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News Update!

 

Jitters in markets spark haven demand

Tensions are dominating the market since the release of downbeat data from major economies, which sparked demand for safe haven currencies led by the yen, franc and dollar.  

Last week ended with worries as the U.S. non-farm payrolls showed that the world's largest economy did not add any jobs in August while July's reading was downwardly revised to 85 thousands from 117 thousands, leading the markets to open today's trading on a gap.

The euro led the decline, plummeting to three-week low versus the dollar, as the pair fell after the defeat of Merkel's party in elections and after the release of lackluster euro zone services PMI, which added to worries that recovery in the 17-nation region is losing momentum.

The German Chancellor Angela Merkel’s party was defeated in elections which raised speculations that bailouts for the region's highly indebted nations are at risk.

On the other hand, European services expansion eased to 51.1 in August from 51.6 in July, following the contraction of the manufacturing sector to 49.7 from the prior expansion of 50.4.

Concerning EUR/CHF, the pair slipped over daily basis to trade around 1.1110, after recording a high of 1.1199 a low of 1.1079.

Moreover, the dollar index, which tracks the dollar's movement versus a basket of major currencies, inched up to a high of 75.06 compared with the day's opening at 74.97 amid the absence of U.S. and Canada for Labor Day Holiday.

Tomorrow, U.S. ISM non-manufacturing is expected to show a cool down in expansion to 51.0 in August from 52.7 a month earlier.

On the other hand, the yen inclined against the dollar, where USD/JPY pair dropped over daily basis to trade around 76.80, after recording a high of 76.95 and a low of 76.67.

The trading range for today is among key support at 75.25 and key resistance now at 78.45.

Moving to the British pound versus dollar, the pair dropped over daily basis to trade around 1.6133 after abreach of   the support at 1.6150 was seen.

The pound was pressured down further, after the release of data that showed services gauge missed both prior and expected readings of 55.4 and 54.0 and came out at 51.1.

So far, the pair has recorded a high of 1.6184 and a low of 1.6092, while The trading range for today is among key support at 1.5935 and key resistance at 1.6365.

 

The Australian economy shows optimistic signs for the fourth quarter

The Australian economy has started its cheerful phase after the services industry index rebounded for the first time in more than four months during August, as the government has supported the economic recovery, led by growth in finance, communication and the recreation. 

Australian services rose as the mining sector rebounded, which is expanding to meet Chinese demand for raw materials, helping the labor market hire more workers. 

Moreover, the Australian business profits soared by more than double expectations during the second quarter through June, as the mining industry and utility companies benefited from stronger prices. 

Today's report showed that the Australian economy is on the trach of recovery before the end of the year, while the government is to introduce more of stimulus to push the economic recovery rebound once again during the next months. 

On the other hand, the Australian economic recovery moves into a narrow channel during the time as the nations is still suffering from first half natural disasters, along with the European debt crisis and the sluggish US economy that has a negative impact on the global economy. 

Furthermore, the Reserve Bank of Australian saw that keeping rates unchanged at 4.75% is a prudent decision amid the slowing global economy, while the Bank aims to support the economy rebound. 

Today, the Australian economy indicated that business investment strengthened during the third quarter of the year, affected by the improvements in the mining sector. 

The government forecasts mining investment of A$76 billion next fiscal year, spurring companies to hire workers and prompting the RBA to predict the unemployment rate to fall 4.25 percent by December 2013. Australia recorded its biggest annual job growth on record last year before hiring cooled.

 

Asia to release important fundamentals this week

The Asian region is to release a set of important economic data in this week, where all eyes are focused on the most critical fundamentals, with the Bank of Japan rate decision along with Australia gross domestic product (GDP) and the RBA rate decision.

Concerning Japan, the Bank of Japan (BoJ) is to announce rate decision, where expectations are pointing for steady rates at " virtually zero" in the range between 0.0% and 0.10% to support the pace of recovery during the coming period.

Moreover, the Japanese economy is still suffering from the Yen's appreciation that hurt the nation's exports and concerned major Japanese firms.

Furthermore, Japanese capital spending unexpectedly dropped by 7.8% in the second quarter. However, Japanese companies cut costs and delayed expansion plans, especially after with the weak business environment and deflation risks that continue to weigh on economic activities.

Moving to Australia, the country will release heavy fundamentals with high impact on market movements, where the Reserve Bank of Australia is to announce the rate decision on September 7, where analysts expect that the Bank to leave rates unchanged at 4.75% amid the sluggish global pace of recovery.

The Reserve Bank of Australia (RBA) sees that steady rates is a prudent decision at this time amid the dominant fears and jitters in the market, where the Bank is expected to keep rates steady until the end of the current year.

