Continued to be a tug of war between bulls and bears, crude oil price initially fell below 70, extending Friday's weakness after disappointing US payrolls and worries over Hungary's fiscal condition, but then rebounded to as high as 72.49 after an encouraging employment trend survey released by the Conference Board and a speech from Fed Chairman Ben Bernanke. Yet, concerns over Eurozone have persisted and price retreated in late trade. The front-month WTI contract ended the day flat at 71.44. Corresponding Brent crude contract moved in a similar pattern but closed at 73.59. Today in Asia, oil prices trade with upward bias, as Asian stocks recover after yesterday's selloff.
In the US, the Conference Board Employment Trends Index soared in May for the 9th consecutive month. The index, at 95.7 last month, increased from April's revised figure of 95.2 and has been up almost +9% from a year ago. This eased market's concerns, after getting Friday's payroll data, that US' job market will deteriorate again.
Ben Bernanke's comments on economic outlook and monetary policy turned slightly more hawkish. The Fed chairman said the nation's economic is 'moderate-paced' and signaled the central bank may hike the policy rate ahead of full employment, 'it will be the case that when we start the process of tightening policy that the economy will not yet be back at full employment'.
Market sentiment was also lifted as EU finance Ministers reached agreement on the details of the 440B-euro IMF stabilization facility which is a part of the EU/IMF rescue package worth 750B euro. A new entity will be formed to sell bonds for capital-raising. The money raised will be used as loans for Eurozone members when needed. Bonds will only be issued after a loan is requested by a member nation.
In IMF's report regarding growth outlook in the Eurozone, the world lender said the current crisis 'results from fiscally unsustainable policies in some countries, delayed repair of the financial system, insufficient progress in establishing the discipline and flexibility needed for a smooth functioning of monetary union, and deficient governance of the euro area'. Policymakers in the Eurozone need to take decisive action to complete their project of monetary union with focuses on 'enforcing budgetary discipline, helped by fundamental legislative reform, and on addressing macroeconomic imbalances' as well as extending 'the progress made in establishing more harmonized regulation and supervision of the EU financial system to the area of crisis management and resolution'.
The report indicates IMF's worries over the 16-nation region's deficit problems and the impacts of growth. Indeed, most investors share the same fear despite recent wax and wane in financial markets. Therefore, we are seeing more capitals flowing in gold. Comex gold futures surged to a 3-week high at 1246.7 before settling at 1240.8, up +1.9%. Yesterday's high was just 3 dollars below the record high of 1249.7. Silver rallied in tandem. After plummeting to 17.195, the benchmark contract jumped more than 1 dollar to as high as 18.295 and eventually closed at 18.162, up +5%.