Web Special: Evening commodity update
Mounting risks over the global economic growth made investors risk averse and, subsequent liquidation in commodities and equities continued. Latest economic indicators from the US were an addition to a string of economic data pointing to a global economic slowing down. Unexpected decline in the US non farm payrolls in May saw unemployment rate in the US rising for the first time this year. Bullions eased after the previous session's rally, while base metals and crude oil continued its down trend in the international market. Crude oil in Nymex dropped to an eight month low while, Brent crude oil tanked to 16-month low, falling below $97 a barrel, on growing fears that demand for the commodity may falter. Base metals remained bearish with the red metal shedding more than three per cent in Shanghai as faltering industrial activity in China and Euro Zone, and disappointing jobs data from the US depressed demand. The major London Metal Exchange will remain closed today and tomorrow on account of Diamond Jubilee celebrations in the UK. Spot gold edged back after posting its largest single day gain in almost three years. Meanwhile, in MCX, commodities were moving zigzag owing to currency fluctuations. Following an early rise in the opening hours, rupee was seen paring initial gains against the US dollar. The weakening rupee helped bullion, base metals and crude oil to trim losses.
Events in Focus
The flagging economic indicators from the U.S and China are proving to be a headwind for investors, who are already unnerved by the escalating debt concerns in the Euro region. Looking into this week, key central bank actions are scheduled, which could entice market forces. After a disappointing payroll numbers from the U.S on Friday, market onlookers would be keenly looking forward to the Federal Reserve Chairman Bernanke’s testimony before the Congress on Thursday, where a possible hint of QE3 could be on cards. With European economies battered by rising debts, all eyes would be on the European Central Bank (ECB) meeting on Thursday, where President Draghi is expected to retain the rates at 1 percent but could initiate bond buying action amid spreading contagion. Into the evening, the U.S factory orders are projected to show an increase of 0.20 percent in April compared to a fall witnessed last month. German Chancellor Angela Merkel is expected to meet EU commissioner Jose Barroso in Berlin today evening to discuss on current situation in Europe, including the preparation for the next European Council meeting June 28-29 in Brussels. Overall, the week could be held hostage to events unfolding in Europe, although hopes of a QE3 could rejuvenate market entities.
Prices looking firm and probably to continue the established buying sentiments, which may at first test the upside region of 29990/30190 or even higher towards 30370. On the contrary, break below 29630 region could give early indication of intraday weakness towards 29520/370.
A flat trading range is expected today. Early attempts to rise would be capped near 55300 but may not force steep falls as long as 53700 hold the downside. A direct rise above 55300 could push prices higher till 56000.
Likely to trade inside 406-397 regions with mild positive bias. Either side breakout would required to suggest fresh directional moves.
As long as prices stay below 900 likely to continue the broad selling momentum. A direct rise above 952 would be required to negate our bearish expectations and take prices higher.
The customary weakness is likely to continue on a break of 4520 region targeting 4480/4450 levels. Otherwise, expect a pullback towards 4580/4625 territory. A close above 4720 region could signal a reversal in trend.
Source: Geojit Comtrade
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