IRCo – Rubber Market Watch: 2 – 6 July 2012

By Yium Tavarolit

The Movements of Global Stocks, Finance and Energy

Most Asian stock markets fell on Friday as investors awaited U.S. employment data which would be released later on Friday, but a fresh interest rate cut in China on the same day held mainland Chinese stocks to close higher. The Shanghai Composite finished the day 1% up at 2,223.58. Elsewhere, Japan’s Nikkei was down 0.7% at 9,020.75 and Australia’s S&P ASX/200 was 0.3% lower at 4,157.80. South Korea’s Kospi edged 0.9% lower to 1,858.20.

Lower-than-expected U.S. jobs data in June and a rise in a yield of the Spain’s 10-year bond to 6.91% disappointed European investors and pressed down stock prices across the region on Friday. The Stoxx Europe 600 index ended 1% lower at 254.41 but still gained 1.3% for the week. The France’s CAC 40 index dropped 1.9% to 3,168.79. The German DAX 30 index fell 1.9% to 6,410.11, and the U.K.’s FTSE 100 index sank 0.5% to 5,662.63.

Wall Street slipped on Friday after the U.S. labor Department reported that there were only 80,000 jobs added in June, below expectations for 100,000. The Dow Jones Industrial Average finished Friday off 124.20 points, or 0.96%, to 12,772.47. The Standard & Poor’s 500-stock index gave up 12.90 points, or 0.94%, to 1,354.68. The Nasdaq Composite eased 38.79 points, or 1.3%, to 2,937.33, but booked its fifth straight week of gains.

The euro dropped to a two-year low against the dollar on Friday, after a disappointing U.S. jobs report and doubts about Europe’s plan to address its debt crisis drove investors to the dollar. In late afternoon trading, the euro sank to US$1.226, its lowest level since July 2010, according to EBS via CQG. The euro ended the New York trading day at US$1.2284, down from US$1.239 late Thursday. The dollar recently traded at Y79.67 versus Y79.91 late Thursday, while the euro changed hands at Y97.88 from Y99.04. The euro traded at 0.7932 pounds, compared with 0.7981 pounds late Thursday. The yen rose against the dollar and the euro, buoyed by its safe-harbor appeal.

Disappointing U.S. jobs data in June also weighed on light, sweet crude for August delivery to settle US$2.77 lower at US$84.45 a barrel on the New York Mercantile Exchange on Friday whereas Brent crude on the ICE futures exchange settled at US$98.19 a barrel, down US$2.51 or 2.5%, Dow Jones Newswires reported.

Rubber Markets

A decision by Euro-zone leaders last Friday to inject money to stricken banks through a single bank supervisor, the European Central Bank’s interest rate cut on Thursday, and the People’s Bank of China’s lending and savings interest rate cuts on Friday were the major factors, which influenced rubber futures and physical rubber markets in Asia to move upwards during the week as shown in the table below.

Many agricultural commodities began 3Q12 with rallies as market players were worried aboutU.S. crop weather and adverse weather in other parts of the world despite most of hard commodities trended downwards. For example, corn hit a nine-months and a half peak on Monday on the Chicago Board of Trade while soybeans climbed to a four-year high caused by sweltering heat and scant rainfall in the U.S.’s corn and soybeans belts, according to the Dow Jones Newswire.

A fresh rebound on Chinese property markets for the last nine months in June shows thatBeijing’s loosing monetary measures by cutting interest rates and lowering commercial banks’ reserve requirements could stimulate domestic consumption and investments in the country to a certain degree.

U.S. auto sales in June reported a 22% increase, fueled in part by lower gas prices and a surge of interest of new car models, while its seasonally adjusted annual auto sales rate stayed at 14.1 million vehicles. In China, General Motors and its joint venture sold 213,495 vehicles in June, up 10.1% from a year earlier. It sold 1.42 million vehicles in China from January to June, up 7.3% from the year-ago level, GM said in a statement on Thursday.

In Japan, auto sales in June increased by 40.9% from a year earlier, the Japan Automobile Dealers Association said on Monday. Sales of cars and light commercial vehicles in Brazil rose by 19% to 340,706 in June, a 24% climb from May sales, Fenabrave said on Tuesday. It added that last month’s sales represented the strongest June ever and the second best monthly sales figure ever.

Furthermore, the major NR exporters, Thailand, Indonesia, and Malaysia mulled over a plan to stabilize the NR price at an appropriate level in order to tame current low prices.

It is expected that the above mentioned factors should be sufficient to lend support for rubber futures and physical rubber markets in Asia to stay on high side in 3Q12 despite a normal rise in NR production in the rainy season, but the current global adverse weather cannot be ruled out as well.

On the technical front, IRCo’s MACD and Signal Line improved slightly, but they still stayed in negative territory on Friday. IRCo’s RSI improved early in the week when it rose to 53.21%, but profit-taking on rubber futures pulled it back to 31.93% on Friday from 36.99% on an earlier Friday.

Combining improved market fundamentals with the above improved IRCo’s technical indicators, there is a possibility that rubber futures and physical rubber markets are likely to improve further in the coming week.

 Source: http://www.irco.biz/BlogMoreDetial.php?id=312&ShowContent=market_watch