IRCo – Rubber Market Watch: 9 – 12 July 2012

By Yium Tavarolit

The Movements of Global Stocks, Finance and Energy

Asian stock markets closed higher on Friday after China reported economic growth in line with expectations of 7.6% in 2Q12. The Shanghai Composite finished flat at 2,185.90. The Hang Seng Index was 0.4% higher at 19,092.63. Japan’s Nikkei was up just 0.05% at 8,724.12. Australia’s S&P/ASX 200 was up 0.4% at 4,082.20, and South Korea’s Kospi climbed 1.5% to 1,812.89.

Also, European stock markets ended higher on Friday as resource shares climbed after China’s economic-growth rate met market expectations and as telecoms rallied on a sector upgrade. The Stoxx Europe 600 index jumped 1.3% to 256.26. On a weekly basis, the Stoxx 600 rose 0.7%. The U.K.’s FTSE 100 index advanced 1% to 5,666.13. For the week, the index closed up 0.1%. The France’s CAC 40 index rose 1.5% to 3,180.81. The index closed out the week with a 0.4% gain. And the German DAX 30 index added 2.2% to 6,557.10 in Frankfurt and was 2.3% higher for the week.

Financial stocks led a market surge after better-than-expected quarterly results from J.P. Morgan Chase boosted enthusiasm about earnings season and jolted the Dow from its longest slide in almost two months. The Dow Jones Industrial Average gained 203.82 points, or 1.6%, to 12,777.09. The Standard & Poor’s 500-stock index advanced 22.01 points, or 1.7%, to 1,356.77. The Nasdaq Composite Index tacked on 42.28 points, or 1.5%, to 2,908.47.

The euro sank to a new two-year low of US$1.2162 early Friday after Moody’s downgraded Italy’s sovereign rating to two notches above junk. But it climbed higher after U.S. stocks opened in positive territory. The common currency ended the New York trading day at US$1.2250, up from US$1.2203 late Thursday. The Australian dollar recently traded at US$1.0225 from US$1.0138 late Thursday. The pound was recently at US$1.5570, up from US$1.5428 late Thursday. Against the yen, the dollar fetched Y79.20 from Y79.32 late Thursday, while the euro was at Y96.98 from Y96.80.

Crude-oil futures moved 1.2% higher on Friday following news the Obama administration had expanded sanctions on Iran. Front-month light sweet crude oil on the New York Mercantile Exchange settled at US$87.10 a barrel, up US$1.02. Nymex oil futures were up 3.1% for the week. Front-month Brent futures on Friday gained US$1.33 a barrel to US$102.40, according to Dow Jones Newswires.

Rubber Market

The benchmark rubber contract for December delivery on the bellwether, Tokyo Commodity Exchange, trended downwards early in the week before it would rebound on Thursday and continued its higher closure on Friday. The active Shanghai rubber contract for September delivery was rangebound during the week, but its weekly average was still higher than an earlier week’s average.

Reports on weak U.S. employment data and easing Chinese inflation in June were the major factors which weighed on rubber futures early in the week before a consecutive rebound on crude oil futures on Thursday and Friday, together with a better-than-expected 7.6% Chinese GDP growth rate in 2Q12 on Friday, would lend support for rubber futures in Asia to rebound consecutively on Thursday and Friday.

In contrast, most of physical rubber markets in Asia were weighed down by the consecutive fall of the rubber contract for the spot month on Tokyo Commodity Exchange throughout the week despite China’s imported natural rubber (NR) rose to 160,000 tons in June or up 45.5% from a year earlier.

The above mentioned reasons led to the falls in all NR prices on Friday, comparing with an earlier Friday, except for field rubber latex in Thailand as shown in the table below.

IRCo’s technical MACD and Signal Line improved slightly in negative territory on Friday whereas its RSI rose from 31.93% on an earlier Friday to 48.80% on Friday. It is expected that IRCo’s technical indicators are likely to improve further in the coming week if global stock markets and crude oil futures continue their upward trends on the back of better-than-expected China’s GDP at 7.6% in 2Q12. However, a strengthening yen remains a barrier to market players on Tocom. Overall, NR prices still have room to improve further in the coming week.

Source: IRCo