Asia Stocks Rise as H Shares Head for Bull; Soybeans Gain

                          Asian stocks rose, with a gauge of Chinese shares in Hong Kong heading toward a bull market, while Treasuries and oil slipped as investors await data on U.S. services before the Federal Reserve meets this week. Soybeans and corn rallied.

The MSCI Asia Pacific Index (MXAP) added 0.3 percent by 12:33 p.m. in Tokyo, following last week’s 1.4 percent advance. The Hang SengChina Enterprises Index climbed to 11,105.70, more than 20 percent above a March 20 closing low, while trading volume in Shanghai surged. Standard & Poor’s 500 Index futures lost 0.1 percent and the yield on 10-year U.S. notes climbed one basis point after the equity benchmark retreated from a record. Oil in New York and London dropped at least 0.4 percent. Soybean and corn futures jumped at least 0.9 percent.

U.S. reports on services activity and pending home sales are due before the Fed meets to discuss monetary policy, while Goldman Sachs Group Inc. said last week rising yields may spur a retreat in global stocks and bonds over the next three months. Chinese industrial-company profits jumped the most last month since September, data yesterday showed. Israel resumed its offensive against Hamas militants in the Gaza Stripafter a lull in fighting, while the U.S. said it has photos of Russia shelling into Ukraine.

“Sentiment has turned in favor of growth and cheap valuations in the Chinese market,” said Khiem Do, who helps oversee about $60 billion as the Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management Ltd. The shares have “been lagging for a long time so they’re catching up with world markets. The Fed has communicated to the market that the first Fed-fund rate hike will be more like next year than this year, so should they change their mind then that would be quite negative.”

Asian Valuations

The Hang Seng China Enterprises Index climbed 1 percent today, after it jumped 5.3 percent last week, the most since March. The Hang Seng Index advanced 1 percent while the Shanghai (SHCOMP) Composite Index surged 2.1 percent, with the number of transactions about 170 percent above the 30-day average for the time of day.

The gauge of Chinese shares in Hong Kong trades at 7.7 times estimated earnings, compared with 13.6 times for MSCI’s Asia-Pacific measure. The S&P 500 is at 16.6 times.

Profits at industrial companies in Asia’s largest economy increased by 17.9 percent in June from a year earlier, after gaining 8.9 percent in May, data from China’s statistics bureau yesterday showed. It was the biggest gain since an 18.4 percent climb in September of last year and came after a private gauge of Chinese manufacturing advanced to an 18-month high, data last week showed.

Price Gap

The Hang Seng China AH Premium Index climbed 1.7 percent to 91.65, signaling a narrowing gap between the Hong Kong and mainland share prices of companies with dual listings. A link between the Shanghai and Hong Kong bourses will start from Oct. 13, the National Business Daily said, citing an unidentified brokerage.

The S&P/ASX 200 Index (AS51) was little changed in Sydney, while South Korea’s Kospi index climbed 0.6 percent. Markets in Indonesia, Malaysia and Singapore are closed for holidays.

Goldman Sachs cut its rating on stocks to neutral, the equivalent of hold, for the next three months, according to a quarterly research report from its portfolio strategy group July 25. The bank also lowered corporate credit to underweight and predicted U.S. government bond yields will increase.

U.S. Notes

Amazon.com Inc. drove U.S. stock declines July 25, sliding almost 10 percent after reporting the widest loss since 2012, distracting investors from an earnings season where 79 percent of S&P 500 members have exceeded analysts’ profit estimates. The benchmark U.S. equity gauge fell 0.5 percent to 1,978.34 July 25, declining for the first time in four days.

Yields on 10-year Treasuries climbed to 2.48 percent after slipping four basis points July 25. Australian bonds due in a decade paid 3.42 percent, after rates rose six basis points, or 0.06 percentage point, last week.

The gap between rates on 30-year Treasury notes and five-year debt narrowed to the least since 2009 last week as uncertainty over whether the U.S. economic recovery is on a strong footing vied with concern that the Fed may raise rates earlier than previously anticipated.

The Treasury will auction $29 billion in two-year securities today, $35 billion in five-year debt tomorrow and $29 billion in seven-year bonds July 30. It will also sell $15 billion in two-year floating-rate notes July 30.

Employers probably added 231,000 workers to nonfarm payrolls in July, after a 288,000 increase in June, according to 69 economists’ estimates compiled by Bloomberg before Aug. 1 reports.

Copper, Lead

The Markit Economics composite and service industries purchasing managers’ indexes for the U.S. are due today, along with data on pending home sales. An update on second-quarter gross domestic product is scheduled for July 30, with the FOMC meeting July 29-30.

Copper for delivery in three months on the London Metal Exchange fell as much as 0.5 percent to $7,090 a ton. Freeport-McMoRan Inc. said July 25 that it will resume full operations in Indonesia at its Grasberg copper operation, the world’s third-largest, and plans to restart exports next month after resolving a dispute with the government.