Finally, Australia will announce the gross domestic product figures during this week, after growth contracted by 1.2% in the first quarter of this year, while the economy is expected to have expanded by 1.0% in the second quarter which might provide aussie with some support.

 

Fundamental Oil

The bearishness continues to dominate oil’s trading with the start of the week, building up on Friday’s heavy losses with mounting slowdown fears after U.S. labor market stagnated in August.

Crude oil futures for October settlement continued to trend lower and currently hovering around the intraday low of $85.02 a barrel after opening at $86.44 per barrel the highest set for today.

The week started with a clear bearish sentiment with growth fears haunting the market and sending Asian equities lower. Investors reacted to the abysmal jobs report from the United States on Friday where the economy unexpectedly did not add any new jobs in August much weaker than expectations, fueling again fears of another recession.

Japanese stocks started Monday with heavy losses and ended lower by 1.9% at 8784.46 wiping out last week’s 1.7% advance on clear signs of economic weakness. The sluggish Chinese data also added to the weak sentiment as the HSCB Services PMI also slowed to 50.6 in August from 53.5 adding more woes from crude’s second biggest consumer.

We also saw more downside pressure on oil from easing tropical storm woes, where Lee weakened from a tropical storm to a depression and moved out of the Gulf of Mexico where crews are resuming production in the western Gulf.

Stocks are under pressure and the sentiment in Europe today is also expected bearish with the sentiment still shaky and trading is volatile, especially with the absence of U.S. and Canadian markets today for Labor Day.

More volatility and choppy trading will be seen for the rest of the session with the dominant sentiment clearly focused on slowing growth and jitters of another recession, especially as Europe is also suffering from the weak growth and deepening debt crisis which is also weighing negatively on the sentiment and on commodities.

 

European manufacturing and services add to worries the current slowdown could morph into a new crisis.

European services data added to worries that global economies may be heading to another recession, where investors are resorting to safe havens amid the sluggish growth pace engulfing global major economies.

Services expansion in the euro zone eased to 51.1 in August from 51.6 in July, following the contraction of manufacturing to 49.7 from the prior expansion of 50.4. Accordingly, PMI composite fell to 50.7 in Aug from 51.5 a month earlier.      

The decline was led by the ease in expansion seen in the region's largest economy, Germany, where services reading fell to 51.1 in August from the prior from 52.9. 

European major sectors were affected by the sluggish pace of growth worldwide as well as the mounting debt concerns, which affected the 17 nations that adopted the common currency.

Chinese HSBC services PMI started the week with an ease in  expansion to 50.6 in August from 53.5 in July.  

The pace of growth in the euro area has eased to 0.2% in the second quarter from 0.8% in the first quarter, buoyed by the drop in German growth to 0.1% from the revised 1.3% in the three months ending March.  

The sharp spending cuts by governments to trim their huge budget deficits weighed on growth and employment.

Unemployment rate in the euro area lingered for the second month at 10.0% in July where June's reading was upwardly revised from 9.9%, thereby affecting consumer spending. The total number of job seekers reached 15.8 million in July, up by 61,000 from June.  

It seems that global economies are in the throes of a new crisis, where last week's U.S. jobs data completed the agony as the world's largest economy did not add any jobs in August while July's reading was downwardly revised to 85 thousands from 117 thousands.

Meanwhile, investors are avoiding risky assets and resorting to safe haven currencies, led by the yen and franc.

What added to concerns is the defeat of German Chancellor Angela Merkel’s party in elections which raised speculations that bailouts for the region's highly indebted nations are at risk.

Consequently, European shares plunged trailing losses in world stocks which plummeted to a one-week low, while the European common currency sagged to three-week low versus the dollar on Monday trading.  

The euro is currently trading around 1.4145 against the dollar after the opening gap seen at 1.4163.

In the U.K., services gauge missed both prior and expected readings of 55.4 and 54.0 and came out at 51.1.

Last week, manufacturing showed contraction of 49.0 in August, marking that the sector contracted for the second consequtive month.  

Also, the pace of growth eased to 0.2% compared with the 0.5% expansion recorded in the first quarter, reviving concerns U.K. recovery is in doubt.

The BoE explained through the latest quarterly inflation report released in August, that the bank has cut growth forecasts to 1.4% this year from 1.8%, in addition, the bank sees the likelihood that inflation will rise to 5% over the coming few months.

Later in the week, U.S. ISM non-manufacturing is expected to slowdown to 51.0 in August from 52.7 a month earlier.

