Commodities lack direction and change little in European session. Economic data has been mixed and failed to give a clear picture of global economic outlook. Although US new home sales beat market expectations in June, severe downward revisions in May and April suggested demand has been sluggish. Investors await S&P/Case-Shiller Composite-20 which probably rose +3.75% y/y in May, following a +3.81% rise in the prior month.

Stocks in Asia and Europe are generally higher. The MSCI Asia Pacific Index climbed for the third straight day, by +0.3%, today. Major regional indices rose but Japan's Nikkei 225 Stock Average slipped -0.07% to 9496.85 while China's Shanghai Composite Index fell -0.51% to 2575.4. Chinese banking shares fell amid worries that some banks may have difficulties to recoup about 23% of the RMB 7.7 trillion they have lent. Commodity shares also dropped as investors perceived recent rally has been overextended. European bourses are boosted by stronger-than-expected earnings from Deutsche Bank. Net income in the bank surged +6.4% to 1.16B euro (consensus: 1.05B euro) in 2Q10. Germany's DAX gained +0.7% while UK's FTSE 100 and France's CAC 40 added +0.9% and +1.1% respectively.

The front-month contract for WTI crude oil has been hovering around 79 over the past 4 days while corresponding Brent crude contract has been oscillating around 77/78. WTI crude has been trading at a premium to Brent crude since June 23 and the spread has widened recently. In mid-June to early-July, Cushing stockpile dropped from a peak of 37.94 mmb and this strengthened front-month WTI prices. However, stock-build resumed at Cushing over the past 2 weeks and we had worried about WTI-Brent spreads. Nonetheless, the spread widened to 1.53 last Friday, the highest level since March 2010. We attribute this to worries over the upcoming hurricane season at the Gulf of Mexico.

Precious metals continue to trade within narrow ranges. Gold has been struggling around the lowest level in 2 months and its near-term outlook remains vulnerable. Platinum climbs for a 7 day to 1563, the highest level since June 29, while palladium stays firm at 477.