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Old Nov 28, 2014, 2:05pm   #25
Joined Oct 2014
OPEC leaves oil output

IFCM started this thread Yesterday the United States celebrated the public holiday, Thanksgiving Day. European markets rose. Market participants had a positive reaction to OPEC’s decision to leave oil output as it was. Oil prices have tumbled about $6 per barrel: it would reduce significantly the expenses of European companies.

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An additional growth factor was the fallen German inflation rate in November. This improves the chances of an early start of the ECB money printing. Investors believe that part of that money would flood into the stock market one way or another. Therefore, euro has slipped. This morning European markets are slightly down expecting the data on inflation and unemployment for the EU. The data will be released at 10-00 СЕТ. It was also caused by the negative stock price change of European oil and energy companies, and Aurubis AG stocks slumped 7% due to the Goldman Sachs forecast revised downward. Note that significant macroeconomic data is not expected today in the US.

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Nikkei dipped on Thursday as it was traded before the OPEC decision. Today it has climbed. It added 6.4% in November, the most significant rise over 12 months. Another positive factor for the Japanese stock market was the yen weakening and the economic data released this morning. Industrial production in October increased 0.2% compared to September. It was expected to fall 0.6%. Unemployment rate was 3.5%, slightly better than expected. Inflation rate in October fell to 2.9% yoy, compared to 3% in September. Growth in consumer prices in Tokyo in November was also less than expected. In theory, this allows the Bank of Japan to continue money issuing, which depreciates the yen. According to the BOJ, if not taking the sales tax hike in April into account, CPI was only 0.9% last month, instead of 2.9% stated in official statistics. The BOJ inflation target amounts to 2%. Note that yen weakening was moderate yesterday as the Bank of Japan announced plans to cut the purchases of short-term government bonds in December.

Previously, we have repeatedly pointed out that fallen world crude oil prices is coherent with anti-Russian Western sanctions. The US increased its own oil output up to 9.08 million barrels per day, the record high since 1983. Oil priced tumbled 37% since June. The CEO of Russia's largest oil company Rosneft Igor Sechin accept the possibility of Brent crude oil prices may be falling to $60 per barrel and lower by the middle of next year. In this case, Russia can reduce the production by 200-300 thousand barrels per day. Note that at the last OPEC meeting, Venezuela and Algeria called for the output cut of 2 million barrels per day. That means Russia is unlikely to affect oil prices without OPEC. The organization produces 30.97 million barrels per day and provides 40% of world exports. Russian ruble falls against the US dollar as global oil prices are going down: it can be used for trading.

According to Olam International forecast, the global shortage of cocoa in 2014/2015 would reach the level of 120 thousand tons due to the reduced crop in Ivory Coast to 1.15 million tons, compared to 1.23 million a season earlier, and in Ghana – 625 thousand tons vs. 735 thousand.

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Gold prices drop for three days in a row. Meanwhile, a Swiss referendum on increasing gold in state reserves from 8% to 20% will be held in Switzerland on Sunday, November 30.

Note that Bloomberg Commodity Index slumped to the record low since July 2009. Some investors deem that cheap oil may cause deflation and have a negative impact on commodity prices.
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Old Dec 1, 2014, 3:29pm   #26
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Biggest one-day drop in oil prices since May 2011

IFCM started this thread World stock markets were mixed on Friday. As OPEC left the output level unchanged, the daily drop in oil prices was the largest since May 2011 and reached 7%. Amid this data, S&P energy index tumbled 6.3%. Stocks of oil companies Exxon Mobil and Chevron fell 4.2% and 5.4%, respectively. Stocks of shale oil companies such as Denbury Resources, QEP Resources and Newfield Exploration dropped about 15%. Cheap oil reduces expenses of transportation and aviation companies, as well as retailers. Stocks of Delta Air Lines rose 5.5%. S&P 500 Retailing upped 1.4%.

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Followed up the week and November, the US stock indices rose. Today at 14-45 СЕТ Markit Manufacturing PMI is to be released in the US. At 15-00 СЕТ we expect the release of ISM Manufacturing index. The forecast for the first index is slightly positive, for the second one – moderately negative. Two Fed officials will be delivering their speeches at 17-15 and 18-00 СЕТ. For more information about macroeconomic data for this week, please watch our weekly video overview. According to the US National Retail Federation, the volume of retail sales in the United States over the weekend and Thanksgiving Day slipped 11.3%, compared to last year. It may hammer stock indices.

