While the S&P500 and Dow show a performance of 18% gain this year, Asian ex-Japan equities are still recovering from the sell-off triggered by talks of tapering on 22 May. The Hang Seng and Shanghai Composite are still in negative territory, unlike the Philippine Stock Exchange, which has staged a strong come back.
The rest of the Asian equity markets are in single-digit growth for the year. It’s clear the exodus of funds has yet to return into the Asian markets. Singapore’s STI has recovered close to half of its losses since mid-May and is trading above its 200-day moving averages. It would be a positive sign if it continues to stay above this 3203 level.
Copper prices traded in a range, while the China GDP top line number met expectations. The weak industrial production data in June is a concern for many going forward. Adding to the downside pressure was eurozone factory output data, which declined in May. Base metals have been under pressure since the beginning of the year, with Comex Copper down 13% year to date.
Prices will not be able to lift as long as concerns over China’s slowdown remain for the rest of the year. We see the immediate price target as 3.11 if prices continue to trend lower.
Gold, on the other hand seems to have found a floor since hitting a low of 1179 on the 28 June, since which point it has gained 4.7%. It appears talks of the Fed’s tapering seem to be further from most people’s minds, making this cash alternative attractive again with an immediate resistant level at $1300.
WTI doesn’t seem to be at all concerned with China’s IP. Long bets and a sharp drop in stockpile by 9.87 million barrels to 373.9 million on 5 July continue to drive prices higher. Given the momentum recently, we expect further upside in the WTI August futures contract, with the immediate price level at $110.