Market Morning Briefing

EQUITIES

Storng rise in Equities overall as the Supports mentioned yesterday have held well.

The Dow (15628.02, +0.83%) has risen sharply as the support at 15500 levels held well. While this support holds, it may rise towards 16000.

Asia-Pac is up overall. Nikkei (14203.02, +1.41%) has risen from yesterday low of 14146.92, as long-term Supports have contineud to hold. A rise past 14372 would confirm negation of a Double Top. A weaker Yen (99.40) can pull the Nikkei higher. Shanghai (2034.35, +0.26%) is also up breaking above resistance at 2025. If this rise holds we may expect it to move towards 2100.

The RBI tightening seems to take a toll on equities. Nifty (5787.25) fell after making a intraday high of 5808.5 yesterday. Danger of 5650 cannot be ruled out. But, need to see whether rise in Equities globally can pull the Nifty up also? Or will India continue to be sold?

COMMODITIES

Brent (110.01) has chosen to move up only. If it does not come off from here today, there will be danger of seeing 115 in coming weeks. Nymex WTI (108.61) has also moved up, as anticipated, rising past our target of 107. Look for 114 going forward. Brent-WTI Spread (1.4) can decrease further.

Gold (1307.76) has fallen, as the Resistance at 1325 has held well. Crucial Support coming up at 1298-95 now, though. Need to see if that will break or not. If it holds, we could see a surprise rise towards 1375. Silver (19.6150) continues to be bearish targeting 18.50. Gold-Silver Ratio (66.49) could target 70.

Copper (3.1535) could be coming back from the brink as it has moved up further yesterday. It can now test 3.20 on the upside. Hopefully, growth in the USA might prompt short-covering even though Chinese slowdown is a concern. That said, failure to rise past 3.20 would still keep danger of sever decline alive.

CURRENCIES

All round Dollar strength since yesterday. Further strength possible. The Euro (1.3208) has started falling as anticipated. We target 1.3100-3050 next week. The Pound (1.5117) still appears ranged sideways and may have some Support near 1.5075. If that is broken, lower range Support near 1.50 could be seen.

Dollar-Yen (99.44) has surprised by moving up strongly through yesterday, breaking above 98.50, proving our bearish bias wrong. Yesterday's bounce now puts Dollar-Yen into a sideways range of 97.50-101.50 for the next few weeks. The Aussie (0.8910) has seen a low of 0.8888. Our target yesterday was 0.8880-8750.

All the R-currencies have weakened sharply yesterday. Expect Dollar-Rupee (60.43) to also move up today on all-round Dollar strength. Crucial Resistance at 60.75. A Week Close above that will suggest further weakness for the Rupee.

INTEREST RATES

The US 10-Yr (2.71%) is back up sharply. Today's NFP is going to be crucial. If the 10-Yr doesn't come off from 2.75% today, it can target 3.0% on the upside as the market fully factors in a start to "tapering" from September.

The ECB kept rates steady as expected. Spanish and Italian yields have been falling over the last few weeks. But, it will be interesting to see if the fall further or not. Draghi has said that the worst may be over in Europe the world sees that the US is doing better. As such, US Dollar is getting the yield advantage.

The Indo-US 10-Yr Spread (5.42%) may narrowed on the rise in the US 10-Yr. It may have to widen towards 6.13% to attract foreign investors.

IMOH, Clement I.
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