Inflation, downgrade in economic forecast and never-ending debt problem were the topics this week. IMF cut it’s forecast of economic growth in US ( 2.8% from 3% ) and Japan ( 1.4% from 1.6% ) this week. Japanese government also downgraded it’s assessment about the economy. This negative opinions about the economies were due, as I told many times in past. China’s quarterly trade deficit ( $1.02bn ) in 7 years, is clearly reflecting that why China is concentrating in domestic demands during couple of months. Though for the month of march, 2011 they have reported a trade surplus of $140bn.
Most of the indexes were negative this week, quite opposite of previous week. BOVESPA & Russia have corrected much this week. Dow showed marginal movement, on the other hand FTSE has faced huge correction.
Though Euro area is in trouble , in spite of that German DAX is doing well compare to the FTSE. UK’s unemployment figure fell by 17000 to 2.48 million in 3months ended February. UK’s jobless claim rises in march, these may surprise many. Euro zone industrial output grows. Growth in Germany & Italy offset the performance of Greece and Ireland. US export for February fell, as data released shows. US federal deficit is currently at $1.4 trillion and will increase to $1.5 trillion in this fiscal year. IMF in it’s report said that US need to tackle the deficit in the government finances urgently otherwise it can create instability in the financial market.
Somewhere I read that Goldman Sachs recommended it’s clients to sell a basket of commodities that had risen strongly during recent months. This week Copper’s movement may be reflecting that but no effect of that is on Silver price or even on Gold .
OIL & Gas
NATURAL GAS (May)
Decrease in Oil price came after the International Energy Agency and OPEC reported that oil demand is weakening due to high prices. Though in last 3 days it again move upward.
It looks to me that Oil right now is not moving on fundamental basis. I think , it is moving up pure on speculative basis. I may say it’s move is similar to the Dow Jones. Previously 106 was acting as resistance now it becomes the support for Oil. It just bounce up from that level. Since Oil is moving on speculative basis so it can go anywhere from here. But as demand for Oil is decreasing due to higher prices so it needs to go down but that is not happening. May be there are many open short positions in the market.
Still Silver is rising more than Gold. This week it has started with a little drop but from that 40 level it just rises again.
On the other hand I feel that Gold is trading on a channel, though it will be clear after some days. Now all the attractions are on Silver so Gold is little less aggressive.
Copper was silent for few days, but time has come for copper to rise again. It’s initial strong resistance will be around 444 level but first it has to cross 436 level. On the downside Copper has a chance to go around 404 level.
BOVESPA has a support at around 66000, though it made a low below that range in the last day of the week but it closes higher. That is a better sign for BOVESPA. Unless it crosses 67000 it will be wrong to predict any big up move.
Dow is clearly making higher highs and higher lows. Dow is looking for base in 12200 level, last two days move was very good. At around 12400 it is facing some resistance. In the upside it has a chance to go for 12500 level and in the downside it can find support at around 11600 level, obviously if 12000 is broken.
Shanghai Composite has crossed 3000 level as I was predicting during last few week but it is getting resistance at 3050 level. it is looking for 3200 level but I will not be surprise if it again comes back to below 3000 level. I am seeing some long-term bullish chart pattern for Shanghai Composite.
Reports due in week ended 22nd April, 2011 –
April 18, 2011, Monday – Housing Market Index
April 19, 2011, Tuesday – Housing starts
April 20, 2011, Wednesday – Existing Home Sales
April 21, 2011, Thursday – Unemployment Claims
Greece government has announced plan to sell state assets like Govt. stake in different companies to make financial system stronger.
Property and Housing prices are effecting two biggest countries of the world. In one side China is trying to control high property prices. On the other side Housing, the main cause of recession in US is still in bad position as home prices are still falling. The hope on manufacturing may disappoint to some extent in coming days as natural disaster in Japan and disturbances in other parts may create supply shortage.
Sentiments are becoming more negative. But there is a hope that oil price may decrease more and that to some extent decreases the inflation fever. Countries such as China, India, South Korea may face hike in interest rate in coming days. Already some of these countries saw some selling from foreign institutes in stock market in last week. So if things have not improved more pressure can come in stock markets around the world especially in those countries.
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