Market Morning Briefing

EQUITIES

The US equities rose yesterday as the fears over Greece's debt lessened. The comments of various EU nations ignited hopes of a Support Plan for Greece.

It brought back some confidence in the markets which was being battered since the beginning of 2010. The Dow (10058.64) rose 1.52% yesterday thus recovering more than Monday's decline. Two important data releases this week would be watched very closely by the markets. US trade Balance is scheduled to be announced today and the US Retail Sales numbers to be announced tomorrow.

The Asian indices are trading higher. The Nikkei (10035.78) is trading 1.04% higher. The Hang Seng (19758.76) is trading 0.17% lower while the Shanghai (2964.80) is trading over half a percent higher. The Sensex (16042.18) rose over half a percent yesterday and closed above 16000 for the first time in last 4 trading sessions. The markets would look up to the annual budget later this month for the direction going forward. Before that, the Sensex may rise towards 16400 over the next few days.

COMMODITIES

Crude (73.33) has risen sharply breaking above the Resistance at 72.50 mentioned earlier as the dollar weakend following the reports on the possiblity of Greece getting aid. Resistance is seen in 75.00-50 region which might be tested in the coming days if it continues to trade above 72.50. To see the Crude graph click on the following link:
http://www.kshitij.com/graphgallery/nymexcrudecandle.shtml#candle

Gold (1077.30) continued its upmove following the weaker dollar and closed just below the Resistance in 1080-1100 region mentioned earlier. The outlook is mixed now and we will have to wait and watch the market. To see the Gold graph click on the following link:
http://www.kshitij.com/graphgallery/goldcandle.shtml#candle

CURRENCIES

Most currencies staged a rally against the Dollar and the Yen yesterday, within an overall downtrend. The Euro (1.3765) saw a high near 1.3839 and the Aussie (0.8765) rose to a high near 0.8795. Question is whether the Greece rescue plan being talked about will lead to "risk appetite" coming back into the markets. The January downtrend is intact at the moment, but could be in danger of breaking. Dollar-Yen (89.75) has risen well over the last couple of days, but has Resistance in the 90.00-50 region, being essentially ranged between 88.50 on the downside and 90.50 on the upside.

The Pound (1.5680) is showing signs of rising towards 1.5820 if "risk aversion" takes a backseat. Dollar-Swiss (1.0660) has bounced a bit after having dipped to 1.0610 in the US session.

USD-SGD (1.4175) has come off a bit from Monday's high near 1.4250 while Dollar-Won (1158.30) has seen a dip from Monday's high near 1180, but has Support near current levels now. Dollar-Rupee had closed at 46.65 yesterday. The 1-week NDFs have traded as low at 46.44 but have last quoted near 46.62/67.

INTEREST RATES

3M USD LIBOR was unchanged at 0.25%. The yields on US Treasuries have risen yesterday. The 2Y and 10Y benchmark yields rose 6 and 8 bps to quote at 0.82% and 3.64% respectively.

The Greek bond yields rose yesterday as hopes were built that EU would own up to Greece and there would be a Support plan to bring some stability to Euro.

Bank of Korea is expected to announce its interest rate decision tomorrow. The markets expect interest rates to be maintained at 2% ahead of the elections.

Kshitij Consultancy Service