Daily market overview by IFC Markets

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US stocks fell on Monday after disappointing economic data from China and Thanksgiving holiday sales. The National Retail Federation estimates indicate retail spending over the Thanksgiving weekend fell 11%, the second straight annual decline, contributing to decline of retailer stocks such as Wal-Mart Inc., Target Corp. The negative retail sales hit also Tech stocks after disappointing sales on Cyber Monday. Internet-retailing giant Amazon.com Inc. shares declined by 1.2%, Apple Inc. fell 3% and other e-commerce companies including eBay Inc , Google Inc , Yahoo! Inc. , Facebook Inc Netflix Inc. and Chinese Internet giant Alibaba Group suffered losses too. The S&P 500 and the Dow saw their biggest one-day loss since Oct 22. The S&P 500 fell 0.7% to 2,053.44, while the Dow Jones Industrial lost 0.3% to 17.776.80. The Nasdaq Composite’s decline was the biggest in seven weeks, after falling 1.3%, to 4,727.35.

European stocks fell on Monday, as investors weighed economic data indicating slowing in economic activity in euro zone and China. Data firm Markit said its monthly survey of euro zone purchasing managers fell to 50.1 in November, down from a preliminary estimate of 50.4. HSBC early Monday said its China PMI fell to a six-month low of 50.0 and China’s National Bureau of Statistics said official PMI fell to 50.3, the lowest level since March. The Stoxx Europe 600 index fell 0.5% to 345.64, the oil and mining shares leading the losses after OPEC decision not to cut oil production and the reported weakness of the world’s second largest economy.

WTI futures gained more than 4% Monday after crude futures plunged 10% on Friday in reaction to the OPEC decision to maintain production levels. January Brent crude on London’s ICE Futures exchange rose $2.39, or 3.4%, to finish at $72.54 a barrel after a five-session decline. Investors expect the price slump to continue unless major energy producers take steps to limit the supply to match the falling global demand. Analysts estimate a massive oversupply in the first half of 2015 roughly equal to 1.5 million barrels per day. And as OPEC didn’t agree to curb its oil output the decision of other major producers will determine future price movement.

After meeting with his Turkish counterpart in Ankara yesterday President Putin said Russia will concentrate on supplying gas to Turkey through a different Black Sea pipeline, scrapping the $45 billion South Stream project that would bypass Ukraine to supply European markets. Russia will supply gas to Turkey through the Blue Stream pipeline, increasing deliveries by 3 billion cubic meters a year and offering a 6 percent discount from January 1. The ruble moved off record lows against the US dollar Monday as oil prices recovered slightly.

Gold and silver bounced on Monday as lowering of Japan’s sovereign credit rating by Moody’s Investors Service, import restrictions easing by India and softer dollar increased investor demand for safe haven assets. Gold for February delivery jumped $42.60 or 3.6%, to settle at $1,218.10 an ounce. Meanwhile, March silver surged $1.14 or 7.3%, to $16.69 an ounce. Asian stocks rose on Tuesday, with a rebound in crude oil and commodities including iron ore and copper prices lifting the stock markets of resource-exporting countries. MSCI's broadest index of Asia-Pacific shares outside Japan climbed 0.6 percent. The Nikkei posted gains of 0.4 percent to end at 17,663.22.

 

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US stocks rose on Tuesday as energy shares rebounded after yesterday’s slumping. The Dow Jones Industrial Average rose 102.75 points, or 0.6%, to 17,879.55, posting its 32nd record close this year. The S&P 500 gained 13.11 points, or 0.6%, to 2,066.55, with the health-care sector stocks joining energy to lead gains. Energy shares rallied 1.3 percent for the largest gains among all sectors. Nine of 10 main industries in the S&P 500 advanced. The investor mood was boosted also by positive economic data released Tuesday morning, showing construction spending rose 1.1% in October to a seasonally adjusted annual rate of $971 million, much higher than expected. A separate report from Autodata indicated that November car and light truck sales were second-highest in eight years at seasonally adjusted annual rate of 17.2 million, up from 16.5 million in October and the best level since August. Shares in General Motors Co. and Ford Motor Co. rose 1% and 0.8% respectively. Fed Vice Chairman Stanley Fischer and New York Fed President William C. Dudley highlighted yesterday the positive economic impact from the decline in oil prices. Stanley Fischer said continued labor market improvement and “some signs” that inflation is beginning to stir would be enough for the US central bank to start to raise interest rates.

Increasing share prices for energy companies drove European markets higher. On Tuesday, shares of oil and gas firm Afren PLC jumped 13% . Also, shares of BG Group PLC climbed 3% and Royal Dutch Shell PLC gained 2%. The Stoxx Europe 600 gained 0.9% to 348.62. Euro zone factory prices declined by 0.4 percent from September against a 0.3 percent forecast, their sharpest monthly drop in a year. This adds pressure on the European Central Bank to do more to lift the bloc's depressed economy. Stock markets in Asia rose also. The HSBC/Markit Services Purchasing Managers' Index (PMI) for China rose to 53.0 last month from October's 52.9, indicating China's services sector grew marginally faster in November in contrast to manufacturing PMIs released a day ago recording declining growth in factories in November. Hong Kong and Shanghai stocks made strong advances early Wednesday amid expectations of further monetary easing policy measures by Chinese authorities. Japanese stocks advanced early Wednesday morning, heading into a possible fourth straight day of gains, helped by US stock market advance, solid auto-sales data and a weaker yen.

Brent for January settlement gained as much as 92 cents to $71.46 a barrel on the London-based ICE Futures Europe exchange and was at $71.06 at 12:36 p.m. Singapore time. Iraq, OPEC’s second-largest producer, reached a deal with Kurdish authorities to export oil through Turkey. It will ship as much as 550,000 barrels a day from northern Iraq to the Mediterranean port of Ceyhan adding to global supply surplus. At an event in London yesterday Saudi Arabia’s former intelligence chief Al-Faisal said the kingdom will consider reducing output if there’s “reasonably guaranteed oversight” of quotas and market share isn’t lost to other suppliers.

Gold and precious metals fell as the ICE US Dollar Index rose 0.8% to 88.64. A strong dollar makes dollar-denominated commodities like gold more expensive for holders of other currencies. Gold for February delivery fell 1.5%, to settle at $1,199.40 an ounce. Global disinflation and rising equity markets set the stage for bearish trend for safe haven assets.

 

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On Friday world stock indices rose after the release of positive data on the US labor market. The number of new jobs in November appeared to be at the highest level since January 2012 (321 thousand). Unemployment rate hit a six-year low of 5.8%. For 11 months in a row more than 200 thousand new jobs a month have been created in the US. Such a long period of growth is observed for the first time since 1994. Over the past year 2.33 million jobs were created and over 11 month in 2014 – 2.65 million. Such dynamics considering the low inflation rate boosts the economic growth and bolsters the US dollar index. Today it has hit a six-year high. Dow and S&P 500 closed higher for the seventh consecutive week. However, weak data on factory orders in October was released on Friday. They fell for the third consecutive month. Currently, US stock indices futures are traded down. There is no more significant macroeconomic data released for today in the US.

