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On Crude oil and the Chinese Equities

Crude: A surprise increase in US crude oil inventories sparked a new round of selling pressure which was exacerbated by technical selling after WTI broke its March low. It did manage to hold above $40.00bbl for now but if that fails, the 2008 low near $35.00 could be tested. Chinese Equities: In typical “day after” fashion, Chinese stocks sold down early yesterday only to manage an important positive closing yesterday afternoon. The early morning plunge - which began at 10am local time - clearly illustrated the influence of forced selling on margined accounts. This was a consequence of unmet request for ‘margin calls’ made early yesterday due to the previous day’s 6% carnage. Brokers in China would have been expected to be working through long lists of accounts affected because of the acute drop in stocks on Tuesday. A continuation of the upward move today is key to securing 10400 as a strong support for the China A50 August contract.



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