Wednesday Morning Market Briefing: Gold, Crude Oil, Stocks

Wednesday Morning Market Briefing: Gold, Crude Oil, Stocks

$GLD, $OIL, $USO, $UGA, $AAPL, $IBM, $UTX

Precious metals

Gold Saw Buying Interest Come In Under 1,100 oz

Gold was pressured and trade was volatile, as buying interests came in under 1100.

The benchmark COMEX contract dropped -0.30% and settled at 1103.3. The volatility in Gold trading was likely driven by China. It was reported that around 5 tonnes of Gold was sold on the Shanghai Gold Exchange in 2 mins at 1 point on Monday.

The normal volume traded is 25 tonnes in a day.

The August 15 COMEX Gold contract also saw 7,600 contracts traded in the frame.

Last Friday, China’s report showed that its Gold purchase missed analysts expectations, adding to the weak sentiment.

Energy complex

Crude Oil was up a bit on the weaker USD. Gains were limited by concerns over China’s diesel and gasoline demand growth.

According to Wood Mackenzie research and consultancy group: “the recent drop in China’s equity market is of concern and acts as a downside risk to our China oil demand outlook.”

It forecast China’s Diesel use would increase +0.1% in 2-H of Y 2015, down from +2.1% in 1-H of 2015. And Gasoline demand growth would probably slow to +6.3% from +8.8% over the same frame The agency suggested that falling domestic demand should raise China’s Crude Oil exports, adding supply to the global oversupplied environment.

On Crude Oil inventory, the industry-sponsored estimated that Crude inventory rose +2.3-M bbl in the week ended 16 July. The market anticiapted that the DOE/EIA report due Wednesday would show a -2.3-M bbl decline in Crude stock.

For motor fuels, Gasoline stock probably added +0.9-M bbl, and Distillate added +1-M bbl.

On Stocks

Disappointing IBM (NYSE:IBM) and United Technologies (NYSE:UTX) earnings weighed on Wall Street, sending DJIA and S&P 500 down 1% and 0.43% respectively. Although Apple’s (NASDAQ:AAPL) earnings exceeded market expectations, its shares were down 7% in after market trade as sales of iPhone and iPad missed forecast and revenue guidance for the next Quarter fell short of expectations.

On the economic front

The Bank of England (BOE) will release the minutes for the July meeting. Expect the members voted unanimously to maintain the bank rate and the asset purchase program unchanged. Governor Mark Governor indicated more than once that rate hike is around the corner of the year.

In the US, existing home sales likely rose +0.93% to 5.4-M units in June. House price index in May might have risen 0.4% M-M in May, following a flat reading in June.

Stay tuned…

HeffX-LTN

Paul Ebeling

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