European stocks are slipping down after Friday’s advance. It was caused by a slowdown in German industrial production in October, 0.2% vs. the projected figure of 0.4%, and a significant reduction in imports to China in November (6.7%). This indicator was expected to add 3.8%. One more negative factor for fallen European markets was the downgrading of Italy’s credit rating from BBB to BBB- by Standard & Poor's agency.

Nikkei has also dipped down after a strong gain. Its dynamics coincides with the global trend. It should be noted that significant yen depreciation was an extra factor in favor of the exporters’ stock rise. Toyota Motor stocks upped 1.5%. Negative economic data which affected the exchange rate was published yesterday in Japan. The reduction in Q3 GDP outperformed forecasts. The trade deficit in October was higher than expected. The next release of Japanese economic statistics will be published on Wednesday morning. In our opinion, the main event of the week may become the elections in the Japanese parliament held on Sunday. New MPs are supposed to support the monetary policy conducted by the Prime Minister Shinzo Abe, aimed at further yen weakening.

World oil prices halted its decline. Despite the overall reduction of Chinese imports, crude oil purchases increased 7.9% in November, compared to the same period last year, and upped 9% compared to October. Currently, China purchases 6.18 million barrels a day. International Energy Agency raised its growth forecast of Chinese oil demand in 2014 up to 2.5% vs. 2.3% as was expected in September outlook. Note that the OPEC production in November reached 30.56 million barrels a day, compared to agreed 30 million. The oil output has been outperformed for six months in a row. According to the US Commodity Futures Trading Commission, WTI crude oil net long positions increased 12% over the past week. Net short positions slumped 15%, while net long positions upped 4%. Probably, hedge funds take profits and do not expect a strong decline in oil prices from current levels.

According to the Commodity Futures Trading Commission, hedge funds increased gold and silver net long positions over the past week. Copper net short positions have also risen. Note that copper is not getting cheaper as China raised its imports 5% in November.

Sugar prices rose slightly due to the Brazilian company Unica’s outlook, which expects to reduce the crop of 2015/2016 to 29-30.3 million tons vs. 31.4 million tons a season earlier. The ethanol production from sugarcane would increase 2%.

 

[IFCMarkets]

US stock markets slumped on Monday recording their biggest one-day slide in nearly seven weeks as continuing oil decline prompted investors to sell-off energy stocks. Disappointing economic reports released on Monday, including lower Chinese trade numbers, contracting Japanese economy in the third quarter and lower expansion of Germany industrial production in October also contributed to worsening investor sentiment. Oil giants ExxonMobil Corp. and Chevron Corp dropped 2.3% and 3.7% respectively, Apple Inc. fell 2.3%. S&P 500 and The Dow Jones Industrial Average slipped 0.75% and 0.6% respectively. The ICE U.S. Dollar Index, a measure of the dollar’s strength against a basket of six rival currencies, was down 0.26%, its first loss in two sessions.

European stocks fell Monday after reports indicating that imports into China unexpectedly fell in November by 6.7% against expectations for 3% growth, and industrial production in Germany rose less than expected. European Central Bank Governor Ewald Nowotny expressed concerns about weakening growth in the eurozone economy at a conference in Frankfurt Monday. He warned that eurozone inflation could continue to fall during the first quarter of 2015, which would take the currency union dangerously close to deflation, and said he would like to see the ECB expand its balance sheet by €1 trillion. On the prospects of further easing of monetary policy by ECB euro fell to $1.2265, a 28-month low, from $1.2289 late Friday. In a separate report the Paris-based research body - the Organization for Economic Cooperation and Development said a composite leading indicator continues to indicate a loss of growth momentum in eurozone, particularly in Germany and Italy.



The Nikkei share average fell 0.5 percent on Tuesday after 7 straight days of gains as a rebound in yen prompted investors to take profits. The yen rose to around 120.90 to the dollar from a low of 121.86 on Monday. Investors are still optimistic as they expect Prime Minister Shinzo Abe to win a weekend re-election bid that will allow him to continue with the government's pro-growth policies.


Crude-oil prices again tumbled to five-year lows Monday with WTI futures for January delivery dropping 4.2%, to settle at $63.05 a barrel. Analysts expect the oversupply to continue into next year without intervention by the Organization of the Petroleum Exporting Countries to cut output to balance the market. A Baker Hughes report on Friday showed an increase in the US drilling rig count, despite the falling price. A separate report from KBC Energy Economics showed less than a third of January’s cargos of Nigerian oil have been sold with just two weeks left before February deliveries. The surplus of West African crude is one indicator of Atlantic basin oil demand, and unsold inventories pressure Brent crude prices.

Nickel fell for a third day as disappointing data from Germany to China indicated weakening global demand. And on the LME, lead, aluminum and zinc were little changed, while tin fell.

The Australian Bureau of Agricultural and Resource Economics and Sciences said in a report that exports to the US from the third-largest shipper will jump 35 percent to 360,000 metric tons in 2014-2015. Years of drought forced the US producers to cull herds, and cattle futures reached a record last month. Prices may rise the most among agricultural commodities next year amid tight supply and strong demand, according to Rabobank International.

 

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US stocks started Tuesday trading with a sharp drop after unexpected move by Chinese authorities to tighten lending rules and news of surprise Greece elections. Markets rebounded by the end of trading session, with S&P 500 finishing practically unchanged and the Dow Jones Industrial Average closing 0.3% lower. The global equity sell-off began after economic data released in China showed producer-price index dropped 2.7 percent in November from a year earlier, a record 33rd-straight decline and the biggest fall since mid last year. Consumer prices rose 1.4 percent, against the 1.6 percent increase in October, indicating that China’s economy has entered a disinflation stage, and faces the risk of deflation. Following a surprise move by regulators that banned investors from using low-grade corporate debt as collateral to borrow cash, The Shanghai Composite Index plunged 5.4% Tuesday. The Nikkei Average dropped 1.5% on Wednesday morning as global equity sell-off and flight to safety drove the yen higher and took a toll on exporters. The yen advanced versus the dollar to ¥119.50, compared with ¥119.60 in New York Tuesday afternoon.

European stocks fell on investor concerns over the uncertainty of the results of Greece’s presidential election in which the Syriza party, opposing the austerity measures of proposed IMF/EU bailout , is well placed to do well. Greek stocks sank 12.8 percent, to post their biggest single-session fall since November 1987. The Stoxx Europe 600 index fell more than 2%, hit by weak German trade data and energy-stock losses. The euro traded at $1.2371 Tuesday against $1.23 Monday afternoon. Elsewhere. The report of UK Office for National Statistics Tuesday morning indicated industrial activity declined unexpectedly in October. The news didn’t bring down the British pound which actually traded higher against the dollar for a second-consecutive session as investors booked profits by selling dollars. The pound traded at $1.5663 Tuesday, compared to $1.56 Monday afternoon.

