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FX Futures Edge: Demand For Commodity Stocks Clearly Waning In China

ByRichard Rhodes
Published 07/12/2013, 03:45 AM
Updated 07/09/2023, 06:31 AM
STOCKS

: The world economy is weakening: the U.S. payroll tax increase and “sequestration” are pressuring the domestic economy. China is being pressured by Japan, and has “dampened” their housing market. The eurozone remains mired in “inaction.” We feel that risk is being mispriced at current levels given recent pressure upon world economic figures and the developing pressure upon corporate margins/ earnings. However, the general consensus is that the world’s central banks will save the day.

STRATEGY: The S&P 500 remained above the 160-wma long-term support level at 1337. The standard 200-dma support level was at 1517. Perhaps more importantly, the distance above the 160-wma faltered below the +23% “bubble-like rally” threshold. This is most definitely a warning sign, especially given 1600 was violated to the downside.

Spain Madrid General Index
WORLD MARKETS WERE MIXED ALONG REGIONAL LINES Friday morning as Asian bourses closed lower, while European bourses traded higher. China led Asia lower as the new Finance Minister signaled that the government may tolerate economic growth figures significantly below 7.0% in the second half of this year. This is bearish for the commodity markets in our opinion – but not necessarily the commodity stocks. Demand is clearly waning in Asia, with recent inventory accumulation likely to result in some liquidation.

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