WSD Global Markets Feed

Market Commentary September 07th 2009

7 Sep 2009 02:22:53 GMT

USD, yen softer as growth-linked currencies firm

SYDNEY - The U.S. dollar and the yen were subdued in early trade on Monday while commodity-linked currencies were strong near highs as investors chose to focus on the brighter side of a mixed U.S. payrolls report. Data on Friday showed U.S. job losses were the smallest in a year in August, although the unemployment rate jumped to a 26-year high, suggesting any recovery in the labor market would be tepid. U.S. stock indices .SPX rose over 1 percent, lending support to currencies like the Australian and New Zealand dollars. These currencies tend to do best when optimism about a global recovery is rising. "We continue to see the risk being for a much stronger than expected rebound in U.S. growth and a continuing economic recovery in China," said John Kyriakopoulos, currency strategist at National Australia Bank. "Such an outcome, especially if accompanied by stronger U.S. consumer spending, would likely boost stock markets, risk-appetite and commodity prices, helping propel the Aussie to the $0.86 level we expect it to end the year." The Australian dollar was trading near a one-year high around $0.8530, having jumped nearly 1.3 percent on Friday. A firm gold price also lent the Aussie support. The New Zealand dollar was strong at $0.6890, having gained about 1.6 percent in the previous session. The Canadian dollar traded firmer at C$1.0841 from C$1.0855 late in New York where it rallied after an unexpected rise in employment in Canada in August. Gains in the euro were muted, up at $1.4318 from $1.4310 and 133.32 yen from 133.02 yen. The U.S. dollar inched up to 93.14 yen from 92.96 yen. Against a basket of currencies .DXY the dollar was at 78.086, down 0.07 percent. Trade is expected to be quiet on Monday with U.S. markets shut for a holiday. The highlights this week will be three major central bank meetings. The Reserve Bank of New Zealand, the Bank of England and the Bank of Canada meet on Thursday and while all three are expected to keep rates unchanged, their statements will be closely scrutinized by investors. The BoE surprised last time with an expansion of its quantitative easing program and the market will be wary of any addition credit easing measures. The RBNZ's statement will be scrutinized for any change of its explicit easing bias, while the market will focus on the conditional BoC commitment to keep rates on hold until June 2010. At the weekend, the G20 finance leaders agreed that it is far too soon to start unwinding fiscal, monetary and financial sector stimulus. Also due this week is a raft of Chinese economic data, including inflation, retail sales numbers and industrial production, which will investors an idea about whether the recovery in the economy is quickening or not.

Market Commentary September 04th 2009

4 Sep 2009 02:22:53 GMT

Nikkei hits 5-week closing low, Daiwa and SMFG fall

TOKYO - Japan's Nikkei average fell 0.3 percent to hit its lowest close in five weeks on Friday, with investors' reluctance to buy ahead of key U.S. jobs data outweighing short-covering on better-than-expected U.S. sales figures. Daiwa Securities Group dropped 6.1 percent, and Sumitomo Mitsui Financial Group fell 2.1 percent after news that Daiwa plans to buy SMFG's stake in their investment banking joint venture. The benchmark Nikkei .N225 fell 27.53 points to 10,187.11, its lowest finish since July 30. It moved in a tight range of about 100 points. The broader Topix declined 0.8 percent to 935.74.

Market Commentary September 03rd 2009

3 Sep 2009 02:22:53 GMT

Motorola shares rise 11 percent ahead of phone launch

NEW YORK - Shares of Motorola Inc closed up more than 11 percent on Wednesday as investors bought into the stock ahead of its highly anticipated Android phone announcement slated for Sept 10. Motorola, which reorganized its handset unit to focus on high-end phones based on Google Inc's Android system, saw its shares rise sharply in the last hour of trade to finish up 80 cents at $7.82, It continued to rise after the New York Stock Exchange close. Some analysts were puzzled by the sharp rise because Motorola had revealed the plan for an announcement the week before. But others said investors were covering short positions in case the company's shares rise after the news next week. "There could be some interest in the stock because of the phone launch coming up," said Deutsche Bank analyst Brian Modoff. He said short sellers, who typically bet on a stock price declining, were likely covering their positions ahead of the announcement. Motorola also attracted bullish option plays and heavy volume on Wednesday. Traders exchanged about 66,000 contracts, five times the average daily volume, according to option analytics firm Trade Alert. WhatsTrading.com option strategist Frederic Ruffy said sellers of the January, 2010 $7.50 and the October $7 and $8 put options drove a lot of the flow, while some players bought January, 2010 $7.50 calls and $8 calls with September and October expirations. While Motorola's valuation has plummeted in the last few years as it has steadily lost market share, its stock has more than doubled since May as some investors bet that strategy changes in its mobile devices business would pay off.