Brent for January settlement slid as much as 1.6 percent in London as an official at Iran’s oil ministry predicted a further slump in prices if solidarity among OPEC members falters. Iran, suffering from economic sanctions over its nuclear program, wants to raise production to 4.8 million barrels a day once the curbs are removed, he said at a conference in Dubai yesterday. In the US, the Energy Information Administration reduced its price forecasts for next year. According to its report WTI will average $62.75 a barrel, compared with a November projection of $77.75. Brent may trade at $68.08, down from an earlier estimate of $83.42. While the price drop will start to slow production next year, output is still forecast at the highest level since 1972, driven by increase in shale oil production. Output advanced to 9.08 million barrels a day through November 28, the fastest weekly rate since January 1983.

Gold rallied above the $1,200 level, extending its Monday gains. Gold rebounded on Monday as slower export data from China and the contraction of Japan’s economy for a second straight quarter revived safe-haven demand for the precious metal.

Copper dropped as much as 0.7 percent after closing yesterday at highest in more than a week as lower PPI and CPI data from China indicated slowdown in the economy of the world’s largest metals user. On the London Metals Exchange, lead fell while aluminum, zinc and nickel were little changed.

 

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US stocks suffered their worst declines in about two months on Wednesday as continued slide in oil led to sell-off of energy, materials and industrials shares. The S&P 500 index fell 1.6%, to 2,026.14, its biggest one-day percentage drop since October 13. The slowing spending by energy companies has started impacting the prospects for companies providing services and equipment for companies in energy sector. The S&P 500 energy sector dropped 6% over the past three trading sessions. The losses on Wall Street come after seven consecutive weeks of gains for the S&P 500 and Dow Jones Industrial. Today at 14:30 CET US Initial Claims for the week ended December 6 and Retail Sales numbers for November will be published. The tentative outlook is positive, reinforcing the recent positive economic reports ahead of the Federal Open Market Committee’s December 17 Meeting that will be considering when to start increasing the interest rates. We expect the reports today will further contribute to the US dollar strengthening.

European stocks fell on Wednesday, led by losses in oil and gas stocks. Data released by French government confirmed earlier indications that Eurozone economy is slowing down as the report showed French industrial production fell 0.8% in October compared with September. Today at 10:00 CET European Central Bank publishes its Monthly Report, at 11:15 CET the Long Term Refinancing Option (LTRO) will be announced, with the targeted level of 148.2B euros against 82.6B euros of the previous LTRO. On the backdrop of falling inflation, the ECB’s liquidity injections have not provided sufficient stimulus for slowing eurozone economy, contributing to euro decline against major currencies. The current stage of LTRO will be more of the same medicine with no fundamental changes in Eurozone economic outlook in view and will most certainly contribute to further weakening of euro.

Japan's Nikkei share average is set for a third day of losses on Thursday. The yen fell for the first time in four days on speculation Prime Minister Shinzo Abe’s Liberal Democratic Party will win an election this weekend and extend measures that have weakened the currency. Japan’s export oriented economy has clearly benefited from Shinzo Abe’s weak yen policy, and we expect the Bank of Japan will need to maintain the stimulus further, which will contribute to further weakening of yen against other major currencies.

Crude-oil futures ended at a fresh five-year low on Wednesday, as the US Energy Information Administration data indicated oil inventories rose by 1.5 million barrels in the week ending December 5 against an expected drop of around 3 million barrels. A further push came from the news the Organization of the Petroleum Exporting Countries cut its 2015 demand expectations for crude. OPEC said earlier Wednesday it predicts that demand for OPEC oil would drop to 28.9 million barrels a day next year, compared with 29.4 million barrels a day in 2014.

Gold retreated on Wednesday as investors took profits following previous session’s gains even as US stocks slumped amid worries about an oversupply in global oil. Typically, investors seek the safety of gold during financial crises and steep declines in equities. In other metals trading, January platinum dropped, while March palladium gained 1.2%, to $821.40 an ounce. High-grade copper for March delivery dropped 1.2%, to $2.89 a pound.

 

[IFCMarkets]

On Friday the US markets dipped despite the release of positive macroeconomic reports. Consumer confidence index hit the January high and reached 93.8 points. However, S&P 500 has tumbled 3.5% this week, for the first time after seven weeks of continuous growth. It is the largest weekly slump since May 2012. We deem that market participants are taking profits. As oil prices keep falling, shares of oil companies such as Exxon Mobil and Chevron Corp hit yearly lows.

Adobe Systems stocks rose 9% due to positive reports and plans of Fotolia purchasing. The trading volume on the US exchanges on Friday was 11% higher than the monthly average and amounted to 7.6 billion stocks. Today we expect the release of the US industrial production in November at 14:15 СЕТ. The outlook is positive. Futures on the US stock indices are now traded considerably upwards. The dollar index is traded sideways ahead of the Fed’s Chair Janet Yellen statement. She is supposed to deliver her speech on Wednesday.

European stocks are currently rebounding after a significant fall on Friday and over the whole last week. For example, the British stock index, FTSE 100, hit the record weekly low over more than three years. Important macroeconomic data is not released today in the EU. The market growth is caused mainly by the oil stocks rising of such companies as Total and Royal Dutch Shell amid a slight increase in hydrocarbon prices.

Today Nikkei has slid on the worsened Tankan survey. The yen weakened slightly against the US dollar (modest increase on the chart) as supporters of the current Prime Minister Shinzo Abe won in parliamentary elections on Sunday. Note that in two years while he is heading the government of Japan and conducts his economic policy called “abenomics”, Nikkei has boosted 70%, and the yen hit a seven-year high (a weakening against the US dollar). Market participants are currently expecting further confirmation of these trends. New Japanese macroeconomic reports will be released on Tuesday night. HSBC Manufacturing PMI in December will be announced in China tomorrow morning at 1:45 СЕТ. In our opinion, the forecast is still quite negative and can affect the commodity futures prices.

Oil prices have slightly risen after the release of its price forecasts for the next year. According to Barclays bank, the average Brent crude oil price in the first half of 2015 would be $67 a barrel, and $78 in the second half of the year. National Australia Bank projects the Brent price to settle at $75 a barrel in the Q1 of 2015, and $80 by the end of next year. According to Commodity Futures Trading Commission (CFTC), despite the fallen oil prices WTI net long positions rose to the two-month high and net short positions reduced to its lowest level since August 2014.

Natural gas prices in the US climbed amid falling oil prices. It was facilitated by the demand increase due to cold winter weather. We also accept the possibility that a part of the shale gas equipment could be used for the shale oil extraction.

Gold prices have fallen ahead of the Fed meeting and the final press-conference which will take place on Wednesday evening. Gold is still 1.5% up compared to the level at the beginning of this year, after falling 28% in 2013. Market participants are concerned that a possible US rate hike would reduce the demand for precious metals. According to CFTC, gold and silver net long positions reached the highest level over the last four months.

 

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Falling oil prices dragged US stocks lower on Monday weighing heavily on investor confidence. The dollar rose against the euro ahead of the Federal Open Market Committee two-day meeting starting on Tuesday as the data indicated industrial production in US grew 1.3% in November against 0.9% forecast, the biggest increase since May 2010. Dollar rose notwithstanding the Empire State disappointing report on regional manufacturing index, indicating it fell to negative 3.6 from positive 10.2 in November, to mark the first negative reading since January 2013. Today at 14:30 CET Housing Starts for November will be published. The forecast at 1.04m is higher compared with the previous months figure at 1.01m indicating improving housing market and continued US economic recovery and we expect the report will contribute to further US dollar strengthening.