As released on Friday, inflation and unemployment in the euro zone remained unchanged in October compared to November. This morning European indices have dipped as the Chinese Manufacturing PMI in November hit the 8-month low (50.3 points). Market participants are concerned that it may reduce the demand for European goods. Another negative factor that affected European markets was the weak Markit Manufacturing PMI performance in Germany, France and Italy. At 9-00 СЕТ the same indicator for the euro zone will come out. There will be no macroeconomic data releases for today.

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Nikkei has risen in the morning as yen hit the 7-year high, a bit above 119 yen per US dollar. Moody's Investors Service lowered the credit rating of Japan to A1 from AA3. Now Nikkei is going down under the pressure of weak data from China. Other Asian stock indices fell altogether. Note that a weak exchange rate of the national currency provides substantial support for Japanese exporters and bolsters the stock rise. The same as in Europe, due to falling oil prices stocks of airlines were traded higher.

A slowdown in Chinese industrial growth affected commodity futures. The most affected resulted to be copper prices. In China copper is used as a guaranty for commercial loans.

As expected, oil prices continued to fall. OPEC members have begun to revise their budgets for next year. Some investors deem that Brent crude oil would stay in the range of $64-68 per barrel, as the lowered price will make the oil production unprofitable at the most part of world’s oil fields. Note that the next OPEC meeting is scheduled for June.

Precious metals have fallen in price, as the Swiss referendum didn’t approve the decision to increase the share of gold reserves of the country. In our opinion, the prices may stop falling for some time, since the majority of players had already sold gold. Gold stockpiles of SPDR Gold Trust reached a 6-year low of 717.6 tons. Pure gold imports into China via Hong Kong in October rose to 77.6 tons from 68.6 tons in September. The Reserve Bank of India cancelled unexpectedly the existing requirements for gold importers. For this reason, according to Indian Bullion and Jewellers Association outlook, gold demand in India would rise up to 900 tons per year.

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Wheat prices have climbed after the announcement of possible export cuts from Russia due to phytosanitary control tightening. We believe it is likely to happen as mutual economic sanctions were imposed.
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Old Dec 2, 2014, 1:29pm   #27
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Markets retreat on weak economic data

IFCM started this thread US stocks fell on Monday after disappointing economic data from China and Thanksgiving holiday sales. The National Retail Federation estimates indicate retail spending over the Thanksgiving weekend fell 11%, the second straight annual decline, contributing to decline of retailer stocks such as Wal-Mart Inc., Target Corp. The negative retail sales hit also Tech stocks after disappointing sales on Cyber Monday. Internet-retailing giant Amazon.com Inc. shares declined by 1.2%, Apple Inc. fell 3% and other e-commerce companies including eBay Inc , Google Inc , Yahoo! Inc. , Facebook Inc Netflix Inc. and Chinese Internet giant Alibaba Group suffered losses too. The S&P 500 and the Dow saw their biggest one-day loss since Oct 22. The S&P 500 fell 0.7% to 2,053.44, while the Dow Jones Industrial lost 0.3% to 17.776.80. The Nasdaq Composite’s decline was the biggest in seven weeks, after falling 1.3%, to 4,727.35.

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European stocks fell on Monday, as investors weighed economic data indicating slowing in economic activity in euro zone and China. Data firm Markit said its monthly survey of euro zone purchasing managers fell to 50.1 in November, down from a preliminary estimate of 50.4. HSBC early Monday said its China PMI fell to a six-month low of 50.0 and China’s National Bureau of Statistics said official PMI fell to 50.3, the lowest level since March. The Stoxx Europe 600 index fell 0.5% to 345.64, the oil and mining shares leading the losses after OPEC decision not to cut oil production and the reported weakness of the world’s second largest economy.

