Equity rally continues on US data

Wednesday, December 24, 2014

Japanese equity markets saw a continuation of the bullish sentiment that dominated European and US markets with benchmark indices heading higher as investors gained confidence from stronger than expected US macroeconomic data. After the S&P 500 managed to close at a record high of 2,082 and the DJIA closed above 18,000 for the first time, investors overnight supported risk assets higher, boosted by better than anticipated US Q3 GDP. Data indicated that the US economy grew at its fastest pace in over ten years, at an annualised rate of 5% q/q which was revised up from 3.9% q/q previously. With initial weekly jobless claims as well as EIA crude oil stockpile data expected later today, any positive surprise could see further gains in what is expected to be a relatively quiet trading session.

Spot gold prices held below $1,180/oz yesterday, underpinned by Monday’s close as a stronger US dollar and optimistic growth prospects for the US economy curbed investment demand. The yellow metal traded towards $1,185/oz on the upside and $1,172/oz on the downside before eventually closing marginally higher as SPDR Gold Trust holdings fell 1.6% yesterday to 712.9 tonnes, declining to levels last seen in September 2008. A stronger dollar added further downward pressure to gold prices with the dollar index adding 0.3% and closing above 90.00 against a basket of major currencies for the first time since March 2006.

Chinese stocks faltered overnight, edging lower for a second session as speculation that the government would initiate measures to help calm markets saw investors take profits. Both the CSI 300 and Shanghai Composite traded significantly lower, losing 2.8% and 2% respectively, gaining downside momentum off of the previous session’s losses as policy easing saw equity markets rally higher throughout December. Both the Shanghai Composite and CSI 300 have added as much as 20% since the start of the month but cautious investors have opted to take profits ahead of any potential move by policymakers to cool equity markets.

DJIA closes above 18,000 for the first time

INDU Index Dow Jones Industrial 2014 12 24 07 24 15

DXY trades above 90.00 for the first time since 2006

DXY Curncy DOLLAR INDEX SPOT 2014 12 24 07 31 58

Gold prices remain under pressure on sluggish investment demand

XAU Curncy Gold Spot Oz 2014 12 24 07 29 43

Events for today

1330

US

w/e

Jobless Claims

1530

US

w/e

EIA Nat Gas

1530

US

w/e

EIA Energy Stocks

Topics: Equities, Gold, DXY
More from: Kash Kamal