Markets extend gains, encouraged by Iranian agreement

Monday, November 25, 2013

Asian stocks rallied higher on a weaker yen while markets expect stronger US data will spur equities higher. Exporters in Japan drove the Nikkei towards 15,620 as it added 1.54% overnight after the yen reached the weakest level in almost 6 months, trading around 101.70 against the dollar earlier this morning. The TOPIX also managed to build on previous gains, adding 0.88% as the outlook for Japanese exporters improved. Manufacturing and home sales data for the US are out later today and with European markets opening on a strong footing a strong US session could support the equity rally higher.

Crude prices have dropped the most in three weeks after agreement over Iran’s nuclear programme was reached. Front month Brent prices fell 2.2% from Friday’s close, pulling back towards $108/bbl before recovering just above $108.50 in early morning trade. Iran has agreed to curb specific nuclear activities in return for an easing of sanctions that have impacted the economy, particularly the oil sector. WTI prices also pulled back, losing 1.4% on the lower geopolitical risk outlook.

Hedge funds have cut back their bullish bets on gold as the yellow metal extends losses, trading around $1,230 this morning as November remains on track for the largest monthly drop since June with prices down 7.5% so far, extending losses for a third consecutive month. According to CFTC data, net positions in futures and options have pulled back 20% in the week ending November 19th as once prominent bulls, notably John Paulson, George Soros and Daniel Loeb, either cut back or sell their entire investment in the SPDR Gold Trust ETF.

Trafigura has raised $500m from a 10% sale of Puma Energy in a deal that makes the floatation of its fast growing oil unit unlikely. According to the Financial Times, the deal prices Puma at around $5bn with Trafigura owning 49%, Sonangol, the state owned oil company of Angola, owning 30% and Cochan, a diversified Angolan business group owning 15%. The management further stated that they remain committed to growth in the LNG sector and the former Soviet Union.

Events for today: Monday, 25 November 2013

1500

US

Oct

Pending Home Sales

1530

US

Nov

Midwest Manufacturing

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Topics: Nikkei, Gold, Crude oil
More from: Kash Kamal