Market Commentary September 02nd 2009

2 Sep 2009 02:22:53 GMT

Oil falls as investor confidence wanes

NEW YORK - Oil prices fell nearly 3 percent to $68 a barrel on Tuesday as economic concerns sent investors into safer havens, outweighing positive U.S. manufacturing and home sales data. U.S. crude for October delivery settled 2.73 percent lower at $68.05 a barrel, down $1.91. In London, Brent crude dropped $1.92 to settle at $67.73 a barrel. The declines came after U.S. stocks dropped as renewed worries about the health of the U.S. financial sector shook investor confidence. .N The dollar rose as the slide in the U.S. stocks boosted the currency's safe-haven appeal. "The dollar is strengthening and equities are coming off hard, so (oil futures) did the same," said Tom Knight, a trader at Truman Arnold in Texarkana, Texas. Oil futures had risen early in the day as the market focused on a report showing a jump in U.S. manufacturing and pending home sales. "It looks like the whole complex is failing to sustain the gains ... basically, the market's not done yet on the downside," said Tom Bentz, senior commodity analyst at BNP Paribas Commodity Futures in New York. Oil prices have risen from a low of $32.40 in December, helped by economic recovery optimism that lifted global stocks .MIWD00000PUS to 10-month highs last month. U.S. DATA Oil traders will look for fresh direction from weekly U.S. crude stockpiles data. Analysts expected the data to show a 600,000-barrel fall in U.S. crude stocks following an increase in refinery utilization, a Reuters poll of analysts showed. The American Petroleum Institute was to release its weekly inventory report at 4:30 p.m. EDT on Tuesday. The U.S. Energy Information Administration (EIA) will release its data on Wednesday at 10:30 a.m. EDT. Adding to already high inventories, the Organization of the Petroleum Exporting Countries has reduced its compliance with agreed production curbs, a Reuters survey on Tuesday found. OPEC supply in August rose for a fourth consecutive month as Saudi Arabia, Nigeria and Venezuela increased their production, taking overall output discipline to 68 percent of the target from a revised 70 percent in July. OPEC meets on September 9 in Vienna to reconsider its output policy.

Market Commentary September 01st 2009

1 Sep 2009 02:22:53 GMT

Oil drops nearly 4 percent on China economy fears

NEW YORK - Oil prices fell nearly 4 percent to below $70 a barrel on Monday as fear of a curb in Chinese bank lending dented optimism about the pace of economic recovery and a potential rebound in global energy demand. U.S. crude for October delivery settled down $2.78, or 3.8 percent, at $69.96 a barrel, having fallen as low as $69.13 in intraday trade. In London, Brent crude settled down $3.14 at $69.65 a barrel. China's key stock index dived 6.74 percent on Monday to a three-month low, prompted by concern that China's government is trying to moderate economic growth and choke off some speculation in its stock market by tightening bank lending. European equities closed lower and U.S. stocks fell after China's index fall. .EU "The oil markets have been strongly affected by what's going on in China, where the fear is that authorities will rein in on lending and in the process curtail growth," said Phil Flynn, an analyst at PFGBest Research in Chicago Jitters about the Chinese economy, the world's second largest oil consumer, also weighed on other Asian stock markets. The Organization of the Petroleum Exporting Countries meets to review output on September 9 in Vienna. Several ministers and officials from the group have said it is likely to leave output targets unchanged. Even though OPEC agreed to 4.2 million barrels per day of supply curbs late last year, and has kept output targets steady so far in 2009, actual production has been rising in recent months, according to industry surveys. In a further sign of that trend, Abu Dhabi, the main producer in the United Arab Emirates, an OPEC member, will lift supply to Asia in October, the state oil firm said on Saturday. Despite the indications of higher supply from some in OPEC, oil has rallied from a low of $32.40 in December, the weakest price in nearly five years, to a 2009 high of $75 a barrel last week.

Market Commentary August 28th 2009

28 Aug 2009 02:22:53 GMT

Dell jumps ahead of the close as earnings released

NEW YORK - Shares of Dell jumped in the final moments of trading on Thursday after the company released second-quarter results before the closing bell. The results had been expected after market close. Dell finished the session up 6.7 percent at $15.65, but the company's shares slipped in extended trade, falling 1.3 percent to $15.44.