European stocks fell also as the sell-off of energy and mining stocks continued. The Stoxx Europe 600 fell for the sixth session in a row. Today UK CPI y/y will be released at 10:30 CET with 1.2% forecast against 1.3% level previous month. We believe this will contribute to weakening the British pound. At 09.:30 CET Markit Germany Services PMI, Eurozone PMI data and at 11:00 CET German ZEW Economic Sentiment will be released, the tentative outlook is positive. We believe the single European currency will strengthen on investor expectations of improving eurozone economic outlook.

Asian stocks fell as falling oil prices reinforced investors’ concerns about weakening global economy and HSBC’s preliminary report indicated contraction in manufacturing activity in China in December. The preliminary reading of manufacturing Purchasing Managers’ Index in China fell to 49.5, a seven-month low. The sell off resulted in strengthening of safe-haven yen. Commodity prices fell on signs of falling demand with slowing Chinese economic growth. Copper, nickel, aluminum, zinc and lead declined on the London Metal Exchange.

Oil continued to fall as West Texas Intermediate dropped below $55 for the first time in five years. Crude oil slumped about 45 percent this year. After OPEC decided not to reduce its output of 30 million barrels a day at a November 27 meeting it was evident that OPEC prepared to defend its market share as other major producers like Russia and US increased their output on the backdrop of weak global demand. The 12-member group, led by Saudi Arabia, pumped 30.56 million a day in November, exceeding its target for a sixth straight month. US shale oil producers do not show signs of reducing output with falling prices, as a report by Goldman Sachs Group Inc indicated US drillers are benefiting as costs fall almost as quickly as prices. The Energy Information Administration report showed production expanded to 9.12 million barrels a day through December 5, the highest rate in weekly records that started in January 1983.

Gold continues falling fifth straight session on Tuesday. Though increasing uncertainty in global economy usually increases the demand for gold as a store of value, investors are cautious ahead of the Fed’s new policy statement and updated economic forecasts that will be released tomorrow after the Federal Open Market Committee meeting. It is widely expected that the central bank officials will decide whether to start hiking interest rates sooner based on improved US economy performance.

 

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The US stock markets recorded their biggest gains in 2014 on Wednesday after dovish Federal Reserve statement. The dollar rose against the yen and the euro after Fed’s statement. Market indexes soared after the Federal Open Market Committee statement that central bank is prepared to hike interest rates as early as the middle of next year, but will be “patient” about the timing of the first rate hike, replacing the “considerable time” language from the previous statement. Fed chairwoman Janet Yellen sounded upbeat on the economy but noted that there was room for improvement. We deem investors optimism was boosted by the Fed’s upbeat assessment of US economy recovery, which makes US assets and dollar more attractive compared with other markets struggling to reverse deflationary developments and negative consequences of geopolitical crises. At 14:30 CET Initial Jobless Claims for the week ended December 13 will be released in US with a tentative forecast of a slight increase compared with the previous month. At 16:00 CET Philadelphia Fed Business Outlook Survey will be released, tentative forecast indicating a lower level of activity compared with the previous month. Disappointing reports may result in a weakening of dollar.

European stock markets closed higher after a rebound in oil prices. Today at 10:30 CET Retail Sales m/m will be published in the UK, with the forecast of decreasing sales compared with the change in previous month. We expect this will cause a short term fluctuation in Pound rate contributing to its relative weakening against major currencies. At 10:00 CET German Ifo Business Climate index will be published, the tentative outlook is positive and the positive report may strengthen the single European currency. Elsewhere, the ruble ended a two-week slide after the Central Bank of Russia loosened restrictions on how much money Russian banks need to hold in reserve, and started selling dollars to stop ruble’s decline. Japan's Nikkei share average jumped 2.5 percent today in morning trade after the US Federal Reserve gave an upbeat assessment of the US economy.

Oil continues rising after Brent for February settlement increased 2 percent yesterday. Investors are weighing the reports of falling crude supplies in US and Iran offering discounts for January shipments for Asia. The US Energy Information Administration reported crude stockpiles in the US, the world’s largest oil consumer, fell by 847,000 barrels last week. Iran’s Oil Minister Bijan Namdar Zanganeh said Iran “will under no conditions let go of its share” of the market given restrictions on its exports in recent years. US Energy Information Administration data indicated US oil production expanded for a fourth week through December 12 to 9.14 million barrels a day, the highest level in weekly data that started in January 1983. There is no sign that any major producer is planning to curb its output as oil has slumped more than 20 percent since OPEC decided at a meeting last month to maintain its output quota.

Olam International Ltd., which agreed this week to buy Archer-Daniels-Midland Co.’s cocoa business to become top-three processor of beans, predicts cocoa prices will probably advance for a fourth consecutive year in 2015, driven by a global shortage. The company estimates demand will exceed supply by 120,000 metric tons in the season started October 1 because of lower output in West Africa, the world’s biggest growing region.

 

[IFCMarkets]

US stocks rose on Monday with S&P 500 and Dow Jones Industrial Average hitting new record highs. The S&P 500 closed at a record for the 50th time this year, the highest number of record closes in a year since 1995. The dollar strengthened against the basket of major currencies. While the economic data released on Monday were mixed, investors' optimism was driven by Fed’s statement that it will be patient before raising interest rates. Sales of existing homes in November slowed down to the weakest pace in six months, while Chicago Fed national activity index came in stronger than expected. Today at 14:30 CET the Durable Goods Orders for November and the final figures for third quarter Gross Domestic Product will be published in US. The value of new purchase orders are expected to rise considerably, and the GDP is expected to be revised upwards. At 16:00 CET New Home Sales figures for November will be released, the tentative outlook is positive. The positive reports should contribute to further strengthening of the dollar against major currencies. European stocks rose Monday with technical, consumer services and financial stocks leading the advance. Asian equity markets closed mostly higher.

Today Asian commodity stocks are falling, dragging the regional index lower for the first time in four days. The yen fell for a fourth day against the dollar, as rising global stock markets reduce the demand for the safe haven asset. The ruble gained 3.1 percent against the dollar by 12:37 pm in Moscow yesterday after China signaled it is prepared to offer Russia support by expanding a currency swap between the two nations and making increased use of yuan for bilateral trade. China and Russia signed a three-year currency-swap line of 150 billion yuan ($24 billion) in October. Ruble was also supported by the announcement of Saudi Oil Minister that fossil fuel will remain the main source of energy for decades to come.

Oil advanced for the second time in three days as investors expect the Energy Information Administration’s report tomorrow will indicate a fall in stockpiles in the US for the second week. There is still an oversupply on global market as major producers don’t plan to cut output while global demand is falling. Iraq’s Oil Minister announced plans for the country to boost production to 4 million barrels a day next year, while the Saudi Oil Minister commented that prices as low as $20 a barrel are irrelevant to OPEC policy.

