After starting off the week lower, precious metals and energy commodities have turned out to be remarkably resilient today, clawing back big early losses. Gold and Brent crude even managed to post gains into the afternoon. This turnaround appears particularly remarkable if the face of what could easily have been seen as a negative development, the weekend nuclear deal with Iran, which could easily have caused political risk premiums and the demand for havens evaporate. There are several possible reasons to suggest why these markets rebounded rather than collapsed. . 1) The 17.5% drop in WTI and the 12.5% drop in Brent since August may have already priced in expectations of progress with Iran and a significant reduction in political risk. Following the initial burst of selling we would be seeing short covering against the news. 2) The limited decline and both crudes holding channel (WTI) or trend (Brent) support indicates the street recognizes that this is only a first stage deal which offers a small amount of sanctions relief ($7 billion) in return for co-operation over a six month period to give time for a broader arrangement to be worked out (or not). 3) This initial deal does not appear to pave the way for a big immediate in Iranian oil exports, but traders need to be aware that increased production would likely be part of a bigger future deal which could limit upside to near-term trading bounces. 4) The uptrend in stocks and downtrend in commodities has been going on for several months now and could be nearing exhaustion. With the US Thanksgiving holiday coming later this week, some traders could be starting to take profits or cover short positions and may be less enthusiastic to add new positions in US markets as the week progresses. Point 4 may seem odd on a day when many stock indices traded up to new all-time highs, including the Dow above 16,100, the S&P above 1,800 and the NASDAQ Composite above 4,000, but indices have climbed just above these levels and stalled, there haven’t been the big enthusiastic breakouts one might expect considering the weekend news. Overseas stock markets surged on the news with Israel’s Tel Aviv market hitting an all-time high. European indices benefitted from the Iran deal in addition to comments from ECB governor Hansson that the central bank could cut borrowing costs further if needed, keeping them in the dovish camp. US indices meanwhile, benefitted from positive flash service PMI but may have been held back by soft housing data. It’s a quiet day for Asia-Pacific news so focus may remain on the US through the first half of the week where a number of releases have been moved up because of the holiday. Asia Pacific markets get their chance to shine later in the week with a number of major announcements from Japan set to fill in the gap. Economic News Highlights of overnight announcements include: US Markit flash service PMI 57.1 vs street 49.3 US pending home sales (2.2%) vs street (1.0%) US Dallas Fed 1.9 vs street 5.0 vs previous 3.6 Upcoming significant announcements include: 4:00 pm AEST Singapore industrial production street 9.3% 9:30 am GMT South Africa GDP street 2.0% 1:00 pm GMT Hungary interest rate decision 20bps cut to 3.20% widely expected 8:30 am EST US building permits street 930K 9:00 am EST US house price index street 0.4% 10:00 am EST US consumer confidence street 72.6

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