Global equity markets hesitant ahead of US data

Thursday, December 05, 2013

Wall Street drifted lower with both the DJIA and S&P 500 dropping for a fourth straight session, trailing 0.16% and 0.13% lower respectively as markets pulled back from the record levels achieved last week. Investors have adopted a cautious attitude as they take the recent string of positive economic data into consideration, with speculation that the Fed will taper in the coming months prompting many to take profits off the table. ADP employment data indicated 215k jobs were added throughout November which was considerably better than the 170k consensus estimate compiled by Bloomberg. Stronger new home sales in October, which increased 25.4% m/m further reinforced the encouraging economic backdrop. Investors will be paying close attention to weekly jobless claims, due out this afternoon, which will provide markets with further direction as nervous investors weigh up the recent positive economic data against the impending withdrawal of Fed support. Volatility has also spiked in recent sessions, with the VIX index reaching 15.48 yesterday for the first time since mid-October on increased uncertainty.

Asian markets extended losses accrued in the previous session as investors weighed a stronger yen and positive US data. Benchmark Japanese equity indices led the move lower with the Nikkei losing 1.5% and the TOPIX down 0.91% during overnight trading. Investors remain cautious to any changes in Fed policy and remain unwilling to buy into the recent declines ahead of jobs data in the US and rates decisions from the ECB and BoE expected later today.

Gold prices recovered 1.74% yesterday, the highest one day gain since mid-October, after finding a floor around $1,210. Prices rallied above $1,250 where they were met with strong resistance before closing at $1,243.79 as investors took advantage of the selling opportunity. Total known ETF holdings of gold have dropped to 58.905m according to Bloomberg data, down 30.4% ytd.

3-month LME copper prices gained 1.9% yesterday, the largest one day increase since 8th August as prices rose to $7,128 before closing at $7,095. LME copper stocks declined by 3,325 tonnes yesterday, with the majority of outflows from Asian warehouses, as inventories fell for a 23rd straight session to 415,425 tonnes. Strikes over pay at Codelco’s Chuquicamata smelter forced operations to cease, which could lead to further supply constraints. 

New home sales in the US recover after summer lull

NHSLTOT Index US New One Family 2013 12 05 07 34 03


VIX increases as rally in equities losses momentum

SPX Index SP 500 Index SPVIX 2013 12 05 07 43 49


Gold prices remain under significant pressure

XAU Curncy Gold Spot Oz D 2013 12 05 08 02 45


Events for today: Thursday, 5 December 2013

1200

UK

Dec

BoE Rate

1230

US

Nov

Layoffs

1245

EZ

Dec

ECB Rate

1330

US

Q3

Personal consumption

1330

US

w/e

Jobless Claims

1500

US

Oct

Factory Orders

1530

US

w/e

EIA Nat Gas

OE: 

Nov  Gasoil (ICE)


View Economic Market Calendar

More from: Kash Kamal