TOPIX extends multi-year high on weaker yen

Wednesday, December 03, 2014

Asian stocks tracked Wall Street higher overnight with Japanese stocks posting steady gains on a weaker yen as investors weighed up the effects of the recent slump in crude oil prices on the global economic growth outlook. Both the TOPIX and Nikkei closed higher for the fourth straight session with the TOPIX reaching a fresh six year high despite failing to hold onto early gains as the yen edged closer towards 120.00 against the dollar, at one stage trading towards 119.44. Front month Brent futures resumed their slide lower yesterday after Monday’s session saw the global benchmark rally off of support around $70/bbl and close almost $2.50 higher at $72.54/bbl, recovering Friday’s losses. However, selling pressure yesterday saw Brent futures erase these recent gains and trade back down towards $70.50/bbl which offered some support for consumer and industrial groups owing to lower costs.

Three month LME aluminium prices lost 2.4% yesterday owing to the bearish crude outlook as production costs for the metal were expected to drop on lower energy prices. Heavy selling pressure yesterday marked the largest one day drop since July last year and saw tentative support around $2,000/tonne and the 50 day MA breached as future erased all of Monday’s gains. Activity early on this morning has followed the crude oil complex lower, as aluminium prices opened just below yesterday’s close before intraday moves on the upside attempted to recover some lost ground. However, the bears have prevailed early on with losses extending as far as $1,960/tonne despite encouraging US auto sales which would otherwise indicate at an improving demand outlook, supporting prices higher. Auto sales increased to a seasonally adjusted annualised rate of 17.2m in November, beating analyst expectations of a 16.8m estimate.   

Today sees plenty of macroeconomic data releases to keep investors busy with the session having already kicked off early this morning with the release of Chinese PMI data. Later on this morning investors will have eurozone and UK PMI statistics to look forward to as well as eurozone retail sales and revised Q3 GDP data. In the afternoon, US investors will have ADP employment, ISM non-manufacturing, EIA energy stockpile data and the Fed beige book to keep them engaged right up until the close. 

JPY heads towards 120.00 against the dollar

JPY Curncy Japanese Yen Spot 2014 12 03 07 31 09

Brent futures resume their slide lower

CO1 Comdty Generic 1St CO Fut 2014 12 03 07 40 55

LME 3-M aluminium prices slip on crude outlook

LMAHDS03 Comdty LME ALUMINUM 3 2014 12 03 07 55 06

Events for today

0001

UK

Nov

BRC Price Index

0145

CN

Nov

HSBC Services PMI

0230

CN

Nov

Composite PMI

0855

DE

Nov

Markit Services PMI

0900

EZ

Nov

Markit Services PMI

0930

UK

Nov

Markit Services PMI

1000

EZ

Oct

Retail Sales

1000

EZ

Q3

GDP Revised

1315

US

Nov

ADP Employment

1330

US

Q3

NF Prod. & Labour Costs

1500

US

Nov

ISM Non-Manufacturing

1530

US

w/e

EIA Energy Stocks

1900

US

Dec

Federal Reserve Beige Book

 

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