Market Commentary August 27th 2009

27 Aug 2009 02:22:53 GMT

Oil falls towards $71 on U.S. stockbuild; China eyed

SINGAPORE - Oil fell toward $71 on Thursday, extending losses by more than $3 after touching a 10-month high this week, as rising crude and diesel stocks eclipsed healthy economic data from the United States and Europe. Investors are also edgy about the pace of economic recovery in China, a likely clampdown on lending and plans to curtail overcapacity, prompting falls in equities markets in Shanghai, Hong Kong and Japan. U.S. crude for October fell 15 cents to $71.28 a barrel by 0234 GMT, retreating further from $75 hit earlier this week, the highest level since October. Brent crude fell 20 cents to $71.45 a barrel. "The question is whether both the commodities and equities markets have priced in the turnaround in the U.S. housing markets and other data," said Ben Westmore, commodities analyst with National Australia Bank. He was referring to better-than-expected gains in U.S. housing prices, an increase in durable goods orders and consumer confidence this week, lending new credence to the view that the economy is emerging from recession. "I don't think the markets will move much more on that." Eyes will now be on the U.S. GDP and jobless claims data later on Thursday, as well as German consumer sentiment. Stirring concerns over the growth of the world's No. 2 energy consumer, the Chinese cabinet said on Wednesday it would take steps to curb redundant investment and overcapacity in industries ranging from steel to wind power equipment. The decision came amid fears that China's $585 billion stimulus plan and a surge in new lending in the first half could trigger wasteful investment and a new crop of bad loans. It followed Premier Wen Jiabao's remarks that the economy faces new difficulties, including trouble boosting domestic consumption. Westmore said the oil markets were still weighed down by overcapacity, as shown by recent crude and products inventory data in the world's largest consumer. U.S. crude inventories rose by 200,000 barrels last week due to a rebound in imports weaker demand from refiners, Energy Information Administration (EIA) data showed, versus analyst expectations for a 1.1 million-barrel decline. Stocks of middle distillates, which include diesel and heating oil, rose by 800,000 barrels to total 162.4 million barrels last week, up over 30 million barrels against last year, and topping projections of a 300,000-barrel build. Gasoline stocks fell by a larger-than-expected 1.7 million barrels, against an expected 1 million-barrel fall. About 72 million barrels of gas oil for heating and jet fuel are also being stored in tankers globally, up from around 62 million barrels in June, at a time of uncertain demand from markets in the West going into the peak winter period. On current fundamentals, traders do not see prices breaking $75, the level at which they have been taking profits after oil jumped almost 130 percent from the lows at the turn of the year.

Market Commentary August 26th 2009

26 Aug 2009 02:22:53 GMT

World stocks steady; Ifo briefly lifts euro

LONDON - World stocks steadied just off this week's 10-month high on Wednesday while a closely-watched German survey, showing a bigger-than-expected improvement in business morale, gave the euro a brief shot in the arm. The Ifo business climate index rose for a fifth month running to 90.5 in August, compared with an estimate for a rise to 88.9 and an upwardly revised 87.4 in July. The euro quickly erased its gains and government bonds advanced however, reflecting just how cautious investors are following a sharp rally in risky assets in recent weeks. "As each day passes, the thought that this rally is unsustainable becomes less and less valid. Whilst it is inevitable that we will have negative days along the way, more and more investors are buying in to the idea that this is not a blip," said Brian Myers, analyst at ODL Securities. "Confidence is a fragile beast, but at the moment we should all be enjoying this return to bullishness." MSCI world equity index was flat after hitting a 10-month high on Tuesday. The index has risen more than 21 percent since January. The FTSEurofirst 300 index lost 0.1 percent with chemical, oil and gas companies leading the way down. "The (Ifo) figures are good. It confirms Germany is out of recession and things are turning up," a European trader said. "But the market is tired, pausing for breath and taking profit." The euro rose to the day's high of $1.4349 before slipping to $1.4325 while it briefly hit a 2-1/2 month high of 87.83 pence against the pound. The dollar lost 0.1 percent against a basket of major currencies. Emerging stocks fell 0.3 percent. Chinese stocks rose 1.8 percent after better-than-expected earnings from key companies. However, the index has lost around 13 percent so far in August, on track for its biggest monthly decline in October. U.S. crude oil rose 0.7 percent to $72.52 a barrel. The September Bund future gained 10 ticks.