 

The governments of the world’s major economies may be struggling with debt, but the corporate sector is in good shape. US companies appear to be especially robust even as the US government just suffered a downgrade in its debt rating, says Lorraine Tan, director of research, Asia at Standard & Poor’s.   But while growth in the US is going to be exceptionally slow, S& P’s economists are not calling a recession, says Tan. For one, US companies are lean, productivity is high and labour cost is not an issue, she adds. “In the US, companies manage their margins much better. Their costs are mostly in US dollar, and they sell in US dollar. In Asia, our 2Q results have not been as exciting as those in the US. We have seen a lot of margin being eroded because costs are locally denominated that has hurt us because we are selling in US dollar.”   Image: Tan says investors can consider stocks of companies with more certain cash-flow streams such as consumer staples and utilities.Credit: Byran Tay, The Edge Singapore   Tan also doesn’t expect a derailment in Asia. “We think the markets in Asia are discounting a recession at this stage. We see the current rebound as a technical rebound. Before there can be a sustained rise, the market needs to consolidate. I think it may come back down and then consolidate,” she says. Even then, she believes the market already reflects fair value in terms of a recession. “We think at these levels, there are buying opportunities. Because of the uncertainties in the near term, we’re still telling our clients to stay defensive for the time being and to err on the side of caution if they must go into equities.”   In the 2008/09 global financial crisis, priceto- earnings (PE) multiples in Asia fell to below nine times. “We’re not seeing single-digit multiples yet, but we’re at 11 times on average in Asia. You’ve got the H-shares [shares of companies incorporated in China and listed in Hong Kong] at nine times 2011 earnings, which to me is pretty much reflecting a near-bottom situation,” she explains. “We’re not expecting the same sort of drop we saw during the global financial crisis, so we’re not expecting severe earnings losses. It shouldn’t be a situation in which [multiples] fall back to single digits,” says Tan. In 2008, Singapore hit a low of about nine times PE multiples. Currently, the local market is trading at around 11 times, based on the stocks in the Straits Times Index.   GOING FOR VALUE The ultra-conservative Tan says investors can consider stocks of companies with more certain cash-flow streams such as consumer staples and utilities. In the Singapore market, where there is “no real utility stock”, Tan prefers the three telcos, Singapore Telecommunications, M1 and StarHub, which have solid cash flows and dividend yields.   “We feel dividend yields in the next couple of years are going to play a bigger role in returns because of this very slow economic growth. You have to have an expectation that EPS [earnings per share] growth will be less than what we think. For instance, if you are getting 5% to 6% yield with 10% EPS growth, dividend is going to play a much bigger role in your return,” Tan elaborates.   Some specific areas, such as the industrials, will hold up better than others, adds Tan. She likes Keppel Corp, as it “has an order book that is locked in for the next few years”. The same goes for Sembcorp Marine, but to a lesser extent.   Although Tan acknowledges she hasn’t seen the latest data for fund flows, she figures there was a shift out of equities because of redemptions and allocations. But if foreign institutions return to the Singapore market, they may consider the three local banks, she adds. “Loans growth is still positive no matter what. Yes, you’ve got a margin squeeze, but the loans growth outlook is still positive, and we’re not expecting things to fall off significantly. We prefer banks over property. Also, the loss of confidence is going to be more significant to the property side rather than to the banks.”   Meanwhile, Tan expects the local construction sector to stay quite healthy and cites the building programme for HDB flats — 25,000 to be built this year alone, and a further 25,000 in 2012 — and the new MRT lines that are being built as drivers for the sector. “I think the domestic story for some of the construction firms is still quite decent. You’ve seen firms benefiting from the supply of materials to the HDB, with quite decent demand in the last quarter,” Tan says.   She highlights one particular company, Nam Lee Pressed Metal Industries. Listed in 2005, the company designs and manufactures aluminium and steel products for infrastructure, buildings and shipping containers. It is an HDB-approved supplier and also provides products for use in road infrastructure. It is the only third-party supplier of aluminium frames to Carrier worldwide.   “Nam Lee’s recent results are quite good,” Tan says. “It supplies steel and aluminium products, with the largest chunk related to the HDB side. It also benefits from the uptick in container demand that we’ve seen globally. More important is the fact that they expect demand to be fairly stable because of HDB activity.”   BEYOND SINGAPORE The domestic story is also relevant for most countries in Asia, says Tan. “For Malaysia, there is still infrastructure development going on, and they’re planning a metro. The talk of it is enough to garner some interest.” But she admits the projects are rolling out gradually. Malaysia also has a relatively “closed” economy, so it won’t have the same volatility as other markets, she adds.   “Thailand’s economic performance has been quite decent, and its electronics sector has picked up recently. It has benefited from things getting back to normal in Japan. And it has the auto industry there as well,” Tan says.   Tan is also optimistic about China despite its debt and inflation problems. “But we have to be selective. Our preference is still for areas that are of strategic significance to the Chinese government and those are going to be more energy-related. We feel too that the big banks are worth having a look. This is where we see buying opportunities, actually.”   While the extent of the banks’ exposure to the special vehicles set up by local governments presents a risk, Tan points out that financial institutions such as China Construction Bank (CCB), Agricultural Bank of China (ABC) and Industrial and Commercial Bank of China (ICBC) have raised enough capital, and their balance sheets are well positioned for the downturn. “In a reasonable downturn, where there is a drop of 30% in your asset values and your loan-loss coverage is 100%, we wouldn’t expect the drop in terms of bank capital to be more than 20%, so we think the risk is largely reflected,” she says. “You will see asset quality deteriorate over a period of a few years, and obviously not all at once. And if China continues to grow at 8%, it’s going to mitigate some of the risks as well, because there is the ability to absorb.”   She believes CCB offers a good buying opportunity once the overhang of cornerstone investors has passed. The single-largest foreign cornerstone investor in CCB right now is Bank of America (BoA), with 25.58 billion shares, or 10.6% of paid-up capital. “Selling restrictions on these shares will be lifted on Aug 29 and, as has been widely reported, BoA is looking to sell at least half of this. (It would be safe to assume that all of it is on the block, should buyers be found),” says S& P in a note.   Another big foreign shareholder is Temasek Holdings, which had 16.91 billion shares (7% of paid-up capital) until it sold about 1.5 billion shares early last month, bringing its stake down to about 6.5%. These shares have no selling restrictions. “The other key investors are primarily state-owned entities, so it’s unlikely that any of them will be selling their respective shareholdings in CCB. Central Huijin Investments, an investment arm of the Chinese government, has a 57% equity stake in CCB,” S& P says. The moratorium for ICBC’s cornerstone investors has expired, and that for ABC’s investors is sometime in the future, Tan adds.   However, she warns that China can’t save the world this time around. “It’s probably not wise to do another series of stimulus mea sures. Also, the crisis this time around is less severe. This is not a financial-crisis situation, where we have a complete freeze in trade activity because of a lack of trade financing. Even if there is a recession, it will be a shallow and short one,” says Tan confidently.   Back to Top Quote this article on your site To create link towards this article on your website, copy and paste the text below in your page. < style type=" text/css" > < !--.quote {width:350px padding: 6px border: solid 1px #456B8F font: 10px helvetica, verdana, sans-serif color: #222222 background-color: #ffffff}.quote a {font: 13px arial, serif color: #003399 text-decoration: underline}.quote a:hover {color: #FF9900 }//--> < /style> < div class=" quote" > < a href=&http://quot http://theedgesingapore.com/investing/investing-ideas/32103-asian-markets-stay-defensive-to-ride-volatility-says-lorraine-tan-of-sap.html" target=" _blank" > Asian Markets: Stay defensive to ride volatility, says Lorraine Tan of S& P< /a> < br /> Monday, 22 August 2011< div align=" right" style=" width:350px" > < p style=" text-align:right " > © 2011 - < a href=&http://quot http://theedgesingapore.com/" target=" _blank" > The Edge Singapore< /a> < /p> < /div> < /div> Preview : Asian Markets: Stay defensive to ride volatility, says Lorraine Tan of S& P Monday, 22 August 2011 © 2011 - The Edge Singapore

