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Markets Update am

Commodity Currencies in Driving Seat as Market Reversed

  • After initial dip over Doha disappointment yesterday, crude oil staged a rebound on news of Kuwait oil workers’ open-ened strike for protesting a proposal to cut wages and benefits of all public sector employees.
  • The country’s crude production dropped by more than half on Sunday.
  • WTI crude oil beached 40 after hitting as low as 37.61.
  • Stocks markets also reversed initial weakness and DJIA closed up 106.7 pts, or 0.60%, to close above 18000 handle at 18004.16.
  • S&P 500 rose 13.61 pts, or 0.65%, to close at 2094.34.

The risk-positive mood is pressuring Treasury prices, nudging yields higher, and weakening the Japanese yen. Gold is up $12 to $1,243 an ounce as the dollar weakens, and silver is jumping 2.4 per cent to $16.62 an ounce as the metal breaks out of a multimonth trading range.

Japan’s Nikkei stock index ended up 3.7 percent, a day after it fell 3.4 percent as investors assessed the impact of earthquakes in southwestern Japan’s Kyushu on manufacturers’ supply chains.

“The effects of the Dow reaching a nine-month high created a buying trend that helped lift the Nikkei today,” said Hiroki Allen, chief representative of Superfund Securities Japan in Tokyo.

The Korea Composite Stock Price Index (KOSPI)  was up 0.1 percent after the Bank of Korea kept rates unchanged as expected.

Brent crude LCOc1 added about 0.8 percent at $43.26 a barrel, while U.S. crude CLc1 rose about 1 percent to $40.18.

Commodity-linked currencies pared their steep losses logged after the Doha deal breakdown.

The perceived safe-haven yen slumped in line with the recovery in risk appetite. The dollar added 0.1 percent to 108.95 yen

the euro added 0.3 percent to 123.48 yen , moving away from the previous session’s three-year low.

Against the dollar, the euro edged up about 0.1 percent to $1.1324  as investors looked ahead to the European Central Bank’s policy meeting on Thursday. While no change is expected, investors are awaiting Mario Draghi’s news conference for clues on the central bank’s thinking.

The U.S. Federal Reserve will meet next week, and is also expected to keep its policy unchanged, though any suggestion that more hikes are on the way sooner rather than later would lift the greenback.

New York Fed President William Dudley said in a speech on Monday that economic conditions are “mostly favorable” yet the central bank remains cautious in raising interest rates because threats loom.

For the second time in as many weeks, Boston Fed President Eric Rosengren warned on Monday that futures markets, which see only one modest rate hike in each of the next few years, are off the mark.

Gold posted its best quarterly jump in nearly 30 years in the first quarter on expectations that the Fed will not be able to raise rates this year as many times as some had believed.

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