WTI futures gained more than 4% Monday after crude futures plunged 10% on Friday in reaction to the OPEC decision to maintain production levels. January Brent crude on London’s ICE Futures exchange rose $2.39, or 3.4%, to finish at $72.54 a barrel after a five-session decline. Investors expect the price slump to continue unless major energy producers take steps to limit the supply to match the falling global demand. Analysts estimate a massive oversupply in the first half of 2015 roughly equal to 1.5 million barrels per day. And as OPEC didn’t agree to curb its oil output the decision of other major producers will determine future price movement.

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After meeting with his Turkish counterpart in Ankara yesterday President Putin said Russia will concentrate on supplying gas to Turkey through a different Black Sea pipeline, scrapping the $45 billion South Stream project that would bypass Ukraine to supply European markets. Russia will supply gas to Turkey through the Blue Stream pipeline, increasing deliveries by 3 billion cubic meters a year and offering a 6 percent discount from January 1. The ruble moved off record lows against the US dollar Monday as oil prices recovered slightly.

Gold and silver bounced on Monday as lowering of Japan’s sovereign credit rating by Moody’s Investors Service, import restrictions easing by India and softer dollar increased investor demand for safe haven assets. Gold for February delivery jumped $42.60 or 3.6%, to settle at $1,218.10 an ounce. Meanwhile, March silver surged $1.14 or 7.3%, to $16.69 an ounce. Asian stocks rose on Tuesday, with a rebound in crude oil and commodities including iron ore and copper prices lifting the stock markets of resource-exporting countries. MSCI's broadest index of Asia-Pacific shares outside Japan climbed 0.6 percent. The Nikkei posted gains of 0.4 percent to end at 17,663.22.
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Old Dec 3, 2014, 2:27pm   #28
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Markets advance as energy shares rebound

IFCM started this thread US stocks rose on Tuesday as energy shares rebounded after yesterday’s slumping. The Dow Jones Industrial Average rose 102.75 points, or 0.6%, to 17,879.55, posting its 32nd record close this year. The S&P 500 gained 13.11 points, or 0.6%, to 2,066.55, with the health-care sector stocks joining energy to lead gains. Energy shares rallied 1.3 percent for the largest gains among all sectors. Nine of 10 main industries in the S&P 500 advanced. The investor mood was boosted also by positive economic data released Tuesday morning, showing construction spending rose 1.1% in October to a seasonally adjusted annual rate of $971 million, much higher than expected. A separate report from Autodata indicated that November car and light truck sales were second-highest in eight years at seasonally adjusted annual rate of 17.2 million, up from 16.5 million in October and the best level since August. Shares in General Motors Co. and Ford Motor Co. rose 1% and 0.8% respectively. Fed Vice Chairman Stanley Fischer and New York Fed President William C. Dudley highlighted yesterday the positive economic impact from the decline in oil prices. Stanley Fischer said continued labor market improvement and “some signs” that inflation is beginning to stir would be enough for the US central bank to start to raise interest rates.

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Increasing share prices for energy companies drove European markets higher. On Tuesday, shares of oil and gas firm Afren PLC jumped 13% . Also, shares of BG Group PLC climbed 3% and Royal Dutch Shell PLC gained 2%. The Stoxx Europe 600 gained 0.9% to 348.62. Euro zone factory prices declined by 0.4 percent from September against a 0.3 percent forecast, their sharpest monthly drop in a year. This adds pressure on the European Central Bank to do more to lift the bloc's depressed economy. Stock markets in Asia rose also. The HSBC/Markit Services Purchasing Managers' Index (PMI) for China rose to 53.0 last month from October's 52.9, indicating China's services sector grew marginally faster in November in contrast to manufacturing PMIs released a day ago recording declining growth in factories in November. Hong Kong and Shanghai stocks made strong advances early Wednesday amid expectations of further monetary easing policy measures by Chinese authorities. Japanese stocks advanced early Wednesday morning, heading into a possible fourth straight day of gains, helped by US stock market advance, solid auto-sales data and a weaker yen.

Brent for January settlement gained as much as 92 cents to $71.46 a barrel on the London-based ICE Futures Europe exchange and was at $71.06 at 12:36 p.m. Singapore time. Iraq, OPEC’s second-largest producer, reached a deal with Kurdish authorities to export oil through Turkey. It will ship as much as 550,000 barrels a day from northern Iraq to the Mediterranean port of Ceyhan adding to global supply surplus. At an event in London yesterday Saudi Arabia’s former intelligence chief Al-Faisal said the kingdom will consider reducing output if there’s “reasonably guaranteed oversight” of quotas and market share isn’t lost to other suppliers.

