About Commodity Trading

Commodities lifted by economic outlook

Tue, 06 Apr 2010 12:18:00 GMT

Positive manufacturing data from China, Europe and the US drove stock markets to a new 18 month high with the S&P showing the best Q1 performance since 1998. This continued appetite for risk helped the Euro to recover 1.25 percent ahead of the US unemployment report due for release Friday while many markets were closed for Easter. Only cloud on the horizon came from the bond market with Greek ten year government yield back above 6.5% as the latest auction of 7-year debt did not go that well. This has left the market somewhat concerned that Greece will struggle to finance its budget deficit.

IMF will take the leading role in a possible Greek bailout

Fri, 26 Mar 2010 07:21:00 GMT

New agreement btw Germany and rest of EU: combined IMF and EU aid to Greece would be allowed, if unanimous decision in E-Z countries.

Be aware of commodity complacency

Mon, 22 Mar 2010 09:47:00 GMT

A sense of calm has descended on world financial markets, most noticeable stock markets where volatility on the S&P index has dropped to a two year low. The VIX (volatility index) is at 16.5% and history has taught us that levels below 20% have been followed shortly afterwards by a major sell-off.

Obama’s health care bill passed yesterday

Mon, 22 Mar 2010 07:31:00 GMT

The US House passed Obama’s Health Care bill yesterday and the USD strengthened. EURUSD stopped short of 1.35 – key level.

With Industrial Production surprising on the upside, we are buying on dips

Mon, 15 Mar 2010 07:31:00 GMT

Credit spreads are continuing to narrow and the VIX is pushing for new lows. Corporate CDS prices are also lower and the S&P500 is making new highs.

1150-level broken in S&P 500, we see continuing risk appetite

Fri, 12 Mar 2010 07:30:00 GMT

If we close above 1150 today in S&P 500 and open higher on Monday we could have a strong signal for further strength in the near future with our sight set on the 1200 mark.

Still looking for 1150 today in S&P 500

Thu, 11 Mar 2010 07:24:00 GMT

A whole host of figures from China: New Yuan Loans moderating significantly (but higher than expected) at 700B. Retail Sales strong, but Industrial Production a lot weaker than expected and AUD and ASX200 are down with commodities under pressure as well.

Dollar weaker but only for a little while

Fri, 05 Mar 2010 15:25:00 GMT

Investors continue to blow hot and cold as the economic outlook remains uncertain and the sovereign debt problem is not going away. The dollar rally ran out of steam during the early parts of the week as traders decided to book some profit ahead of the monthly U.S. employment rapport.

NFP is out at 13.30 GMT, do the blizzards matter?

Fri, 05 Mar 2010 07:22:00 GMT

• Key risk today is the NFP and Unemployment Rate in the US. We warn our clients that both measures could show very large surprises today (due to the weather conditions and record changes in the US Labor Market Participation Rate in February).

Bullish stance, but watch out for Central Bank announcements

Thu, 04 Mar 2010 07:23:00 GMT

The EUR has bounced somewhat from the bottom and there might be more in the bounce to come, but rallies should most likely be capped around 1.3840 (trendline resistance)

Copper, not gold hit by Chile earthquake

Mon, 01 Mar 2010 12:59:00 GMT

The terrible earthquake in Chile has not had an impact on Gold, which is still blowing hot and cold in line with the dollar and the general level of risk appetite.

The main market impacted by the 8.8 magnitude earthquake that hit Chile over the weekend has been HG Copper which trades 2.5% higher at 336 after having reached 348.70 overnight.

Plenty of macro data out today, watch out for higher than expected ISM Manu.

Mon, 01 Mar 2010 07:22:00 GMT

We are bullish on risk today and buy on dips in equities.

Solid GDP figures from Asia to spur stocks

Mon, 22 Feb 2010 07:25:00 GMT

Stocks and oil went higher overnight on the back of solid GDP figures from Taiwan (9.2% YoY) and Thailand (5.8% YoY). This together with an easing of the fear that a tightening is imminent in the US is helping risky assets.

Exit phase begins as Fed hikes

Fri, 19 Feb 2010 14:26:00 GMT

The US Federal Reserve began withdrawing emergency support to the financial system by raising the discount rate. Although the move was not seen as one leading up to an imminent change in the Fed funds rate, stock markets fell and the dollar strengthened on the back of the announcement. The Fed stressed that the changes did not signal any change in the outlook for the economy but never the less this changes the psychology of the market.

