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Week ended 12/24/2010 -- Markets this week


This week started with Korean tension but later situation improved and fears eased with the news of North Korean permission of nuclear inspectors.


Index
Week ended Dec24
       (%)

Week ended Dec17 (%)





OIL  (Feb)
91.51
3.28%

0.32%





GOLD  (Jan)
1380
0.08%

-0.37%





DOW
11573
0.71%

0.71%





LONDON
6008
2.33%

1.01%





BRAZIL
68485
0.74%

-0.52%





JAPAN
10279
-0.23%

0.90%





INDONESIA
3611
0.83%

-4.43%





CHINA
2835
-2%

1.83%





INDIA
20073
1.05%

1.82%





Japan has kept interest rate between 0-0.1%. Due to a little bit weaker Yen its export  figure grew but bad thing is that Japanese govt.  forecast  GDP increase of just 1.5% in next year, a big fall from 3.1% it predicts for this year. So I think that this export growth may not sustain for long otherwise that must reflect in GDP growth.

In Europe UK’s economy grew 0.7% less than estimated in 3rd quarter, it also cut the April June quarter and year on year growth figures. On the rating side Moody’s may lower the rating of Portugal and Fitch cut the rating of Portugal on economic outlook, Fitch also cut the rating of  Hungary’s debt.



US economy grew at an annualized rate of 2.6% in 3rd quarter though the rate was higher than previously estimated but even that is looking less for some analyst who are expecting it 3%. On the other hand  existing home sales rose in November.
China has increased it’s  diesel and gas price due to protect it’s refineries, the losses that they are making for increase in crude price. Now this can create more pressure in their inflation rate, as we see last week they have increase their reserve ration. But Chinese govt. think this step will not further worsen the matter !
As I told in my previous writings that Chinese govt. may be helping the Euro countries to protect its own  Euro reserve, this week they again offered their support to Euro-zone countries.
Two important news came  from China, one is they are purchasing less foreign currency and other is  control of cars in the city. These two news are going to make lot of noises in coming days in china.
Some experts believe that Chinese trade surplus may be under pressure in future as govt. is buying more goods from outside the country where as some govt. report says that next year foreign trade will grow 10%  from 30% this year. Now it is a matter to look how Chinese govt. handle the situation.


S&P lowered the rating of  Vietnam’s local and foreign currency and raised doubt about it’s banking system. It also warned that if financial stability weaken further it may lower Vietnam’s  credit ratings. Concern about state run Vinashin’s debt default is an important news now in Vietnam as it’s debt was overdue  this week.

As I was writing in my previous weekly review  that if Oil cross 88.50 we may see a run there.

Looking at the chart, I think it is working on a channel. And if other things go in positive way we may see more up movement in coming week. May be the words of Venezuelan minister is reflecting in oil’s movement.

IMF  said it concluded it’s  sale of 13% gold reserve to increase it’s finances and lend at reduce rates to low income countries.  Previously I told  that time will prove whether these countries like India, Sri Lanka  are going to make profit by buying  gold in this price !



Looking at the gold chart I some time think that if gold does not breach this 1380-1385 level then we can see an up move here in spite of the fact that it is making head & shoulder pattern.

World 3rd largest copper mine company  Collahuasi in Chile, halted it’s shipment because of an accident. It is not cleared when they are going to resume Copper  shipment. This news helps to send the price of copper future at a record close at $4.8.
Mining companies were making  gains in Australia after  news of a good proposal of mining tax came.


Coming week
Though some of the indicators showing Dow Jones is overbought but  looking at it’s move it looks to me in new year it may move more in the upside. 69800 level is very crucial for  Brazilian Bovespa, if it breaks this level after the holiday season then it may test it’s November high.



But until the new year comes it may retest its recent low in coming week .Brazilian market is yet to face any big correction. As I was telling  in my last review that Shanghai composite may be going lower, still again this week looking at the chart I am in the same view. I think it may retest its recent low 2750. T-SEC is very much overbought as indicators are saying but it may cross the 9000 level to test the may 2008 level. If this would not been a holiday season CAC could easily cross it’s may 2010 high in this week.
Aussie dollar close this week above 1, and coming days it may carry on this move.
Like this week in coming week volume will be less and market will be slow, so unless new year comes we may see this type of market. Coming week  important reports like  consumer confidence data, unemployment claims and pending home sales are due. European economic problem and Chinese rate cut will still contribute to the down side of the market. Chinese govt.  may again increase their reserve ratio in next year if not the rate increase.
Wish all of you  Merry Christmas.


NOTE :  Please see the disclaimer below this blog.



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