Last Updated on Monday, 22 August 2011 15:43

 

Gold, Silver and Oil Trading Technical Report

 

Chinese Data to Impact World Market This Week

 

Business says Italy's credibility on line

By FRANCES D'EMILIO
Associated Press

(AP:CERNOBBIO, Italy) Business leaders on Sunday voiced skepticism over the ability of Premier Silvio Berlusconi, dogged by a sex scandal and at the mercy of squabbling allies, to quickly adopt the severe austerity measures sought by the European Central Bank and uneasy financial markets.

One prominent banker, former Unicredit CEO Alessandro Profumo, on the sidelines of a prestigious economics forum at a Lake Como resort this weekend, even volunteered to head a possible interim government of nonpartisan " technocrats" to guarantee the country's government would have the courage to make even bolder deficit-slashing decisions.

" I think it is difficult to carry out strong fiscal moves with a backdrop of electoral" concerns, Profumo said in an interview published in Sunday's Corriere della Sera. " An intermediate phase would be opportune."

Elections are scheduled for spring 2013, and Berlusconi has coyly refused to rule out he might run again at the helm of an increasingly fractured center-right coalition. Italian newspapers have been touting names of possible respected figures from the world of finance, including Profumo, who might be able to lead a nonpolitical government in the run-up to elections.

Some experts, including New York University economist Nouriel Roubini, speaking with journalists at the forum, insisted Berlusconi step aside now, or risk irreparably hurting Italy's credibility on international financial markets.

President Giorgio Napolitano, in remarks to the forum, reminded financial and political leaders present that as long as Berlusconi's forces control a majority of seats in Parliament, his hands are tied.

