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Bookends – activity and inflation

Markets are set for a positive start to trading this week after Friday’s stronger readings on activity indices for Europe and the US. Stocks rallied and metals lifted despite a disappointing French manufacturing PMI. The strength came in services, and US indicators that pointed to faster economic expansion. Oil prices rallied hard as OPEC opened the taps less than expected.

Trade concerns remain a topmost short term risk for markets. This week sees a lack of major data releases until US durable goods and European inflation numbers late this week.

Futures are pointing to modest opening gains for Asia Pacific traders. Pressure on the US dollar, and subsequently higher local currencies may contain any investor exuberance. Bond markets are a focus after rallies in American interest rates, with higher yielding Brazilian and Argentinian issues a feature. Market action suggests investor opinions are divided, leaving gold prices frozen in the spotlight.

Energy stocks could lead regional markets higher after an almost 4% rally in crude prices. The gains could come at the expense of gold stocks, which curiously rallied on Friday in the face of a languishing spot market. A lack of traction could mean yellow metals miners are dumped in trading today.


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