STOCKS
Equities continue to remain positive broadly. However, the impact on the market sentiment after the US signing the Hong Kong protest bill will have to be seen. Otherwise, the Dow, Nikkei, Sensex and Nifty look bullish in the near term. DAX has to breach a key resistance to gain strength and move higher. Shanghai remains mixed and continues to hover around its crucial support zone.
Dow (28164, +42.32, +0.15%) has moved further higher and keeps our bullish view intact to test 28250 and 28400 on the upside. The current upmove may have room to test even 28800 on the upside in the coming weeks.
DAX (13287.07, +50.65, +0.38%) is inching higher. As mentioned yesterday, a strong rise past 13300 will boost the momentum for the index to surge towards 13600 and even 14000 – the two crucial resistances in the coming weeks. But, while below 13300, the index can consolidate between 13100 and 13300.
Nikkei (23453.96, +16.19, +0.07%) is managing to hold higher. The outlook is bullish for it to test 24000 in the coming days. The current upmove can even extend up to 24800 in the coming weeks. As mentioned yesterday, a strong break/close above 23500 will accelerate the rally.
Shanghai (2894.91, -8.28, -0.29%) continues to oscillate around 2900 and remains mixed. A strong rise past 2920 is needed for the index to gain strength and become bullish. 2890-2880 is a crucial support region which needs to hold in order to keep alive the possibilities of an upmove in the coming days. We will have to wait and watch closely.
Nifty (12100.70, +63, 0.52%) is bullish to test 12200-12300 while it sustains above 12000. However, there is an important resistance at 12300 which will need a close watch as the index can reverse lower from there.
Sensex (41020.61, +199.31, +0.49%) has support at 40750 and can rise to 41250 in the near-term from where a reversal is possible.
COMMODITIES
US crude inventory stocks increased by 1.6mln barrels last week and US production is said to have hit a record high of 12.9mln bpd according to report by EIA. EIA’s forecasts of further increase in crude production lead to selling. US GDP improved in the 3rd quarter at 2.1% annual rate compared to market expectations of 2.1%. This also led to some strength in the Crude prices and could have some downward pressure in today’s session too. Gold and Silver look bearish for the near term while Copper looks bullish.
Brent (63.89) has dipped a bit but could trade within 63-65 region with chances of testing 63 over today and tomorrow. Note that 63 and 65 are immediate support and resistance levels.
Nymex WTI (57.88) has dipped below 58 but has support at 57 and while that holds, price could rise towards 60 in the near term.
Gold (1462.80) rose slightly to test 1470 yesterday but has dipped back from there. While below 1480, we may expect a test of 1440/30 in the near term.
Silver (17.08) has scope to fall towards 16 in the near term. View is bearish just now.
Copper (2.6880) has risen sharply and could head towards 2.7250-2.75 in the near term.
FOREX
Dollar Index (98.33) rose slightly after a higher than expected 3rd quarter GDP data came out yesterday. 98.50 is an important near term resistance that seems to be holding well for now. It would be important to see if this breaks on the upside for the index to target 99+ levels in the near term. While 98.50 holds, we may expect another dip from here back towards 97.
Euro (1.1006) is trading at support levels and a break below 1.096 would be crucial indicator of further bearishness in Euro just now.
Dollar-Yen (109.45) has come up to test 109.50 as expected. A break above 109.50 could take it higher towards 110 before a corrective dip is seen in the near term. Watch price action near 109.50.
EUR-JPY (120.48) is likely to trade within 119-121 region in the near term. Only a break on either side would throw some clarity on further direction.
Pound (1.2929) has risen to re-test 1.30/31 levels. We would watch price action near current levels to see if the price breaks above the upper end of the sideways range to turn bullish for the medium term.
Aussie (0.6765) has fallen as expected and continues to look bearish towards 0.6750-0.6650 for the medium term.
USDCNY (7.0279) is stable just now and could remain above 7 just now while upside could be limited to 7.40.
Dollar-Rupee (71.36) has been falling in line with our expectations but may test immediate support at 71.25 which could produce a bounce back towards 71.50/65 in the near term. A break below 71.25 would open up chances of further fall towards 71. Watch price action near 71.25 just now.
INTEREST RATES
The US Treasury yields have bounced but are likely to reverse lower again and keep the short-term downtrend intact. It will have to be seen as how China condemning the US for signing the Hong Kong protest bill impacts the market sentiment today. The German yields are moving towards their supports and are likely to bounce in the coming days. The 10Yr GoI can trade sideways.
The US 2Yr (1.63%), 5Yr (1.63%), 10Yr (1.77%) and 30Yr (2.19%) have bounced but is unlikely to sustain higher. As we have been mentioning for some time, the short-term outlook is bearish. The 10Yr has resistance at 1.80% and can dip to 1.70% initially and then to even 1.65%-1.63% eventually. The 30Yr can test 2.15%-2.12% on the downside.
The German 2Yr (-0.65%), 5Yr (-0.60%) and 10Yr (-0.38%) continue to dip and are coming closer to a key near-term support. The 5Yr has support at -0.62% and the 10Y has supports in the -0.40% and -0.43% region which are likely to limit the downside and produce a bounce in the coming days. The 30Yr (0.13%) continue to trade stable in a narrow range of 0.10% and 0.15%.
The 10Yr (07.26 GS 2029) GOI (6.6299%) sustains above 6.60% but looks mixed in the near-term. The yield can remain range bound between 6.60% and 6.70% in the near-term. We will have to wait for a breakout on either side of 6.60%-6.70% will give a cue on the next move.
The 10Yr (06.45 GS 2029) GOI (6.4725%) on the other hand can trade in the range of 6.46% and 6.50%.