Berlusconi's three-year-old government would like to avoid putting the euro45.5 billion ($64.86 billion) package of sharp spending cuts and some new taxes to a politically risky confidence vote as a way to ensure quick passage this month in Parliament and reassure both the European Central Bank and markets that Italy is serious about healing its economy.

Should the government lose a confidence vote, it would have to resign. On paper, Berlusconi holds a majority in the legislature, but his coalition is held together by volatile ally Umberto Bossi, whose protests over the government's austerity proposals last month quickly triggered the removal of pension reform, an extra tax on high-earners and a plan to abolish tiny towns to save on administrative expenses.

The flip-flops have sent markets diving, and drew a sharp call by ECB President Jean-Claude Trichet at the forum Saturday for Rome to quickly wrap up the measures.

Foreign Minister Franco Frattini, a leader of Berlusconi's Freedom People Party, told reporters at the forum Sunday he didn't think a confidence vote would be needed to ensure quick package of the austerity measures, which include a call for a balanced budget by 2013.

" I believe that the Italian government will reassure, by its deeds, any concerns" by the ECB over the measures, pledged Frattini.

Other ministers at the forum brushed of reporters' questions about whether Berlusconi should leave power so an interim government might be named.

" Governments are elected," Interior Minister Roberto Maroni, Bossi's No. 2, replied curtly.

Berlusconi has been keeping a low profile. Last week, he acknowledged that he had referred to Italy in a disparaging, vulgar way, in an intercepted phone conversation which came to light as part of a probe by prosecutors of a scandal involving prostitutes arranged by an Italian businessman for the premier's parties at his private villas.

The businessman and his wife were arrested last week for allegedly extorting hundreds of thousands of euros from Berlusconi to purportedly avoid making potentially damaging testimony about whether the premier knew the women were prostitutes.

Berlusconi, who has denied ever paying for sex, has reportedly said he gave money to help the businessman in financial difficulties unrelated to the scandal.

Italy's business leaders are fretting that Berlusconi is paying insufficient attention to helping the economy.

" The worry by Italian industrialists and businessmen is very strong," said Emma Marcegalia, the president of the country's big business lobby, Confindustria.

" There's a problem of our country's credibility and over austerity measures whose overall figures are uncertain and which has absolutely no plan for growth," Marcegaglia said during a break in the closed-door sessions at the forum.

Industry Minister Paolo Romani at the forum contended the measures would be made into law within a couple of weeks and dismissed business sector concern. " There is no basis for speculation" by the markets, he insisted.

But Profumo contended Italy should be even bolder in trying to heal its economy. In the Corriere interview, the banker said the government should aim to swiftly bring the deficit to GDP ratio, now at 120 percent, down even 90 percent by more drastic measures.

 

ENERGY MARKETS

October crude oil closed lower due to profit taking on Friday as it consolidates some of the rally off August's low. The low-range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. Closes above the reaction high crossing at 89.19 are needed to confirm that a low has been posted. If October renews this summer's decline, the 75% retracement level of the 2009-2011-rally crossing at 71.72 is the next downside target. First resistance is Thursday's high crossing at 89.90. Second resistance is the May-July downtrend line crossing near 93.88. First support is the 20-day moving average crossing at 85.51. Second support is August's low crossing at 76.15.

PRECIOUS METALS

October gold closed sharply higher on Friday as it extended the rebound off last week's low. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term. If October extends today's rally, August's high crossing at 1915.00 is the next upside target. Closes above August's high crossing at 1915.00 are needed to renew this year's rally. Closes below last Thursday's low crossing at 1701.70 are needed to confirm that a short-term top has been posted. First resistance is today's high crossing at 1885.00. Second resistance is August's high crossing at 1915.00. First support is last Thursday's low crossing at 1701.70. Second support is the 38% retracement level of this year's rally crossing at 1686.80.

CURRENCIES

The September Dollar closed higher on Friday as it extended this week's rally. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI have turned bullish signaling that sideways to higher prices is possible. Closes above August's high crossing at 75.65 would confirm that a low has been posted while opening the door for a larger rebound during the first half of September. If September renews the decline off July's high, May's low crossing at 73.32 is the next downside target. First resistance is the reaction high crossing at 75.39. Second resistance is the reaction high crossing at 75.64. First support is the reaction low crossing at 73.51. Second support is May's low crossing at 73.32.

The September Euro closed lower on Friday and the low-range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near-term. If September extends this week's decline, August's low crossing at 140.41 is the next downside target. From a broad perspective, September needs to close above 148.75 or below 138.11 are needed to confirm a breakout of this summer's trading range and point the direction of the next trending move. First resistance is Monday's high crossing at 145.53. Second resistance is June's high crossing at 146.52. First support is the reaction low crossing at 140.41. Second support is the reaction low crossing at 139.88.