Lead on the LME rose as much as 0.8 percent to $2,284 a ton, heading for the highest close this year. The metal gained 3.7 percent last week, the biggest advance since January. Aluminum was up 0.7 percent to $2,010.50 a ton. - Bloomberg

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Gold fluctuates near 3-month high with Fed stimulus in focus

           Gold prices fluctuated between small gains and losses in rangebound trade on Wednesday, as comments made by Federal Reserve Chair Janet Yellen on Tuesday continued to support the precious metal.

Gold prices last traded at USD1,289.30 an ounce during U.S. morning hours, down 0.05%.On the Comex division of the New York Mercantile Exchange, gold futures for April delivery held in a range between USD1,284.10 a troy ounce and USD1,292.30 an ounce.

Gold futures rallied to USD1,294.40 an ounce on Tuesday, the most since November 8, before trimming gains to settle at USD1,289.80, up 1.18%.

Prices were likely to find support at USD1,264.70 a troy ounce, the low from February 10 and resistance at USD1,313.30, the high from November 8.

Meanwhile, silver for March delivery inched up 0.25% to trade at USD20.20 a troy ounce. The March contract settled 0.2% higher on Tuesday to end at USD20.15 an ounce.

In her first congressional testimony on Tuesday, Fed Chair Yellen said that the central bank would taper the pace of its asset purchases at future meetings if the economy continued to improve as expected.

She added that the pace of the central bank’s bond purchases are not on a “preset course”, while reiterating that Fed plans to hold interest rates at zero “well past” the time the jobless rate falls below 6.5%.

The testimony is coming amid fresh concerns over the outlook for the recovery, following the weakest two-month stretch of U.S. job creation in three years in December and January.

The Fed tapered its monthly asset purchase program by another USD10 billion to USD65 billion a month at its last policy meeting.

Elsewhere on the Comex, copper futures for March delivery rose 0.85% to trade at USD3.243 a pound.

Data released earlier showed that China’s trade surplus widened to USD31.86 billion last month from a surplus of USD25.6 billion in December, compared to estimates for a surplus of USD23.65 billion.

Chinese exports climbed 10.6% from a year earlier, beating expectations for a 2% increase and following a 4.3% gain in December. Imports rose 10%, compared to forecasts for a 3% increase.

According to the data, the Asian nation imported a record-high 536,000 tons of anode, refined copper, alloy and semi-finished copper products in January, up 21% from December.

China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year. - investing.com

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Gold edges lower after Fed tapers by USD10 billion

               Gold prices edged lower on Thursday, after the Federal Reserve announced that it will taper its bond-buying program to USD65 billion a month following its policy meeting.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery fell to a session low of USD1,255.40 a troy ounce, before trimming losses to trade at USD1,256.90 during European morning hours, down 0.4%.

The April contract rallied 0.94% on Wednesday to settle at USD1,262.20 an ounce as ongoing turbulence in emerging markets saw investors flee riskier assets and move in to safe-havens.

Gold futures were likely to find support at USD1,248.00 a troy ounce, the low from January 28 and resistance at USD1,280.10, the high from January 27.

The Fed said Wednesday that it would reduce its monthly bond buying program by USD10 billion to a total of USD65 billion a month, in a widely anticipated decision.

The U.S. central bank said growth signals are encouraging, and the unemployment market shows improvement "on balance".

The Fed left unchanged its statement that interest rates are likely to remain low even after the unemployment rate drops below 6.5%, the threshold at which the central bank has previously said it would start to consider rate increases.

The Fed added it will keep a close eye on economic indicators before deciding to wind down its stimulus program even further.

The U.S. is to publish preliminary data on fourth quarter economic growth. The nation is also to release the weekly report on initial jobless claims and data on pending home sales.

Meanwhile, silver for March delivery fell to USD19.28 a troy ounce, the weakest level since December 31, before paring losses to trade at USD19.37 during early European hours. 

Elsewhere on the Comex, copper futures for March delivery fell 0.2% to trade at USD3.235 a pound, the lowest since December 9.

Data released earlier showed that China’s final HSBC Purchasing Managers Index fell to a six-month low of 49.5 in January from a preliminary reading of 49.6 and down from 50.5 in December.

China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year. - Investing.com

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Crude inches up on U.S., European data, Federal Reserve outlook

                 Crude Oil prices rose in choppy trading on Monday on solid U.S. and European factory reports, while dovish comments from U.S. Federal Reserve officials also bolstered the commodity albeit in choppy trading that saw the commodity jump in and out of negative territory.

On the New York Mercantile Exchange, light sweet crude futures for delivery in December traded at USD94.67 a barrel during U.S. trading, up 0.06%.

The commodity hit a session low of USD94.09 and a high of USD95.10. The December contract settled down 1.84% at USD94.61 a barrel on Friday.

Oil futures were likely to find support at USD92.73 a barrel, the low from June 24 and resistance at USD98.80 a barrel, the high from Oct. 28.

The euro zone manufacturing purchasing managers’ index ticked up to 51.3 in October from a final reading of 51.1 in September, unchanged from a preliminary estimate and in line with market forecasts, according to London-based Markit Economics.

