Shanghai Plummets Over 1 Percent

Mainland China’s benchmark has fallen over 1 percent today as the fears over reforms regarding Initial Public Offerings (IPO) was enough to make investors shrug off good economic data in the manufacturing area.

Most of Asia is trading lower as the markets kicked off the final month of the trading year. We are waiting on key economic releases from the States like Q3 growth, supply management, and Fridays much awaited non-farm payroll (NFP). The European Central Bank (ECB) is also slated to have its policy meeting this week. The last for the year.

U.S. markets reopened Friday after being closed for Thanksgiving. The major indexes had solid gains for the third straight month.

STOCKS
The DJIA continued to climb hitting a new intraday high on Friday before closing up 10.92 points to 16,086.41. The Dow Jones was up 2.6 percent for the month and 0.1 percent for the week. The S&P 500 also saw an intraday high before closing 1.42 points lower at 1,805.81. The S&P was up 1.9 percent for the month and 0.1 percent on the week. The tech heavy Nasdaq Composite was up 17.34 point to 3,487.82. The NASDAQ was up 2.8 percent for the month and saw 1.9 percent gain for the week.

In Asia, the Shanghai Composite is down 1.6 percent to its November 11 low on recent news that authorities in Beijing will lift its one year freeze on IPOs. This will inundate the market with new shares. The smaller Shenzehn Index was down over 4 percent at one point.

The Nikkei continues its subdued profit taking as the market saw a nice 9.3 percent monthly gain. The USD/JPY fell off its 102.60 high set last week and is near 102.38 now. Investors will be waiting on comments by BOJ chief Haruhiko Kuroda who will be speaking in Nagoya later today.

The Australian ASX 200 is down by 0.8 percent despite good manufacturing data out of China. The AUD/USD also climbed on the news. Investors are waiting on the Royal Bank of Australia meeting tomorrow and are expecting no change in policy.

CURRENCIES
The EUR/USD (1.3605) has been trading from 1.358 to 1.3615 for three days. We are rising with no momentum making this bullish recovery look painful. We could test 1.365 with a failure sending us back to into bearish mode. A break below 1.3570 is truly bearish for 1.3470/60.

USD/JPY (102.382) is trading sideways around 103.50. We have been consolidating here as we hope to build up energy for the next rally. A break there sees 103.75 then 104.00. Support is at 101.90 today. AUD/USD (0.9153) is trying to recover from 0.9059. It was much oversold at that point. We could bounce to 0.9200 where we face strong resistance and could come under more selling pressure. A break there sees 0.9250, which is not very likely.

COMMODITIES

Gold (1245.90) has risen a bit and could test 1250 today. If that breaks we could move to 1257. We are thinking we could remain consolidative here. Silver (19.775) is still range bound and likely to stay this way for a few days as we need a break above 20 or fall below 19.10 for a clear sign. Copper (3.221) is near support at 3.21 right now. If it holds we will see a bounce higher to 3.25.

TODAY’S OUTLOOK

This is one busy week as the ECB will meet, the BOJ will meet, the RBA will meet and key U.S. data from manufacturing and inventories to the non-farm payroll will be released. We should see interesting market moves all week long.