Gold futures fell below $1,200 an ounce Monday, with gold for February delivery falling 1.4%. Silver for March fell 2.1% . Both metals ended last week sharply lower, with gold declining 2.2% and silver losing 6%. With dollar getting stronger and rising global equity markets the demand for safe haven assets is expected to decrease. Copper prices declined for the second time in three sessions after purchases of previously owned US homes dropped more than forecast in November.

Russia plans to introduce export duties on cereals as it tries to stop the increase in the price of bread as the ruble slumped 40% against the dollar this year. A report from Rabobank International indicated that Russia has already shipped 15 million to 16 million metric tons of wheat out of the 22 million tons expected by the US Department of Agriculture for the season.

 

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US stocks and dollar moved higher on Tuesday after the revised data on third quarter economic growth bolstered investors optimism about US economy. The unexpectedly high revision of the third-quarter GDP growth rate to 5% from an initial estimate of 3.5% showed growth in the US economy accelerated at its fastest pace in 11 years. The ICE dollar index climbed 0.32% to 90.06. The Dow Industrial closed above 18,000 for the first time ever and the S&P 500 closed at a record again, its 51st record close of the year. Trading volumes were extremely low and are expected to be light today as stock markets will close three hours earlier than normal. At 14:30 CET labor market statistics will be released in US. The tentative forecasts for Continuing Claims and Initial Jobless Claims for weeks ending December 13 and 20 respectively indicate marginal increases in both indicators, which we believe may have a limited negative effect on USD.

The broader European stock market rose Tuesday for sixth consecutive session. The Stoxx Europe 600 gained 0.6% led by industrial, consumer staples and discretionary shares. The euro slipped against the dollar after the Greek Prime Minister Antonis Samaras failed to get his presidential candidate elected in a second round of parliamentary voting. There is a possibility that far-left Syriza party may win in a general election if no president is confirmed during a final vote on December 29 and snap elections are called for late January, which negatively affects the euro outlook. Syriza is opposed to austerity measures imposed on the country as a condition for Greece’s bailout program.

Japanese stocks are rising today following the Wall Street's lead. Dollar advanced for a fifth day against the yen breaking through the 120 mark, moving back towards a 7-1/2 year high and boosting Japanese exporters’ shares

The ruble strengthened after the government called on exporters to buy rubles. According to Gazprom, the government has ordered five state-controlled exporters, including Gazprom, to reduce their foreign-currency holdings by March 1 to levels no higher than on October 1. Analysts predict the gains in ruble may be overdone and the future movement of the exchange rate will be determined by the price of oil.

Crude-oil futures rose on Tuesday on indication of faster US economic recovery attested by the revised third-quarter GDP data showing US expanded by an unexpectedly strong 5% annual rate. On the New York Mercantile Exchange, West Texas Intermediate crude oil futures for delivery in February gained 3.4%. Investor optimism was boosted also by a Reuters report on Tuesday quoting some Arab members of the Organization of the Petroleum Exporting Countries as saying they expect global oil prices to rebound to between $70 and $80 a barrel by the end of next year, underpinned by a global economic recovery. A report by Morgan Stanley indicated a likelihood of some value buying over the next two months as global oil demand rises in the northern winter, but predicts “any oil-relief rally is likely to be limited and short-lived, barring a major outage,” citing OPEC’s decision not to cut production, new oil supply coming in early 2015, and a strengthening US dollar. Today at 16:30 CET US Crude Oil Inventories will be released, the tentative forecast is bullish for oil prices as a fall in inventories is expected.

 

[IFCMarkets]

World stock markets were traded sideways at the end of last week as investors activity was low due to Catholic Christmas celebration. The US stock indices, Dow and S&P 500, managed to hit record highs in intraday trading. However, the indices showed a relatively slight rise over the week. The Dow upped 1.4%, S&P 500 – 0.9%, NASDAQ – 0.9%. There was no significant US economic data released on Friday. Today we also don’t expect any information. The trading volume was 60% below the monthly average and reached 3.1 billion stocks. Currently, futures on US stock indices are traded “noticeably down”. Note that the US dollar index hasn’t still managed to consolidate above the psychological resistance level at 90 points. Subsequently, the euro has suspended to fall against the dollar.

European markets are traded down today amid the political risks associated with the third round of voting in Greece, electing its president. If today the Greek Parliament fails to elect the president, it may trigger a snap election which will be finished only on February, 8. Investors believe that it could have a negative impact on the economy of the entire European Union. The election results in Greece will be announced approximately at 11:00 СЕТ. Important economic reports in the EU are not expected to be released until Friday.

Nikkei has slipped today along with other global stock indices. An additional negative factor was the news of the first Ebola case in Japan. The investor activity was low. The trading volume on the Tokyo Stock Exchange was 18% lower than the monthly average. Let’s remind that macroeconomic data will not be released this week. Japanese stock exchanges will be closed from December 31 up to and including January 4.

World oil prices climbed slightly amid the renewed fighting in Libya: 800 thousand barrels or nearly two-day production volume of the country was destroyed over that period. An extra factor providing support for oil prices was the policy conducted by the Central Banks of China and Japan, aimed at economic growth boost. China is planning to cut rates once again early next year. On Saturday the Japanese government approved a plan of economic incentives in the amount of $29 billion.

Natural gas price in the US tumbled 26% in December, and reached the psychological support level of $3 per million BTU for the first time since 2012. It was caused by the warm weather forecasted in the United States this winter, according to the Commodity Weather Group. Note that 49% of American housing uses natural gas for heating. Amid the warm weather conditions, the US gas reserves may hit historical highs, more than 4 trillion cubic feet by the beginning of the next heating season. Now the gas reserves make up 3.25 trillion. Note that the US gas production has risen 5.5% this year and reached a record high of 74.3 billion cubic feet a day. It happened mainly due to an increase in shale gas production by 19%, up to 16.3 billion cubic feet. However, we accept the possibility of a technical price upward retracement, starting at the level of $3, or at least highly volatile trading.

Copper prices have reached a four-year low today, after the negative data on Chinese industrial revenues in November was released on Saturday. Its total reduction appeared to be the largest in two years. Note that the Chinese PMI in December will be released on December 31. The outlook is negative: it may affect the commodity futures prices.

Soybean prices are at the two-week high due to the flooding in Malaysia, the world leader in palm oil production. Investors deem that it would increase the demand for alternative soybean oil.

 

[IFCMarkets]

US markets closed mixed on Monday with S&P 500 edging up to another record close, while The Dow Jones Industrial Averageretreated from the record close achieved on Friday. Trading volumes were at roughly two-thirds of their 30-day average. Trading is expected to be light throughout this holiday-shortened week. Today at 16:00 CET Consumer Confidence will be released in US by the Conference Board Inc. The tentative forecast indicates increasing consumer confidence which we expect will have a positive effect on US dollar. On Wednesday at 14:30 CET labor market statistics will be released in US. The tentative forecasts for Continuing Claims and Initial Jobless Claims for weeks ending December 20 and December 27 respectively indicate marginal decrease in Continuing Claims while the Initial Claims are expected to increase marginally, which we believe may have a limited negative effect on USD. At 15:45 CET Chicago Purchasing Managers’ Index will be published, the tentative forecast indicating a slight decline in the index. And at 16:00 CET Pending Home Sales for November will be released, the tentative outlook is positive.

