Metals Rally on Developments in Ukraine and China
Stock markets are off to a positive start to the week, but the biggest action has been in metals markets.
Over the weekend two eastern regions of Ukraine held independence referendums which passed with over 90% approval in both cases further ratcheting up the tensions in that country and raising the risk of increased sanctions on Russia. Gold has rallied back above $1,300/oz on the news while nickel is exploding to the upside and Brent crude oil is up moderately.
This rally may have difficulty keeping its momentum going, however, as CHF and JPY have not jumped on the bandwagon and RUB has actually strengthened slightly today. This suggests that not all traders are convinced things are about to spiral out of control.
Copper, meanwhile is soaring along with Chinese indices today after the country’s government announced over the weekend plans to allow more foreign investment in listed shares, increase capital flow quotas, and develop tools for increasing commodity trading. The resource group of currencies are clearly outperforming their peers on tis news led by SEK and NZD with AUD and CAD also posting gains. GBP and EUR are bouncing back a bit today with sterling outperforming slightly.
European markets are trading higher and the Dow has been taking another run at the 16,600 key channel resistance level. Following several intraday penetrations and subsequent failures, it needs to close well above that level to signal a drive to new heights.
With momentum weakening, a less seasonally favourable period for markets on the way and news focus turning from north America to Asia this week, it’s hard to see what could propel stock indices to new highs in future if the great news we have already had this month was unable to do so.
Economic reports released overnight and this morning include:
China new Yuan loans 774B vs street 800B
China M2 money supply 13.2% vs street 12.2%
India consumer prices 8.6% vs street 8.5%
India industrial production (0.5%) vs street (1.5%)
Australia business confidence 6 vs previous 4
NZ house sales (20.2%) vs previous (10.0%)
NZ house prices 0.1% vs previous 3.4%
Economic reports due later today include:
There are no major reports scheduled for North America or Europe today.