Crude oil slides in early NY session after failing to re-test 76. Currently trading at 75.3, the front-month WTI contract falls amid profit-taking as price has gained almost +5% over the past 2 days. Gold has attracted buying interest at around 1200 as the benchmark contract has rebounded to as high as 1212 after plummeting to 1194.6.
Stock markets, a leading indicator of crude's movement in recent months, trade within narrow ranges today, ahead of the earnings season. In Asia, the MSCI Asia Pacific Index rose +0.9% while China's Shanghai Composite Index and South Korea's KOSPI index jumped +2.3% and +1.4% respectively. Shares in China were boosted by a news report saying that some Shanghai-based commercial banks have resumed providing loans for third-home purchases and have eased lending policies for second-home purchases. While the news has not been verified, it has boosted market sentiment as the world's biggest growth engine has unwound some tightening measures. In Korea, the central bank announced to raise the 7-day repurchase rate by +25 bps to 2.25%. This is the first rate hike since August 2007 and signals the government is confident of economic growth.
European shares opened higher but gains were pared amid profit-talking. Benchmark indices are currently trading around +0.2% above yesterday's close. Wall Street plunges after surging over the past few days as driven by Johnson & Johnson and Intel.
Economic data is mixed. In the UK, PPI slipped for the first time since November 2008, by -0.3% m/m, in June as driven decline in gasoline prices. This may have given MPC members another reason for keeping interest rates low. However, persistent overshoot of headline CPI and VAT hike will continue to be a headache for policymakers in making a balance in containing inflation and boosting economic growth. In Canada, the number of payrolls increased +93.2K in June, following a +24.7K addition in May. The market had anticipated a milder gain of +20K. Unemployment rate also dipped 0.2% to 7.9%. However, optimism from the job market was tempered by weaker-than-expected housing starts which 100 units to 189K in June.
In the coming week, movements in crude oil and other commodities will continue to be directed by macroeconomic outlook. For oil, monthly demand forecasts from IEA and OPEC will likely increase price volatility.