The stocks in Europe edged higher as Stoxx Europe 600 posted marginal gains on Monday notwithstanding the Greek parliament’s rejection of the prime minister’s nominee for president. This means the Greek parliament will have to be dissolved and a snap election will be held on January 25. Investors are concerned whether the Greece’s bailout program and austerity measures will continue if the far-left Syriza party wins in the general election. The uncertainty about the bailout program pushed euro to a two-year low versus the dollar. On the backdrop of struggling Eurozone economy the European Central Bank will meet on January 22 amid speculation officials are preparing to consider sovereign-bond purchases as a next stage of expanding the monetary stimulus measures into a full blown quantitative easing program. This sets the stage for continued euro weakness.

The Nikkei is falling today after closing 0.5% down on Monday. As the Bank of Japan is considering additional measures of monetary easing in April after it tripled its buying of exchange-traded funds to 3 trillion yen in October and the government announced a 3.5 trillion yen ($29 billion) fiscal stimulus package to boost the economy on December 27, all indications are that yen will continue falling in 2015.

The ruble fell the most in almost two weeks after the Economy Ministry report indicated that gross domestic product shrank 0.5 percent in November from a year earlier. The performance of Russia’s currency is determined by the price of crude oil, Russia’s main source of export revenue. If the price of oil does not stabilize the pressure on Russian economy and the ruble will continue.

Oil tumbled to the lowest level in more than five years on concerns of global supply glut, reversing early gains after news that oil storage tanks in Libya were set ablaze and the subsequent report by a National Oil Corporation spokesman that fires were extinguished. As dollar strengthens the appeal of raw materials as a store of value decreases, further reducing the speculative demand for oil. According to ICE Futures Europe exchange, hedge funds curtailed net-long positions by 15 percent in the week ended December 23, while they had added to net-longs in the prior four weeks, boosting them to the highest level since July on December 16.

 

[IFCMarkets]

Global stock indices were down on Friday due to weak macroeconomic data released in the US. Markit’s Manufacturing PMI and ISM Manufacturing in December appeared to be lower-than-expected. Construction Spending declined for the first time since June, while it was expected to grow. The volume traded on the US exchanges was 23% below the monthly average and reached 5.3 billion shares. Starting today, the majority of world markets are opened on a regular schedule. Futures on US stock indices are currently traded prominently down. Today we don’t expect any important macroeconomic data to be released in the US.

The US currency has advanced greatly. It was caused by the European data release, the same as it happened on Friday. The Greek parliament failed to elect the president, so it will have to be dissolved and a snap election will be held on January 25. Amid this information there were even rumors in Germany of Greece leaving the European Union. These rumors were disproven later. However, the whole situation has affected the euro. It fell below $1.2 for the first time in four years. Another negative factor was the investor expectation of the ECB to announce the beginning of euro printing at the meeting which will take place on January 22. Due to this news, the US dollar has strongly settled above 90 points.

European markets have indicated minor gains in the morning, as the expected euro printing should result in a splurge of liquidity, according to market participants. We don’t exclude that the American and European stock markets and currencies of both regions may be observed in a mixed trading for some time (according to the example of Nikkei and yen). This information may be used for creating a personal composite instrument. The German CPI will be released today at 13:00 СЕТ. In our opinion, the tentative outlook is negative for the euro.

Nikkei has dipped today. We deem there was no specific reason for the index drop. However, note that Markit and JMMA Manufacturing PMI index in December has been announced today early in the morning. It proved to be a bit worse than expected. Composite PMI and Services PMI will be released tomorrow at 1:35 СЕТ. The forecast is neutral. Note that the exchange rate of the Japanese yen against the US dollar looks very stable. It is still difficult to predict whether it remains for a long time or not. Economic data will be reported in Japan on Friday morning.

Crude oil prices reached the lowest level over five and a half years. Some oil-producing countries are forced to increase the production level in order to offset the fallen revenues due to lower prices. Russia’s production rose 0.7% in 2014, up to 10.58 million barrels a day. According to the Russian Ministry of Energy, oil production is expected to fall to 525 million tons in 2015, from 526.6 million tons in 2014 due to the depletion of a number of deposits in Western Siberia. But meanwhile, it is a matter for the future. Russia produced 10.67 million barrels a day in December, more than the country’s annual average. In December Iranian oil exports climbed to the highest level since 1980 (2.94 million). In January it may reach 3.3 million barrels a day.

As expected earlier, $3 per million BTU has become a kind of “support level” for the US natural gas. However, it was not the result of investor sentiment, but due to the Arctic front and cold weather forecasts, according to National Weather Service. The US natural gas reserves shrank 133 million cubic feet a week, while the demand upped 21%, to 100 million. It has also affected the prices.

Today the majority of commodity futures are going up again after severe losses as negative Chinese data on manufacturing production was released last week. The Chinese statistics will be released tomorrow morning, on Wednesday and Friday. In our opinion, all the forecasts are neutral.

 

[IFCMarkets]

World stock markets tumbled on Monday on continued fall in oil prices and surging dollar. Sell-off of US equities dragged US stock indices down, with Dow Jones Industrial and the S&P 500 recording their worst losses since October. Investors sold off energy stocks as WTI slid below $50 a barrel. The Dow Jones Industrial Average also suffered its largest one-day decline in three months, with 28 of its 30 components closing with losses. The US Dollar Index, which has increased nearly 2% already in 2015, upped 0.3% on Monday. Today at 16:00 CET the December Non-Manufacturing Purchasing Managers' Index (PMI) by the Institute for Supply Management will be released in US. The Non-manufacturing PMI is expected to reach 58.2 in December having increased to 59.3 in November, which may contribute to temporary weakening of US dollar as the Manufacturing PMI also came out lower than expected earlier on Friday.

European stocks fell sharply on Monday on concerns over political uncertainty in Greece and falling oil prices. Investors are concerned that the opposition Syriza party may win the snap election scheduled for January 25 after the third and final parliamentary vote failed to elect a new Greek president. Syriza has threatened to stop implementing the austerity program that the country agreed to as a condition for the international bailout. Today from 9:15 to 10:00 CET December Services PMI by Markit will be released for Spain, Italy, France, Germany and Eurozone. They are expected to remain unchanged from previous month levels and should not affect financial markets. A slightly improved December Services PMI for UK is expected to be released at 10:30 CET, which may positively affect the British Pound. The euro recovered after falling to its lowest level in nine years as investors covered their shorts to take profits. Investors started selling the single European currency ahead of the expected large-scale purchases of government bonds by the European Central Bank. The ECB’s next monetary policy meeting is scheduled for January 22 and analysts expect the ECB may decide to start the quantitative easing program to add around €1 trillion to the central bank’s approximately €2 trillion-balance sheet. On Monday the final German consumer price index reading for 2014 was released, indicating prices remained unchanged month over month against an expected 0.1% increase. The likelihood that the ECB will decide to start the quantitative easing will greatly increase if the Eurozone CPI for December, expected to be released on Wednesday, shows falling prices as the tentative outlook indicates.