Gold and precious metals fell as the ICE US Dollar Index rose 0.8% to 88.64. A strong dollar makes dollar-denominated commodities like gold more expensive for holders of other currencies. Gold for February delivery fell 1.5%, to settle at $1,199.40 an ounce. Global disinflation and rising equity markets set the stage for bearish trend for safe haven assets.

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Old Dec 8, 2014, 3:08pm   #29
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Markets rise as positive data on labor market released

IFCM started this thread On Friday world stock indices rose after the release of positive data on the US labor market. The number of new jobs in November appeared to be at the highest level since January 2012 (321 thousand). Unemployment rate hit a six-year low of 5.8%. For 11 months in a row more than 200 thousand new jobs a month have been created in the US. Such a long period of growth is observed for the first time since 1994. Over the past year 2.33 million jobs were created and over 11 month in 2014 – 2.65 million. Such dynamics considering the low inflation rate boosts the economic growth and bolsters the US dollar index. Today it has hit a six-year high. Dow and S&P 500 closed higher for the seventh consecutive week. However, weak data on factory orders in October was released on Friday. They fell for the third consecutive month. Currently, US stock indices futures are traded down. There is no more significant macroeconomic data released for today in the US.
European stocks are slipping down after Friday’s advance. It was caused by a slowdown in German industrial production in October, 0.2% vs. the projected figure of 0.4%, and a significant reduction in imports to China in November (6.7%). This indicator was expected to add 3.8%. One more negative factor for fallen European markets was the downgrading of Italy’s credit rating from BBB to BBB- by Standard & Poor's agency.

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Nikkei has also dipped down after a strong gain. Its dynamics coincides with the global trend. It should be noted that significant yen depreciation was an extra factor in favor of the exporters’ stock rise. Toyota Motor stocks upped 1.5%. Negative economic data which affected the exchange rate was published yesterday in Japan. The reduction in Q3 GDP outperformed forecasts. The trade deficit in October was higher than expected. The next release of Japanese economic statistics will be published on Wednesday morning. In our opinion, the main event of the week may become the elections in the Japanese parliament held on Sunday. New MPs are supposed to support the monetary policy conducted by the Prime Minister Shinzo Abe, aimed at further yen weakening.
World oil prices halted its decline. Despite the overall reduction of Chinese imports, crude oil purchases increased 7.9% in November, compared to the same period last year, and upped 9% compared to October. Currently, China purchases 6.18 million barrels a day. International Energy Agency raised its growth forecast of Chinese oil demand in 2014 up to 2.5% vs. 2.3% as was expected in September outlook. Note that the OPEC production in November reached 30.56 million barrels a day, compared to agreed 30 million. The oil output has been outperformed for six months in a row. According to the US Commodity Futures Trading Commission, WTI crude oil net long positions increased 12% over the past week. Net short positions slumped 15%, while net long positions upped 4%. Probably, hedge funds take profits and do not expect a strong decline in oil prices from current levels.

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According to the Commodity Futures Trading Commission, hedge funds increased gold and silver net long positions over the past week. Copper net short positions have also risen. Note that copper is not getting cheaper as China raised its imports 5% in November.

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Sugar prices rose slightly due to the Brazilian company Unica’s outlook, which expects to reduce the crop of 2015/2016 to 29-30.3 million tons vs. 31.4 million tons a season earlier. The ethanol production from sugarcane would increase 2%.
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Old Dec 9, 2014, 12:47pm   #30
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Markets retreat as oil declines

IFCM started this thread US stock markets slumped on Monday recording their biggest one-day slide in nearly seven weeks as continuing oil decline prompted investors to sell-off energy stocks. Disappointing economic reports released on Monday, including lower Chinese trade numbers, contracting Japanese economy in the third quarter and lower expansion of Germany industrial production in October also contributed to worsening investor sentiment. Oil giants ExxonMobil Corp. and Chevron Corp dropped 2.3% and 3.7% respectively, Apple Inc. fell 2.3%. S&P 500 and The Dow Jones Industrial Average slipped 0.75% and 0.6% respectively. The ICE U.S. Dollar Index, a measure of the dollar’s strength against a basket of six rival currencies, was down 0.26%, its first loss in two sessions.