Germany’s manufacturing PMI, however, rose to 51.7 last month from 51.5 in September as new orders and production levels rose.

Analysts were expecting the figure to remain unchanged at 51.5, and the surprise on the upside gave oil prices a boost.

Meanwhile in the U.S., date released earlier revealed that U.S. factory orders rose 1.7% in October from September, in line with expectations.

Also in the U.S. Federal Reserve officials said earlier the U.S. central bank should not scale back its USD85 billion in monthly bond purchases until economic fundamentals display noted improvements.

St. Louis Federal Reserve Bank President James Bullard and Federal Reserve Board Governor Jerome Powell stressed the need to keep stimulus programs such as monthly asset purchases in place though they didn't indicate when monetary authorities should begin tapering and then asset purchases.

Monthly bond purchases aim to spur recovery by driving down interest rates, weakening the dollar in the process.

A weaker greenback makes oil a nicely priced asset on dollar-denominated exchanges.

Meanwhile on the ICE Futures Exchange, Brent oil futures for December delivery were up 0.27% at USD106.20 a barrel, up USD11.53 from its U.S. counterpart. -
Investing.com

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Silver futures fall to 12-day low on Fed taper concerns

            Silver prices traded at the lowest level in more than two weeks on Monday, as renewed uncertainty over when the U.S. Federal Reserve will scale back its stimulus measures weighed on sentiment.

Prices of the precious metal have largely tracked shifting expectations as to whether the Fed would start tapering its USD85-billion-a-month asset-purchase program by the end of the year.

On the Comex division of the New York Mercantile Exchange, silver futures for December delivery traded at USD21.70 a troy ounce during European morning trade, down 0.6%. 

Silver prices fell to a session low of USD21.61 a troy ounce earlier, the weakest level since October 17.

The December contract ended 0.14% lower on Friday to settle at USD21.83 a troy ounce.

Futures were likely to find support at USD21.10 a troy ounce, the low from October 17 and resistance at USD22.62, the high from October 31.

Federal Reserve Bank of Dallas President Richard Fisher said earlier that the Fed should scale back its stimulus measures as soon as possible.

Speaking at a conference in Sydney on Monday, Fisher said a "fiscally irresponsible" U.S. government counteracted the effects of accommodative Fed policy. 

He also added that he did not expect the central bank's USD85-billion-a-month bond-buying program to increase or go on indefinitely.

“At the earliest possible moment we need to focus on transitioning back to having an interest-rate-driven monetary policy,” Fisher said.

Market players now looked ahead to the release of key U.S. economic data later in the week to help assess the timing for a reduction in the Fed’s bond-purchasing program.

The U.S. is set to release preliminary data on third quarter economic growth on Thursday, while October’s highly-anticipated nonfarm payrolls report is scheduled for Friday.

The central bank sounded more optimistic than anticipated in its assessment of the economy following its policy-setting meeting last week, sparking speculation the Fed could start tapering stimulus at its December meeting.

Silver traders have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Fed to reduce its bond purchases.

Elsewhere on the Comex, gold for December delivery inched up 0.1% to trade at USD1,314.50 a troy ounce, while copper for December shed 0.65% to trade at USD3.277 a pound.  - Investing.com

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Copper Falls a Third Session on Speculation Fed to Slow Stimulus

                          Copper fell for a third session in New York on speculation the Federal Reserve will slow the pace of economic stimulus in the U.S., the world’s second-biggest consumer of the metal.

Richard Fisher, president of the Fed’s Dallas branch, said today he wouldn’t rule out backing a reduction by March of the central bank’s $85 billion-a-month debt-buying, depending on economic conditions. James Bullard, head of the St. Louis Fed, said three days earlier an improving labor market might warrant less stimulus.

“The market might be sensitive to one or two Fed official comments on QE tapering from time to time,” Richard Fu, director for Asian commodity trading at Newedge Group SA in London, said in a note today.

Copper for delivery in December slumped 0.6 percent to $3.279 a pound by 7:43 a.m. on the Comex in New York. Copper for delivery in three months fell 0.6 percent to $7,198 a metric ton on the London Metal Exchange.

Fed policy-makers decided last week to maintain the rate of stimulus. The central bank will only start slowing the purchases in March, a Bloomberg survey of economists showed last month. Communist Party leaders in China, the biggest copper user, will enter a policy-making summit this week with services and manufacturing surveys showing a strengthening economy.

Copper stockpiles monitored by the LME fell 0.4 percent to 474,675 tons, daily data showed. Inventories in New Orleans, the biggest repository for the metal, gained for a fourth session after 29 straight drops. Orders to take the metal from warehouses fell 1 percent to 285,025 tons.

Tin for delivery in three months fell 0.2 percent to $22,750 a ton on the LME, erasing a climb of as much as 0.6 percent. The metal for immediate delivery traded at a $9.60-a-ton premium to the three-month contract. Backwardation, or prices for earlier deliveries above later contracts, usually indicates limited supplies.

Nickel, lead, zinc and aluminum reached two-week lows in London. - Bloomberg.com

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