Daily Analysis – Oil and Metals Soar, Dollar Tumbles

Equities

The Nikkei led Asian markets higher, rallying 1.9% to 9768, as investors returned to buying following the previous day’s earthquake. China’s Shanghai Composite gained .7% and the Hang Seng rose .5%. The Australian government rejected an $8 billion offer from the Singapore Exchange to buy the ASX group, citing sovereignty issues. The country’s main index, the ASX 200, rose .7%.

In Europe, miners led shares higher, as base metal prices jumped. The FTSE and CAC40 both climbed .8%, as gold hit a new record high , while copper and silver posted strong gains.

US stock eased, with the Dow closing down 29 points, and the Nasdaq down .6%. US lawmakers finally reached a budget deal late Friday night, preventing a government shutdown. The deal will cut $40 billion from this year’s budget and sets the stage for a broader showdown later in the year.

Airlines tumbled, as soaring oil prices hurt the industry. United Continental fell 5.8%, JetBlue dropped 4.25% and Delta sank 3.9%.

Expedia shares jumped 13% on news it would spin off TripAdvisor a separate company.

Treasuries and Commodities

Bonds fell as commodities rallied, fueling inflation concerns. 10-year notes declined 8/32 to yield 3.58% and 30-year notes dropped 13/32 to yield 4.64%.

Crude oil soared 2.3% to 112.79, and Brent Crude jumped 3.28 to 126.90. Gasoline futures moved in pace, rising 2.3%, while natural gas continued to lag behind, dropping .4% to 4.041.

Gold climbed 1% to 1474.10, a new record close, and silver rallied 2.75% to 40.608. Copper gained 1.9% to 4.5015, its highest close in a month.

Agricultural futures ended mixed, as wheat rose 3.1% while sugar fell 3.2% and cotton dropped 2.5%.

Currencies

The dollar sank against all major currencies, with the Dollar index falling 1% to 74.86. The Euro rose an impressive 1.2% to 1.4483, as did the Swiss Franc, up 1.2% to .9058. The Yen and Pound both rose .4%, and the Australian dollar jumped another 1% to 1.0566, a new record high.

Economic Outlook

Earnings season begins next week, beginning with Alcoa and Chevron on Monday.

Wholesale inventories rose 1% to $473.9 billion, the highest level since December 2000.

-Bradley Welcher

About the author: BinaryOptionStrategy- David Frank

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