Japan's Nikkei average is falling today on concerns over Greece's future in the euro-zone and falling oil prices. The yen is gaining against the dollar as investors seek the traditional safety of the Japanese currency amid worries about global growth.

On the backdrop of swelling oil supplies the Saudi Arabia state-owned producer, known as Saudi Aramco, raised prices for all its sales to Asia in February and cut all of them for Europe and most in the US. It will sell its Arab Light grade for $1.40 a barrel less than a regional average next month, the company said yesterday in a statement.

Gold climbed for a third day as slumping equity markets and concern that Greece may quit the euro area spurred demand for the safe haven asset. Silver and palladium rose.

 

[IFCMarkets]

Markets continued retreating on Tuesday as oil prices slumped. The sell-off of US stocks continued for the second consecutive day. The S&P 500 benchmark index fell for the fifth session in a row, with only two sectors – utilities and telecoms, remaining in the green. Reports released on Tuesday indicated orders for goods produced in US factories fell 0.7% in November, and companies in services sector grew at a slower rate in December. Intercontinental Exchange Inc.’s US Dollar Index, which measures the currency’s performance against the basket of six major currencies, rose 0.3 percent to 91.741 after climbing to 91.818, the highest level since December 2005. Today at 14:15 CET December Non-Farm Employment Change by ADP will be released in US. The tentative outlook is positive for US dollar as the economy is expected to add 227,000 jobs in December, more than the 207,000 jobs gained in the previous month. At 20:00 CET Federal Open Market Committee December Meeting Minutes will be published. After the December FOMC meeting the Fed modified its statement about keeping interest rates low for “considerable time” saying instead it will be patient about future interest rate hikes but plans to raise interest rates in 2015. The Fed stance was interpreted as more hawkish as Chairwoman Janet Yellen sounded optimistic about US economy and unconcerned about the impact of falling oil prices. The details of the meeting minutes may reveal whether bullish or dovish considerations prevailed in the internal debate, which may accordingly boost or weaken the bullish dollar sentiment.

European stocks fell on Tuesday for third consecutive day in a row. Markit reported on Tuesday euro-zone activity in the manufacturing and services sectors rose marginally in December with the PMI growing to 51.4 against 51.1 in November. Euro fell for a fourth day. Today at 11:00 CET euro-zone December Consumer Price Index will be released. The inflation in November reached 0.3%, much lower than the ECB inflation target of just below 2% over the medium term. With falling oil prices the disinflationary pressures have increased, and a further decrease in CPI is expected in December. In case the CPI comes out negative indicating an annual decline in prices, it will be a critical factor that may provide the justification for the start of a large-scale sovereign-bond purchases for coming ECB meeting on January 22, thus contributing to further euro weakening.

Nikkei fell 3% on Tuesday posting its biggest one-day loss in nearly 10 months. As investors sought safe havens after stocks slumped around the world this year the yen advanced against the dollar. Japanese stocks and East Asian markets are trading mostly higher today, and the yen fell versus all 16 major currencies as Asian stocks snapped a two-day rout, decreasing the demand for safer assets.

Oil continued falling on the backdrop of a global supply glut, rising US dollar and increased uncertainty over euro-zone economy prospects. WTI traded near $48 a barrel. There are no indications the global demand will increase significantly in the first half of 2015, which means bearish factors will determine the market dynamics in the near term.

Gold fell for the first time in four days before the Federal Reserve releases minutes for its December meeting that may give clues to the timing of higher interest rates, curbing demand for the metal.

 

[IFCMarkets]

Markets rebounded and oil rose on Wednesday. US stocks recorded solid gains, with the S&P 500 index snapping a five-day losing streak and recording its first gain in 2015. Investor optimism was boosted as oil markets stabilized and better than anticipated employment data were released by ADP. The dollar continued to advance against major currencies with ICE US Dollar Index rising 0.61% to a level slightly below a nine-year high reached earlier in the session. The investor reaction to the minutes of the December meeting of the Federal Reserve was neutral as minutes indicated that low inflation would not prevent the central bank from raising rates, but the central bank was in no hurry to start raising interest rates, not until at least April. Today at 14:30 CET the labor market data will be released in US. The number of Initial Claims is expected to fall to 290,000 this week compared to 298,000 increase last week. The fall in initial claims should contribute to further strengthening of US dollar. At 21:00 CET the November Consumer Credit number will be released, the tentative outlook is positive for the dollar.

European stocks recorded their first gain of 2015 as investors bet on further stimulus measures from the European Central Bank after consumer price data with first deflationary reading on annual basis since October 2009 were released. Euro fell for a fifth day, trading at nine-year lows against the dollar on the prospect of further monetary stimulus. Today the euro-zone Retail Sales number for November will be reported at 11:00 CET after the German Factory Orders for the same month is released at 08:00 CET. Both indicators are expected to come out below the previous month readings, and lower actual numbers may negatively affect the single European currency.

Japanese stocks are rising today as rising US and European markets and a rebound in oil prices eased investor concerns. The Nikkei added 0.01 percent on Wednesday, just managing to snap a four-day losing streak. The yen also weakened against the dollar trading above 119.00 level, compared to 118.71 Tuesday. The divergent central bank policies of Bank of Japan and the Federal Reserve with the BOJ implementing accomodative policies while the Federal Reserve moves toward raising interest rates constitute the main source of the yen weakness. Yen weakness will continue if no major policy reversals take place.

US crude oil rose Wednesday, snapping a four-session losing streak after a dip below $47 a barrel earlier in the day as a weekly US inventories report showed a surprise drop in crude supplies. WTI for February delivery rose 1.5% to settle at $48.65 a barrel on the New York Mercantile Exchange. There are no signs that the current bearish trend will reverse in short term as analysts from Bank of America Merrill Lynch estimate that Non-OPEC and OPEC producers don’t plan curbing output and it will take time for the global demand to increase with lower prices.

Natural gas for February also retreated - 2.3% to $2.8710 per million British thermal units, the lowest settlement since September 2012. Today at 16:30 CET the EIA Natural Gas Storage Change for the week ended January 2 will be published, with an expected decline of 116 billion cubic feet. A bigger than expected actual number may result in increase in gas prices.

 

[IFCMarkets]

World markets were traded lower on Friday. Average Hourly Earnings in December, released in the United States, indicated unexpected decrease and affected investor’s sentiment. Non-Farm Employment Change outperformed the outlook, Unemployment Rate dropped to the lowest level over 6.5 years (5.6%). In general, 2.95 million new jobs were created in the US in 2014, the highest level since 1999. However, stocks were traded lower along with the US dollar index. The stocks that posted the biggest losses were JPMorgan Chase (-1,7%) and Wells Fargo (-1,6%). Investors are concerned that next week these companies may publish weak Q4 earnings reports. The volume traded on US exchanges was 12% lower than the weekly average and amounted to 6.3 billion shares. We don’t expect any significant US statistics released today.

Today European indices are advancing on US stock futures lead. Crude oil prices hit new low. Investors deem that cheap hydrocarbons would accelerate the economies of western countries. Amid additional positive news from the EU we would like to note that pharmaceutical company Shire bought NPS Pharmaceuticals for $5.2 billion. This was the reason why other stocks in medical sector rose as well. Today macroeconomic reports in the EU are not expected.