The September Japanese Yen closed higher on Friday as it extends August's trading range. The mid-range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are neutral signaling that sideways trading is possible near-term. If September renews last week's decline, the 25% retracement level of the April-August rally crossing at .12810 is the next downside target. First resistance is August's high crossing at .13173. First support is last Thursday's low crossing at .12871. Second support is the 25% retracement level of the April-August rally crossing at .12810.

STOCK INDEXES & MARKETS

The September NASDAQ 100 closed sharply lower on Friday following the release of this morning's unemployment data, which showed now job growth for August. The low-range close sets the stage for a steady to lower opening when Tuesday's night session begins trading. Stochastics and the RSI are overbought and are turning bearish signaling that a short-term top might be in or is near. Closes below the 20-day moving average crossing at 2148.16 would confirm that a short-term top has been posted. If September renews the rally off August's low, the 75% retracement level of the July-August decline crossing at 2320.06 is the next upside target. First resistance is Wednesday's high crossing at 2268.50. Second resistance is the 75% retracement level of the July-August decline crossing at 2320.06. First support is the 20-day moving average crossing at 2148.16. Second support is last week's low crossing at 2022.25.

The September S& P 500 index closed sharply lower on Friday following the release of this morning's bearish unemployment data. The low-range close sets the stage for a steady to lower opening when Tuesday's night session begins trading. Stochastics and the RSI are overbought and are turning neutral to bearish signaling that sideways to higher prices are possible near-term. Closes below the 20-day moving average crossing at 1169.52 would confirm that a short-term top has been posted. If September extends the rally off August's low, the 62% retracement level of the July-August decline crossing at 1253.00 is the next upside target. First resistance is Wednesday's high crossing at 1229.50. Second resistance is the 62% retracement level of the May-August decline crossing at 1253.00. First support is the 20-day moving average crossing at 1169.52. Second support is last week's low crossing at 1112.80.

The Dow closed lower due to profit taking on Friday and tested the 20-day moving average crossing at 11,225. Today's low-range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought and are turning bearish signaling that sideways to lower prices are possible near-term. Closes below the 20-day moving average crossing at 11,225 would confirm that a short-term top has been posted. If the Dow renews the rally off August's low, the 50% retracement level of the May-August decline crossing at 11,740 is the next upside target. First resistance is the 50% retracement level of the May-August decline crossing at 11,740. Second resistance is the 62% retracement level of the May-August decline crossing at 12,008. First support is today's low crossing at 11,211. Second support is last week's low crossing at 10,801.

FOOD & FIBER

December coffee posted an inside day with a lower close on Friday as it consolidated some of the rally off August's low. The mid-range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If December extends the rally off August's low, the 75% retracement level of the May-August decline crossing at 29.42 is the next upside target. Closes below the 20-day moving average crossing at 26.59 would confirm that a short-term top has been posted.

December cocoa posted an inside day with a lower close on Friday. The mid-range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are diverging and turning bearish hinting that a short-term top might be in or is near. Closes below the 20-day moving average crossing at 30.19 would confirm that a short-term top has been posted. If December extends the rally off August's low, July's high crossing at 32.67 is the next upside target.

October sugar closed lower on Friday and the mid-range close set the stage for a steady to lower opening on Tuesday. Stochastic and the RSI are bearish signaling that sideways to lower prices are possible near-term. Closes below the 20-day moving average crossing at 29.13 are needed to confirm that a short-term top has been posted. If October renews this summer's rally, weekly resistance crossing at 34.50 is the next upside target.

December cotton closed higher on Friday and the mid-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near-term. If December renews last week's decline, the reaction low crossing at 93.72 is the next downside target. Closes above the reaction high crossing at 109.00 would confirm that a low has been posted while renewing the rally off July's low.

 

McDonald's begins showing calories on menus in UK

(AP:LONDON) You know it's fattening, but now the hard numbers _ 490 calories _ may force you to rethink buying that Big Mac in Britain.

About 1,200 McDonald's restaurants in the U.K. will this week begin displaying the calorie count of each food and drink item on their wall-mounted menu boards, as part of a government-led program to fight obesity and promote healthier eating, the chain said Sunday.

McDonald's already puts calorie information on its Web site and the back of its tray liners, but this is the first time the figures will be displayed prominently in its restaurants outside the U.S.

The chain has similar calorie menu boards in New York City, which became the first in the U.S. to put a calorie-posting law in place in 2008.

The British program is voluntary, and relies on partnering companies to fulfill their health pledges. Aside from calorie labeling, McDonald's has also promised to remove artificial trans fats from its products, although it did not sign up to a salt reduction pledge.

Other chains that have signed up to the British Department of Health calorie display program include KFC, Pizza Hut and Starbucks.