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European stocks fell Monday after reports indicating that imports into China unexpectedly fell in November by 6.7% against expectations for 3% growth, and industrial production in Germany rose less than expected. European Central Bank Governor Ewald Nowotny expressed concerns about weakening growth in the eurozone economy at a conference in Frankfurt Monday. He warned that eurozone inflation could continue to fall during the first quarter of 2015, which would take the currency union dangerously close to deflation, and said he would like to see the ECB expand its balance sheet by €1 trillion. On the prospects of further easing of monetary policy by ECB euro fell to $1.2265, a 28-month low, from $1.2289 late Friday. In a separate report the Paris-based research body - the Organization for Economic Cooperation and Development said a composite leading indicator continues to indicate a loss of growth momentum in eurozone, particularly in Germany and Italy.

The Nikkei share average fell 0.5 percent on Tuesday after 7 straight days of gains as a rebound in yen prompted investors to take profits. The yen rose to around 120.90 to the dollar from a low of 121.86 on Monday. Investors are still optimistic as they expect Prime Minister Shinzo Abe to win a weekend re-election bid that will allow him to continue with the government's pro-growth policies.

Crude-oil prices again tumbled to five-year lows Monday with WTI futures for January delivery dropping 4.2%, to settle at $63.05 a barrel. Analysts expect the oversupply to continue into next year without intervention by the Organization of the Petroleum Exporting Countries to cut output to balance the market. A Baker Hughes report on Friday showed an increase in the US drilling rig count, despite the falling price. A separate report from KBC Energy Economics showed less than a third of January’s cargos of Nigerian oil have been sold with just two weeks left before February deliveries. The surplus of West African crude is one indicator of Atlantic basin oil demand, and unsold inventories pressure Brent crude prices.

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Nickel fell for a third day as disappointing data from Germany to China indicated weakening global demand. And on the LME, lead, aluminum and zinc were little changed, while tin fell.

The Australian Bureau of Agricultural and Resource Economics and Sciences said in a report that exports to the US from the third-largest shipper will jump 35 percent to 360,000 metric tons in 2014-2015. Years of drought forced the US producers to cull herds, and cattle futures reached a record last month. Prices may rise the most among agricultural commodities next year amid tight supply and strong demand, according to Rabobank International.
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Old Dec 10, 2014, 2:10pm   #31
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Markets decline on China and Greece outlook

IFCM started this thread US stocks started Tuesday trading with a sharp drop after unexpected move by Chinese authorities to tighten lending rules and news of surprise Greece elections. Markets rebounded by the end of trading session, with S&P 500 finishing practically unchanged and the Dow Jones Industrial Average closing 0.3% lower. The global equity sell-off began after economic data released in China showed producer-price index dropped 2.7 percent in November from a year earlier, a record 33rd-straight decline and the biggest fall since mid last year. Consumer prices rose 1.4 percent, against the 1.6 percent increase in October, indicating that China’s economy has entered a disinflation stage, and faces the risk of deflation. Following a surprise move by regulators that banned investors from using low-grade corporate debt as collateral to borrow cash, The Shanghai Composite Index plunged 5.4% Tuesday. The Nikkei Average dropped 1.5% on Wednesday morning as global equity sell-off and flight to safety drove the yen higher and took a toll on exporters. The yen advanced versus the dollar to ¥119.50, compared with ¥119.60 in New York Tuesday afternoon.

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European stocks fell on investor concerns over the uncertainty of the results of Greece’s presidential election in which the Syriza party, opposing the austerity measures of proposed IMF/EU bailout , is well placed to do well. Greek stocks sank 12.8 percent, to post their biggest single-session fall since November 1987. The Stoxx Europe 600 index fell more than 2%, hit by weak German trade data and energy-stock losses. The euro traded at $1.2371 Tuesday against $1.23 Monday afternoon. Elsewhere. The report of UK Office for National Statistics Tuesday morning indicated industrial activity declined unexpectedly in October. The news didn’t bring down the British pound which actually traded higher against the dollar for a second-consecutive session as investors booked profits by selling dollars. The pound traded at $1.5663 Tuesday, compared to $1.56 Monday afternoon.

