
GBP
|
Average Earnings Index +Bonus
|
|
07:00 a.m. EDT
|
ZAR
|
South African Retail Sales (YoY)
|
Live Economic Calendar Powered by
Forexpros
- The Leading Financial Portal
Commodity Marker - Electronic Trading
|
Crude oil
|
$92.86
|
+0.13
|
+0.14%
|
|
Nat Gas
|
$2.746
|
+0.017
|
+0.62%
|
|
RBOB-Gasoline
|
$2.992
|
+0.0013
|
+0.04%
|
|
Brent Crude
|
$113.80
|
+0.20
|
+0.18%
|
|
Gold
|
$1,612.70
|
+2.10
|
+0.13%
|
|
Silver
|
$27.815
|
+0.048
|
+.17%
|
|
Copper
|
$3.331
|
+0.0075
|
+0.22%
|
|
U.S. dollar index
|
82.42
|
-0.065
|
-0.08%
|
|
As of 7:40 a.m. EDT
|
Precious metals corner
Gold and silver both drifted lower yesterday with gold forming
a bearish engulfing candle formation. The precious metals
continue to trade in a sideways channel ahead of the ECB and FOMC
meetings.
ETF holdings
Holdings in the world's largest gold-backed ETF, the SPDR Gold
Trust (
GLD
,
quote
) remained steady at 1,258.15 tons as of August 13 from the
previous trading day.
The iShares Silver Trust (
SLV
,
quote
) held at 9,742.43 tons on August 13 from the previous trading
day. SLV is the world's largest silver backed ETF.
Fundamental outlook
Gold and silver continue to remain weak and unable to break
out of the three month range-bound channel. Global economic
weakness is pressuring gold prices but anticipation of QE3 is
weighing on the U.S. dollar, helping to stem any large sell-off
in the metals. Come September's FOMC decision all this could
change.
The U.S. dollar is limiting upside while economic weakness in
both developed and emerging markets pushes gold.
Looking at the pre-market we find:
ELN
ELAN CORP PLC ADR
CTFO
CHINA TRANSINFO TECH CORP
GA
GIANT INTERACTIVE GROUP ADR
IBN
ICICI Bank Limited ADR
TTM
Tata Motors ADR
Bottom line
: Developed and emerging markets are in for more of the same as
market participants speculate on key economic data out this week
as to the FOMC and ECB's willingness to initiate monetary
easing.
Continue to look for comments from developed and emerging
markets' central banks and the economic calendar in particular,
with an eye to any growth or lack thereof which could spark
additional speculation.