 

Kuwait oil output hits 2.8MN b/d

(AP:CAIRO) Kuwait's oil minister says his country's oil output surged to 2.8 million barrels per day by last month, an increase that helped cool world crude prices.

The official KUNA news agency quoted Mohammed Al-Busairi on Sunday as saying that had Kuwait and OPEC kingpin Saudi Arabia not boosted output following the last producer group's last meeting, oil prices would have " shot up much higher than the current level and would have caused a global crisis that would boost the global economic recession."

The 12-nation producer bloc refused to change its members' output quotas in June. But Saudi Arabia and Kuwait increased their production as concerns mounted about surging crude prices.

Kuwait's OPEC quota is officially around 2.2 million barrels per day.

 

 

 

 

Singapore, Sept 2, 2011 - (ACN Newswire) - Singapore Exchange (SGX) said securities and derivatives trading volumes grew strongly in August from a yearago.Securities- Turnover increased 31% year on year to $41.4 billion securities daily average value was $1.97 billion. - Exchangetraded fund turnover more than doubled from a year earlier, increasing by 156% to $1.18 billion. - Structured warrants volume increased by 189%, more than doubled year-on-yearto 5.2 million units. Derivatives- Total volume increased 53% year on year to 8.1 million contracts derivatives daily average volume was 360,282 contracts.

China A50 futures trading rose 31% from July to 301,133 contracts while MSCITaiwan futures volume was 49% up from a year earlier to more than 2 millioncontracts. Nifty futures volume was 80% higher from a year earlier at 1.48 million contracts. Commodities and Clearing- Volume of OTC commodity contracts cleared rose 29% from a year earlier to 21,884 contracts. - Volume of Iron Ore Swaps cleared hit a new record high of 8,564 contracts, more than double from a year earlier. - Clearing of OTC Interest Rate Swaps continued to grow with a notional $22 billion cleared in August bringing the cumulative amount cleared since launch to $164billion notional. Consolidated Overview of the Securities, Derivatives and Commodities Markets Jul 2011 Aug 2011Number of Trading Days (Securities) 21 21Securities market Turnover Volume (million shares) 26,528 33,043Securities market Turnover Value ($million) 29,275 41,421Securities Daily Average ($million) 1,394 1,972Derivatives Volume5,206,183 8,096,266Derivatives Daily Average Volume 252,751 360,282Total Number of Listed Securities 778 775Total Market Capitalisation 905,887 819,845About Singapore Exchange (SGX)Singapore Exchange (SGX) is among the world's largest exchanges and Asia's second largest listed exchange.

As the Asian gateway, SGX is the market of choice for investors wanting to participate in Asia's vibrant and rapidly growing economies, and for Asian issuers seeking international capital.SGX's extensive suite of securities, derivatives and commodities products makes it Asia's most international exchange. SGX's services range from listings, trading, high-speed market access, clearing and settlement to depository services and Central Counter Party services for OTC traded derivatives. With the region's longest trading hours, and powered by cutting-edge technology, SGX is the unparalleled conduit for investment flows into and out of Asia. For more information, please visit www.sgx.com Source: Singapore Exchange.

 

Soccer-China fight back to beat Singapore at altitude 

BEIJING, Sept 2 (Reuters) - Winger Yu Hai scored the winner as China came from behind to beat visitors Singapore 2-1 in a heated World Cup third round qualifier on Friday. Hosting the match 1,900 metres above sea level in Kunming, China fell behind to a goal from 41-year-old striker Aleksandr Duric in the 33rd minute. China, managed by former Spain boss Jose Camacho, then missed the chance to level on 58 minutes when Singapore's substitute goalkeeper Lionel Lewis saved a penalty from Qu Bo. The hosts made no mistake with their second penalty just over 10 minutes later, awarded when Yu Dabao went down in the box although television replays suggested he was lunging for the ball rather than being pulled back.

Zheng Zhi slotted home from the spot, while Yu Hai completed the comeback four minutes later when he prodded in a rebound after Lewis had saved a shot from Yu Dabao. Frustration bubbled in the Singapore camp at what they saw as two dubious penalty decisions with coach Raddy Avramovich given his marching orders after 71 minutes for protesting too much. They were angered even further when Duric was brought down in the box but no penalty was given. Singapore players surrounded Lebanese referee Andre El Haddad after the final whistle gesturing with their hands and shouting with winger Qiu Li then shown a yellow card. The match rounded off a bad week for Singapore who were forced to play without their top midfielder Hariss Harun, who is doing his National Service. Singapore entertain Iraq on Tuesday, while China travel to Jordan in their next Group A game on the same day.

China are aiming for only their second World Cup appearance. Their only other outing was in 2002 when their qualification chances were significantly helped by host nations Japan and South Korea not having to qualify.