Brent for January settlement slid as much as 1.6 percent in London as an official at Iran’s oil ministry predicted a further slump in prices if solidarity among OPEC members falters. Iran, suffering from economic sanctions over its nuclear program, wants to raise production to 4.8 million barrels a day once the curbs are removed, he said at a conference in Dubai yesterday. In the US, the Energy Information Administration reduced its price forecasts for next year. According to its report WTI will average $62.75 a barrel, compared with a November projection of $77.75. Brent may trade at $68.08, down from an earlier estimate of $83.42. While the price drop will start to slow production next year, output is still forecast at the highest level since 1972, driven by increase in shale oil production. Output advanced to 9.08 million barrels a day through November 28, the fastest weekly rate since January 1983.

Gold rallied above the $1,200 level, extending its Monday gains. Gold rebounded on Monday as slower export data from China and the contraction of Japan’s economy for a second straight quarter revived safe-haven demand for the precious metal.

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Copper dropped as much as 0.7 percent after closing yesterday at highest in more than a week as lower PPI and CPI data from China indicated slowdown in the economy of the world’s largest metals user. On the London Metals Exchange, lead fell while aluminum, zinc and nickel were little changed.
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Old Dec 11, 2014, 2:48pm   #32
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Markets tumble as oil keeps falling

IFCM started this thread US stocks suffered their worst declines in about two months on Wednesday as continued slide in oil led to sell-off of energy, materials and industrials shares. The S&P 500 index fell 1.6%, to 2,026.14, its biggest one-day percentage drop since October 13. The slowing spending by energy companies has started impacting the prospects for companies providing services and equipment for companies in energy sector. The S&P 500 energy sector dropped 6% over the past three trading sessions. The losses on Wall Street come after seven consecutive weeks of gains for the S&P 500 and Dow Jones Industrial. Today at 14:30 CET US Initial Claims for the week ended December 6 and Retail Sales numbers for November will be published. The tentative outlook is positive, reinforcing the recent positive economic reports ahead of the Federal Open Market Committee’s December 17 Meeting that will be considering when to start increasing the interest rates. We expect the reports today will further contribute to the US dollar strengthening.

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European stocks fell on Wednesday, led by losses in oil and gas stocks. Data released by French government confirmed earlier indications that Eurozone economy is slowing down as the report showed French industrial production fell 0.8% in October compared with September. Today at 10:00 CET European Central Bank publishes its Monthly Report, at 11:15 CET the Long Term Refinancing Option (LTRO) will be announced, with the targeted level of 148.2B euros against 82.6B euros of the previous LTRO. On the backdrop of falling inflation, the ECB’s liquidity injections have not provided sufficient stimulus for slowing eurozone economy, contributing to euro decline against major currencies. The current stage of LTRO will be more of the same medicine with no fundamental changes in Eurozone economic outlook in view and will most certainly contribute to further weakening of euro.

Japan's Nikkei share average is set for a third day of losses on Thursday. The yen fell for the first time in four days on speculation Prime Minister Shinzo Abe’s Liberal Democratic Party will win an election this weekend and extend measures that have weakened the currency. Japan’s export oriented economy has clearly benefited from Shinzo Abe’s weak yen policy, and we expect the Bank of Japan will need to maintain the stimulus further, which will contribute to further weakening of yen against other major currencies.

Crude-oil futures ended at a fresh five-year low on Wednesday, as the US Energy Information Administration data indicated oil inventories rose by 1.5 million barrels in the week ending December 5 against an expected drop of around 3 million barrels. A further push came from the news the Organization of the Petroleum Exporting Countries cut its 2015 demand expectations for crude. OPEC said earlier Wednesday it predicts that demand for OPEC oil would drop to 28.9 million barrels a day next year, compared with 29.4 million barrels a day in 2014.

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Gold retreated on Wednesday as investors took profits following previous session’s gains even as US stocks slumped amid worries about an oversupply in global oil. Typically, investors seek the safety of gold during financial crises and steep declines in equities. In other metals trading, January platinum dropped, while March palladium gained 1.2%, to $821.40 an ounce. High-grade copper for March delivery dropped 1.2%, to $2.89 a pound.
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