Market Commentary August 25th 2009

25 Aug 2009 02:22:53 GMT

Oil prices touch 10-month high on economic hopes

PORTLAND, Maine - Oil prices gained on Monday, briefly touching a 10-month high near $75 a barrel on expectations an economic recovery would revive ailing world energy demand. U.S. crude rose 48 cents to settle at $74.37 a barrel after peaking at $74.81, the highest intraday price since October 21. Brent crude gained 7 cents to $74.26. The gains came alongside strength on Wall Street, where the stock market also briefly touched 10-month highs before pulling back slightly after a four-day rally. .N "The stock market's rise is driving crude oil futures higher, with the outlook controlled by economic optimism," said Phil Flynn, analyst at PFGBest Research in Chicago. Commodities markets have tracked stocks indexes closely in recent months as dealers view equities as a lead indicator of economic performance. Oil dealers said many investors were also using commodities as a hedge against the dollar, particularly oil as OPEC producers work to restrain supply. "Oil continues to ride a wave that is propelled by a fear of rising inflation and currency devaluation, OPEC members' unusually high level of compliance with production constraints, and a high level of oil importation into China," Mike Fitzpatrick, vice president at MF Global, said in a note. A report Monday showed implied oil demand in China, the world's No. 2 energy consumer, rose in July for the fourth consecutive month as refiners ramped up activity. Feeding hopes the recession was waning, reports on Monday showed new industrial orders in the euro zone rebounded in June and U.S. economic activity improved again in July. A string of positive economic data from various countries and rallying stock markets helped lift oil prices by 9.5 percent last week. Crude is up around 65 percent in 2009 and may head higher still, according to analysts. "We could now easily move toward the $80 mark, if the growing enthusiasm about the budding economic recovery continues to dominate sentiment," said Edward Meir, oil analyst at MF Global. Renewed tensions in Nigeria could also add support to oil prices. Nigeria's main rebel group said on Saturday it would resume attacks against Africa's biggest energy industry next month, overshadowing the surrender of hundreds of arms by rebels in a federal amnesty program. Oil analysts expect U.S. petroleum inventory data this week to show small declines in crude oil and gasoline supplies and a build in distillates inventories, according to a Reuters poll.

Market Commentary August 24th 2009

24 Aug 2009 02:22:53 GMT

Yen out of favor on recovery optimism

SYDNEY - The yen was broadly lower on Monday as optimism about the global economy saw investors increase bets on currencies linked to global growth and higher yields, such as the Australian and the New Zealand dollars. U.S. stocks .SPX ended firmer on Friday after a surprising rise in home sales and upbeat comments from Federal Reserve chief Ben Bernanke. Commodities were also firmer, with the CRB index .CRB jumping nearly 1 percent on Friday. The euro held firm around $1.4340, having gained 0.6 percent on Friday with resistance seen around $1.4406. Against a basket of currencies .DXY, the dollar was off 0.03 percent at 78.027 and well below last week's peak of 79.51. On the yen, the euro was at 135.63, up from 135.19 yen while the dollar advanced to 94.61 yen from 94.31 yen late on Friday. Commodity-linked currencies extended gains. The Aussie rose to $0.8380 from Friday's $0.8332 while the New Zealand dollar advanced to $0.6850 from $0.6816. Both had hit 2009 peaks earlier this month, before retreating on a bout of profit taking. "Bernanke's comments suggest better conditions for the U.S. economy and a virtual end for the recession," said Stephen Roberts, economist at Nomura Australia. "All the upbeat comments and better economic data are supporting appetite for high-yielders." "Also, the housing sector there seems to be turning a corner, although the Shiller report will give a better indication whether the sector is recovering or not." The Standard & Poor's Case/Shiller report on U.S. house prices for June is due for release on Tuesday. The month-on-month number is forecast to rise 0.2 percent. Later the same day, a report on U.S. consumer confidence in August is due for release. Analysts said while investors were getting confident the U.S. recession was ending, it was still unclear how the recovery would unfold. The strength of China's revival is also key, with the performance of Shanghai's share index acting as a major barometer of market sentiment in recent weeks. "With the Chinese economic recovery likely to have continued in the September quarter we'd be surprised to see a significant fall in commodity prices," said John Kyriakopoulos, currency strategist at National Australia Bank. As a result, he remained bullish on the Australian dollar, expecting to end the year at $0.8600