 

Financial markets remained in the 'risk on' mode as investors continued to be thrilled by the FOMC minutes. Added to the optimism was the news that German Chancellor Merkel's cabinet had approved to support expansion of the EFSF. On the macro front, US factory orders and Chicago PMI came in better than expected. These also helped alleviate market worries over a recession. Wall Street rose with DJIA and S& P 500 gaining +0.46% and +0.49% respectively. In the commodity sector, the front-month contract for WTI crude oil fluctuated between gains and losses before closing largely flat at 88.81. The equivalent Brent crude contract traded above 115 for the first time since August 3 and ended the day at 114.85, up +0.73%. Gold faltered after failing to touch 1850 and settled flat at 1831.

Hopes of QE3 rekindled after the minutes for the August FOMC meeting showed that a few members believed the Fed should do more than just announcing that interest rates will stay exceptionally low at least until mid-2013. Chicago Fed President said on earlier in the week that he is in favor of some of the 'most aggressive policy action' as he is 'nervous about the economic recovery'. Sort of echoing Evans' tone, Atlanta President Dennis Lockhart said recent weakness in economic data and 'rising concern about chronic slow growth', he did not think 'any policy option can be ruled out at the moment'. The focus is now on the September FOMC meeting which is extended to 2 days for fuller discussion on possible easing measures.

A ray of light is seen on the debt issue in the Eurozone after Germany showed supports on the new EFSF which was agreed among European leaders on July 21. German Chancellor Merkel's cabinet backed the new EFSF which is given purchasing power on sovereign bonds. Germany's share in the loan guarantees is raised to 211B euro from 123B euro. Members of the GCD party are confident that they can secure a coalition majority to get approval on September 29. According to Finance Minister Wolfgang Schaeuble, 'the German government has strengthened its determination to secure the stability of the euro with a powerful set of tools at the Eurozone level'.

As far as the dataflow is concerned, Chicago PMI fell -2.3 points to 56.5 in August, better than consensus of 53.5, while factory orders grew +2.4% in July after dipping -0.8% a month ago. Initial jobless claims probably fell -8K to 409K in the week ended August 27. ISM manufacturing index might have slipped to 48.5 (contractionary territory) in August from 50.9 in July.

 

Financial markets were not impressed by the ISM manufacturing index which surprisingly held above 50 in August. Indeed, the details of the report suggested US economy is deteriorating and the manufacturing sector still has high chances of falling into the contractionary territory in September. Meanwhile, manufacturing PMIs showed weakness in most of the countries last month, damping optimism of investors. Following equities' coattail, oil prices initially climbed higher but then reversed. Losses were, however, limited by the threat of a storm in the Gulf of Mexico. Failing to re-test the 90-level, the front-month contract for WTI crude oil pulled back and ended the day flat at 88.93. The equivalent Brent crude contract lost -0.31% to settle at 114.29.

ISM manufacturing index eased to 50.6 in August from 50.9 a month ago. This was better than consensus of 48.5. However, the components were not as encouraging as the headline reading suggested. ‘Employment' fell to 51.8 from 53.5 while ‘production' dropped to 48.6, the lowest level since May 2009, from 52.3. The biggest driver was ‘inventories' which climbed +3 points to 52.3. However, the new orders to inventory index continued to decline, suggesting that the headline reading has high chances of falling below 50 next month. Manufacturing data for the rest of the world was no better. As we mentioned yesterday, China's PMI climbed +0.2 points higher to 50.9 in August. While domestic demand stayed firm, exports weakened as affected by the headwind faced in advanced economies. Eurozone's PMI was revised lower to 49 in August from preliminary reading of 49.7 while UK's reading surprisingly fell to 49 from 49.1. In Switzerland, the SVME PMI slipped to 51.7 in august from 53.5 in July. The market had anticipated a bigger drop to 51.2. US' ISM manufacturing index might have slipped to 48.5 (contractionary territory) in August from 50.9 in July.

Also in the US, initial jobless claims fell -12K to 409K in the week ended August 27, in line with expectations, but the 4-week average edged up for a second consecutive week to 410K. The focus of the day is the August employment report. Consensus forecast shows that the number of non-farm payrolls probably increased +90K, down from 117K in July, while the jobless rate stayed unchanged at 9.1%.

Meteorologists forecast that a low-pressure system in the Gulf of Mexico has 80% chance of developing into a tropical storm. Oil companies such as BP, Anadarko Petroleum and Royal Dutch Shell have begun evacuating staff. As a place contributing to 27% of total US oil supply, 5.7% of oil production in the Gulf of Mexico has been shut as the weather gets worse. This probably explained why Nymex crude performed better than Brent crude yesterday. Yet, the WTI-Brent spread remained at exceptionally wide level that we believe unjustifiable.