US exchanges were closed yesterday


2/9/2014

Yesterday the exchanges were closed in the US. The rest of the markets exhibited neutral trends. Today at 13:45 CET the Purchasing Managers Index(PMI) will be published by Markit. At 14: 00 CET today the Manufacturing ISM industrial activity index for August and Construction Spending statistics for July will be released. In our opinion, the initial forecasts may be neutral, since both manufacturing indices are expected to be a little worse than those for the previous month, and the indicators of the real estate sector- a little better.

Today the world indexes are on the rise. The investors assume, that on Thursday the ECB will announce the parameters of monetary policy easing. Today the Producer Price Index for EU will be released at 9:00 CET. The forecast is neutral.

As was expected in previous overviews, the Japanese yen (USDJPY) has declined noticeably to its maximal value in seven months. Recent data did not indicate noticeable economic growth in Japan, nevertheless, the Bank of Japan has no intention of stopping the monetary expansion. It should be noted that the opposite picture is recorded in the US – a successful recovery of the economy and the contraction of the Federal Reserve monetary expansion program – the QE3. On this backdrop Nikkei has risen considerably today. We assume this is the result of the liquidity inflow. Today the trading volume at Tokyo exchange has been the maximal in the last month at 2.4 billion stocks. Among other things, the investors reacted positively to the change of some ministers in Shinzo Abe’s cabinet. Tomorrow a two day session of the Bank of Japan will start. Besides that, at 1:35 CET two Markit/JMMA PMI indexes will be published: Composite PMI and Services PMI.

The gas price has fallen. Russia started building the new gas pipeline “The Power of Siberia” to China. It can lower the gas price in South-Eastern Asia, which at present is four times as high as that in the US. It is unlikely that the price will plunge, so far the change looks like a correction. First of all, it is planned that the construction of the “Power of Siberia” will be finished in 2017 and the pipeline capacity will not be that big – 38 billion cu. m. annually. Secondly, the World Resources Institute announced that the US may run into water shortages for shale gas production. It should be noted that previously the US Energy Information Administration had announced that the shale development could increase the technically extractable gas reserves by 47% and the oil reserves – by 11%. Theoretically, in case of a water shortage, the reserves may be reduced.

fccattle-chart

The beef futures rose noticeably. South Korea lifted the ban on the biologically active additive zilpaterol in meet. The issue was under consideration since last October. It should be noted that the beef with that substance is still banned in Europe and China.

sugar-chart

Thailand reduced the internal consumption quota for sugar by 100 thousand tons with the aim to increase the export to 8.8 million tons this year, compared with 6 million tons last year. This is what the Office of Cane and Sugar Board informed. Thailand is the second biggest exporter of sugar in the world. It is expected that the sugar production will reach 11.3 million tons in the season of 2013/2014. It should be noted that despite the big crop, the International Sugar Organization forecasts the reduction of sugar excess in world sugar balance to 1.3 million tons in the 2014/2015 season compared to the 4 million tons of excess in world sugar balance in the 2013/2014. It is the opinion of the organization that this can happen due to increase in sugar consumption for 2% to the level of 182.4 million tons.

gold-chart

Gold fell noticeably on the backdrop of rising dollar and stock market. As we have noted several times, the precious metals and financial assets often move in opposite direction. Palladium also declined slightly from its maximal value since February 2001. We do not exclude the possibility of continued correction in case of release of weak production indicators for the US and other countries. It should be noted that the “wedding season” as well as Dhanteras and Diwali festivals start in India, which will raise the demand for gold. The price premium at London exchange may reach $10-12 per ounce from current $4-5. The Indian jewelers expect that gold imports in September may rise to 60-70 tons from 40 tons in July. The import in July was 63 tons.




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