Thursday May 27, 2010 - 03:44:51 GMT
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Morning Briefing : 27-May-2010 - 0343 GMT
GOOD MORNING!
EQUITIES
Bad news on the Dow (9974.45) which has closed below 10000 for the first time since Feb, earlier this year. A further fall towards crucial Support at 9422 is possible. Please note that this is a very important Support. We do not know if it will hold or break, but there will be "disaster" if it does. Apart from the ongoing European crisis, it is to be noted that yesterday's supposedly bullish data releases (Durable Gooods New Order +2.9% and New Home Sales +15%) have not been able to bouy the Dow. Sentiment remains bearish.
Asian stocks are marginall lower today. The Nikkei (9468) is 0.6% lower while the Shanghai composite is down 0.3% at 2618. The All-Ordinaries in Australia is up a bit at 4340. The Nikkei looks bearish for a further dip towards 9000. The Sensex-Nifty had gained to 16387.84 and 4917.40 yesterday, but might see only smaller gains today.
COMMODITIES
Crude (70.90) bounced back sharply yesterday. Data showing an increased demand for oil product in the US and the initial rise in the equity market supported the price rise although the EIA's data release showed an increase in the US Crude inventories. However, the Resistance at 71.80-72.00 region which we have been mentioning for some time has held very well. Note the, high recorded yesterday is 71.70. While below 72, Crude is expected to remain pressured on the downside.
Gold (1213.20) is continuing to trade above 1200 and is retaining the overall bullish sentiment intact for a rise once again towards 1250-70 in the coming days. Support is seen at 1200. To see the Gold graph click on the following link:
http://www.kshitij.com/graphgallery/goldcandle.shtml#candle
CURRENCIES
Euro (1.22) has taken a fresh beating on a report that China is likely to review its holdings of European bonds. The trend remains bearish and unlikely to reverse in a hurry. Note how yesterday's rally to 1.2345 has been sold off easily. Further losses possible. Dollar-Yen (89.95) has fallen back after rallying to 90.65 yesterday and may be ranged between 89.60-90.60 for a couple of days. The Euro-Yen Cross (109.95) has come off sharply as a result of the fall in both EURUSD and USDJPY. Rallies are simply being sold into.
Dollar-Swiss (1.1575) has rallied a bit alongwith the fall in the Euro. Upmove may be tiring. The Pound (1.4400) also seems to be breaking away from the Euro, managing to remain above Support at 1.43-42. The Australian Dollar (0.8256) meanwhile, has been seeing huge volatility. It is down again after having risen to as much as 0.8390 yesterday. The overall trend remains bearish as the currency is again trading below the 200-week Moving Average at 0.8288.
In Asia, the Korean Won (1235.60) has recovered a bit more from its weakest level of 1277 seen on Tuesday. Further gain towards 1220 is possible. The Sing Dollar (1.4087) has chances of strengthening further towards 1.4030. The Rupee market is closed today on account of Buddha Purnima.
INTEREST RATES
The 3M USD LIBOR was unchanged at 0.54%. The 2Y and 10Y yields were up 2 bps and 3 bps each to quote at 0.82% and 3.20% respectively.
Reports say that China might reviews its investments in European government bonds has added further pressure on the prevailing debt crisis concerns.
DATA TODAY
12:30 GMT US GDP Q1 '10 (Pre)
...Expected 3.5%...Previous 3.2%
http://www.kshitij.com/fundamentals/funcharts/usgdp.shtml
DATA YESTERDAY
------------
Apr US Durable Goods Orders
...Actual 2.9%...Previous -1.2%
Apr US New Home Sales
...Actual 504K...Previous 439K
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