Japanese markets are closed due to the Bank holiday, Coming-of-Age Day. Note that tomorrow morning a few economic indicators will be released in Japan. They have little chances to affect markets. Trade Balance in December will be published in China: it may have a strong impact on commodity futures prices.

Crude oil prices have continued dipping as the investment bank Goldman Sachs cut its WTI price outlook from $70 to $41 a barrel in the first half of the year, and down to $47 for the entire 2015. According to Goldman Sachs, the average Brent crude oil price would be $50.4 a barrel this year. The bank expects that WTI-Brent spread could increase up to $5, from $1,5-2 .

Precious metals continued to go up. The weekly rise in gold prices was the largest since July. SPDR Gold Trust reserves upped 0.4%, to 707.8 tons. According to U.S. Commodity Futures Trading Commission (CFTC), gold net log positions rose 8.5% over the week and hit the five-month high.

Coffee prices have boosted amid information about drought forecasts in Brazil published by Somar Meteorologia and MDA Weather Services. So 40% of the crop is in jeopardy. The weekly increase in coffee prices was the highest over 11 months. According to CFTC, net long positions rose 6.6% over the week, the largest increase since October.
The majority of other commodities sagged on fallen oil prices. Oil makes up a significant part of their production.

Today at 17:00 CET USDA is expected to release the quarterly report revealing the data on global grain supply and demand, and the amount of grain inventories in the US. Moreover, winter wheat crop in the US will be assessed. The data may affect strongly the price. Most market participants expect wheat-cultivated areas would expand. Prices hit six-week lows on Friday. According to CFTC, wheat accounted for net short positions, meanwhile soybeans – net long positions.

 

[IFCMarkets]

Markets were mixed on Monday as oil resumed its fall. US stocks fell for a second straight trading session as investor confidence was hit by further plunge in oil prices ahead of the start of the fourth-quarter earnings season. Investors’ earning expectations have become less positive as energy companies’ profits will be hit by falling oil prices. The ICE dollar index finished the day unchanged after falling on Friday as mixed US jobs report indicated hourly wages fell last month. Today at 16:00 CET the November Job Openings and Labor Turnover Summary (JOLTS) will be published in US. The US economy has been creating jobs at a healthy pace during the past year, and the last JOLTS report indicated increase in October job openings to 4.834 mln from previous month’s 4.685 mln level. A higher than expected increase in job openings will likely result in further strengthening the US dollar.

European stocks rose on Monday as investor confidence was boosted by reports the European Central Bank is considering various schemes for launching a quantitative-easing program. According to CNBC report, the ECB is considering a quantitative-easing program where the magnitude of a country’s sovereign debt the ECB would purchase would be determined by the level of paid-in capital contribution made by national central banks into the ECB. The euro slumped to a near nine-year low against the dollar. As ECB is moving towards implementing a monetary stimulus program to support sluggish economy and ward off deflation, the pressure on euro will remain. Goldman Sachs raised its forecast for the dollar to $1.14 per euro in three months from a previous prediction of $1.23. Today at 10:30 CET the December inflation data will be published in UK. The annual consumer price inflation has been below the 2% target for all previous months of 2014, with CPI inflation falling to 1% in November from 1.3% in the previous month. Further slowing of inflation is likely to negatively affect the British Pound as the central bank will most likely refrain from taking measures toward monetary tightening in 2015 while the inflation is falling further away from the 2% target rate.

The Nikkei is falling on the backdrop of falling US stock markets, sliding oil prices and rising yen. The yen rose for a third day against the dollar as the slide in oil prices spurred demand for haven assets. Falling oil prices contribute to narrowing Japan’s trade balance, providing further support for the yen.

Oil continued falling amid speculation that US crude stockpiles increased. As US production reached the highest level of 9.14 million barrels a day through December 12, the most in weekly EIA records that started in January 1983, the United Arab Emirates Energy Minister Suhail Al Mazrouei said yesterday UAE will continue plans to boost its production capacity to 3.5 million barrels a day in 2017 as it pumped 2.7 million a day last month with a current capacity of 3 million.

The soybeans futures tumbled as the US Department of Agriculture said inventories expanded in the US, the world’s biggest grower, and revised upwards the US production data to a record 3.969 billion bushels (108.01 million metric tons) from 3.958 billion in December.

Copper traded near the lowest since October 2009 after falling 1.2 percent yesterday on concern that output is outpacing demand.

 

[IFCMarkets]

World markets were mixed on Tuesday as oil continued falling. US stock market started the trading session with a rally but the early gains were reversed by midday and the market ended the session slightly lower, recording triple-digit swings in the key benchmarks. Positive reports released on Tuesday indicating that the labor market is improving as November job openings rose to 4.97 million from October’s 4.83 million, and a measure of small-business confidence rose in December to the highest level in more than eight years didn’t boost investor optimism sufficiently to overcome concerns over global deflation as oil slide continues. Dollar continued strengthening as the ICE Dollar index, which measures the dollar’s strength against a basket of six major currencies, rose 0.35% to 92.2980. Today at 14:30 CET December Advance Retail Sales numbers will be published in US. Retail sales are expected to contract which may have a limited negative effect on US dollar, unless an actual reading indicates a surprise rise in retail sales which will contribute to the US dollar strength. At 16:00 CET the November Business Inventories number will be released. A lower than expected actual reading for inventories growth rate may have a positive effect on US dollar.

European stocks rose on Tuesday on reports the European Central Bank is considering a sovereign-debt buying program to stimulate the euro-zone economy and stave off deflation. Euro extended its losses against dollar and declined to nine-year low amid expectations the ECB will launch an extensive stimulus program at its meeting on January 22. Bank of England Governor Mark Carney said in an interview with BBC that the ECB and President Mario Draghi have made it “very clear” that investors can expect “considerable asset purchases” in the months to come. Another factor of pressure on euro is the political uncertainty surrounding the Greece elections.

The Nikkei closed down 0.6% on Tuesday on worries about global economic outlook and impact of falling oil prices. The yen rose for a fourth day against the dollar as falling equities and concern over global economic slowdown boosted haven asset demand. Japanese stocks are falling today. Tomorrow November Machine Orders and December Domestic Corporate Goods Price Index will be released in Japan. Core machinery orders are expected to rise, indicating capital spending is picking up, which may positively affect the yen.

Oil fell for a fourth day, extending losses from the lowest close in more than five and half years as Ali Al Yabhouni, the United Arab Emirates’ governor to the Organization of Petroleum Exporting Countries, said yesterday the market may recover only when demand improves later this year.

Gold fell yesterday, trading below 12 week-high on the backdrop of slowing global economy and the prospect for higher US borrowing costs. Industrial metals fell on concern that global demand will not be enough to eliminate a supply glut after the World Bank revised downward its forecast for global growth in 2015. The world economy will expand 3 percent in 2015, down from a projection of 3.4 percent in June, according to the World Bank’s report released yesterday. Copper tumbled the most in almost six years to below $5,400 a metric ton as the demand for the metal in China, the world’s biggest user, is forecast to slow this year while supply rises globally.