Oil finds support, but going nowhere fast

Fri, 12 Feb 2010 15:04:00 GMT

The focus in financial markets stayed with Greece and the potential implications for currency and commodity markets. The fiscal debt problems that caused a flight to secure government bonds and the dollar away from commodity and equity markets still lingers as Germany made clear that they were not willing to pull out the cheque book.

Eurozone GDP, a downside surprise?

Fri, 12 Feb 2010 08:36:00 GMT

An otherwise slow week in terms of macro data ends on a busy note with the most important ones being Eurozone GDP and US Retail Sales. Vehicle Sales were weak in January recording a drop of 5%, but sales of other goods should have increased enough for overall sales to increase. The Eurozone economy is struggling and with the Germany economy recording a flat GDP for Q4 earlier today we see downside risk to the consensus estimate of 0.3%.

Buy on dips on European talks

Thu, 11 Feb 2010 08:00:00 GMT

Today, European leaders will meet (9.15 GMT) with the topics being the economy, the climate, and Haiti. However, there’s an expectation that talks on the Greek situation will take centre stage instead. The ECB is banned from helping out member countries through debt purchases, so it looks likely that a solution will involve loan guarantees from Germany and France. We expect risk appetite to continue today and remain buyers on dips.

Risk appetite up on news that Greece will not be alone

Wed, 10 Feb 2010 08:17:00 GMT

Risky assets turned in a strong performance yesterday as rumours that a bailout plan will be put together grew stronger – even if the terms of any solution to the Greek situation are still very unclear. Today, the German Finance Minister Schaeuble is expected to outline how Greece will be supported. Also watch out for the BoE inflation report (10:30) and Fed testimony at 15:00 GMT. Considering that we are still low on other news, including macro releases, and with a solution to the Greek situation apparently edging closer we remain bullish today and buy on dips in stocks.

A quiet day on the macro side, look for earnings releases

Mon, 08 Feb 2010 08:30:00 GMT

A relatively quiet Monday follows the mixed unemployment report from Friday afternoon. Nonetheless we expect the Friday sell-off to continue, thus remain negative on risk, sell on rallies.

Nonfarm Payrolls

Fri, 05 Feb 2010 07:56:00 GMT

Today Nonfarm Payrolls are released with the added spice that the annual revision will accompany it. Estimates are all over the place ranging from -100K to 100K.

Buy breaks in equities on better than expected earnings

Thu, 04 Feb 2010 08:14:00 GMT

Risk could take a turn for the better if better than expected earnings reports continue throughout the day. Also keep an eye on German factory orders.

Earnings focus today - Cisco, Pfizer and Visa

Wed, 03 Feb 2010 08:13:00 GMT

Earnings are back in the drivers seat. The fear of soveriegn collapse in the PIIGS countries seems eased for the moment. We expect risk appetite coming back because earnings are so far quite good.

Commodities: risk aversity versus relative strength

Mon, 01 Feb 2010 13:20:00 GMT

The twenty most traded commodities apart from sugar all showed a negative return last week with copper and natural gas leading the rout falling by 8.8% and 10.8% respectively. The dollar rally continues and from being a rally primarily versus the Euro, it has now become broad based with the dollar index rising 4% from the mid-January low.

Re-election of Bernanke could spur risk appetite again

Wed, 27 Jan 2010 08:40:00 GMT

It is now more or less obvious that Bernanke will be reelected as Fed Chairman. That will be supporting risk, so we are looking for a bounce in the markets over the rest of the week. Furthermore, New Home Sales have the potential to surprise on the upside, so we recommend being long stocks and risk over the figures. Therefore we have a “buy on dips” stance for risk today – especially ahead of the FOMC Decision and Statement tonight.

Watch out for US housing data today

Tue, 26 Jan 2010 08:15:00 GMT

Watch out for the housing indices out of the US today. House prices appear to have stagnated and we expect a flat MoM number, which translates into a -5.2% YoY figure from -7.3% prior.

Temporary retracement in risk, look for buying opportunities on dips

Mon, 25 Jan 2010 08:37:00 GMT

Obamas proposal to further regulate US banks led to Friday's sell-off in equities during the US session. It continued in Asia and Europe opened lower. But in our view this will be overshadowed by solid earnings reports.