Stock market rebounds in Asia Monday, following late-session rally in US bourses last Friday. At the same time, speculations that China may delay further tightening measures to cool the economy because of Eurozone's sovereign crisis also boost shares. The MSCI Pacific index edged +0.3% higher. China's Shanghai Composite index surged +3.5%, the biggest gain since October 2009. In our opinion, the market remains vulnerable as there is high uncertainty regarding Eurozone's debt problems and it's unlikely that policymakers will get a solution to solve the problems soon.
Oil prices change little as investors are cautious and worry about austerity measures in peripheral European economies will dampen economic growth. WTI crude oil price hovers around 70 while Brent crude trades at 71.6, flat from Friday's close.
Gold price rises for the first time in 8 days. The benchmark contract soars to 1184 in Asia as last week's -7% decline from the record high has attracted buying interest. Other precious metals, silver, platinum and palladium also edge higher.
The focus this week will remain on developments in Europe. Concerning dataflow, the US government will report existing home sales for April today. This together with Wednesday's new home sales report will give an updated trend of the country's property market. US Conference Board consumer confidence (Tuesday) and durable goods orders (Wednesday) will also be catching attention.
Commitments of Traders
Crude Oil: Net speculative long positions plummeted -27% to 67.4K last week while price tumbled to below 70. Panic selloff was seen as the market concerned global economic economy will slow down as debt-ridden European countries stepped up fiscal consolidation processes. Surge in short positions and liquidation of long positions were also driven by huge stock build at Cushing
Natural Gas: Net speculative short positions dropped for a second week to 184.2K. During the week, gas price also soared after being pressured for some time. Less-than-expected increase in storage and surprising decline in gas rig counts boosted gas
Gold: Net speculative long positions slid after rising to a 5-month high last week to 231.7K. Profit-taking and liquidation of longs to meet margin calls in other investments were the main reasons for the falls in price as well as net longs
Silver: Net speculative long positions surprisingly surged to 42.8K, the highest level since January also silver price indeed fell in tandem with gold during the week. Increase in longs together with decrease in shorts during the were probably a catch-up as silver investment underperformed gold over the past weeks
Platinum: Net speculative long positions rose, for the first time in 3 weeks, to 23.1K. We believe this was also a catch-up of gold's outperformance in recent weeks. However, contraction in net longs is expected in coming weeks as indicated by the sharp fall in platinum price. Platinum has strong industrial application and its demand may be reduced should world recovery slows