Aug 3, 2016 - Also, investors will be cautious ahead of crucial ADP Non-Farm Employment Change data due tonight. Further
Fundamental Report 3rd Aug 2016 Gist of Report Gold - Gold prices to get a boost post BOJ monetary stimulus. Crude Oil - Global supply glut a cause of concern for oil markets. Copper - Top Chinese official pledge to do whatever it takes to boost growth in the economy.
Bullion – On Tuesday, spot gold prices rose by 0.77% to close at $1363.2 per ounce as dollar hovered near a three-week low after expectations of a near-term U.S. interest rate hike lost steam following last week's disappointing U.S. growth figures. The Federal Reserve should be cautious on interest rate increases due to lingering risks to the U.S. economy, New York Fed President William Dudley said on Monday, appearing to signal the chance of a hike by the end of the year was fading. The Bank of England looks ready to cut interest rates for the first time since 2009 on Thursday, seeking to stop Britain's vote to leave the European Union from kicking the country into recession. On the MCX, gold prices rose by 0.8% on Tuesday to close at Rs.31815 per 10 gms. Spot silver prices rose by 1% on Tuesday to close at $20.6 per ounce in line with rise in gold prices and weakness in the dollar. On the MCX, silver prices rose by 0.74% to close at Rs.48071 per kg
Outlook The US Federal Reserve’s decision has maintained its status quo by not doing rate hike in its recent meeting indicating that the growth in the economy needs to gain further. Besides, The Bank of Japan has announced a modest expansion of its monetary easing program, blaming Britain’s decision to leave the European Union as the biggest uncertainty facing world markets. Markets will closely monitor this week's data, which includes the monthly non-farm payrolls report on Friday.
Energy – WTI oil prices declined by 1.4% on Tuesday to close at $39.5 per barrel as persistent worries of both a crude and refined fuel glut and a slide in U.S. equities offset an early boost from a weak dollar. Both WTI and Brent held losses in post-settlement trade after preliminary inventory data from trade group American Petroleum Institute (API) showed that U.S. crude stockpiles fell 1.34 million barrels last week, largely within expectations. The U.S. government will issue official inventory data on Wednesday. Oil hit 2016 highs above $50 a barrel between late May and June as crude supplies tightened from disruptions in Canada, Nigeria and Libya, and a near economic meltdown in OPEC member Venezuela. The rally faded soon after as higher prices spurred more output of crude and refined products. On the MCX, oil prices declined by 1.5% to close at Rs.2640 per barrel.
Outlook On an intraday basis, we expect oil prices to trade lower as global supply glut continues to bother investors sentiment. Crude inventories in the US at around 519 million barrels will also exert downside pressure on oil prices.
Base Metals – LME base metals traded mixed as China’s official and unofficial manufacturing PMI data painted a mixed picture. Along with that, disappointment over Japan’s much awaited stimulus package hurt risk appetite. MCX base metals traded mixed in line with international trends. LME Copper prices traded higher by 0.2% to close at $4892/ton but gains were limited as weak manufacturing data from major global economies took a toll on prices. Official data showed activity in China's manufacturing sector eased unexpectedly in July as orders cooled and flooding disrupted business. On the contrary, unofficial data showed China’s manufacturing activity expanded for the first time in 17 months in July. This has raised doubts about the future course of stimulus measures from China. Also, U.S. manufacturing activity eased in July amid shrinking order backlogs and declining employment. MCX copper prices traded higher by 0.3% yesterday to close at Rs.326.7per kg.
Outlook LME Copper is currently trading lower by 0.1% at $4885.5/ton. Prices are likely to trade lower today as persistent decline in crude oil prices will limit risk appetite. Also, investors will be cautious ahead of crucial ADP Non-Farm Employment Change data due tonight. Further, Japan’s fiscal stimulus package fell short of expectations, will continue to pinch the markets.
ECONOMICAL DATA Indicator Services PMI ADP Non-Farm Employment Change ISM Non-Manufacturing PMI Crude Oil Inventories
Country UK US US US
Time (IST) 2:00pm 5:45pm 7:30pm 8:00pm
Forecast 47.4 171K 56.0 -
Previous 47.4 172K 56.5 1.7M
Impact High High High HIgh
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