The oil-rich nation Abu Dhabi injected $10B to Dubai World, helping it to repay part of the debts which includes $4.1B on Islamic bonds, as well as payments to the company' contractors, suppliers , interest and operating costs. According to Dubai World, the money 'provides funding and a stable basis for the restricting process, which continues'.
World stock markets rebound after the news with Dubai' benchmark index roaring +10%. In Asia, the MSCI Asia Pacific Index rose +0.5%, following a decline of -0.4% in the previous month. Shares in other countries such as Australia and China also rose. The only exception was Japan. The Nikkei 225 Stock Average fell as much as -1% before Abu Dhabi' announcement as the Tankan index disappointed the market. The Tankan index of sentiment among big manufacturers rose +9 points, the smallest gain since the economy emerged from recession, to -24 in December. According to the survey, capital spending by large companies will decline -13.8% yoy. The Nikkei 225 Index ended the day flat.
In Europe, stocks open higher with all benchmark indices gain. UK' FTSE 100 Index adds -0.9% while Germany' DAX Index increases +1%. In France, the CAC 40 Index also climbs +0.6%.
The dollar pares gains as risk aversion reduces. The dollar index slides to 75.7. Against the euro, the greenback also drops to 1.465 after rising to 2-month high of 1.458 last week. Gold rebounds as USD falls. Comex gold for February delivery recovers to 1121 in European session.
Unfortunately, crude oil price fails to benefit from the broad-based recovery as demand concerns remained. The benchmark contract continues to trade 70 and plunged to as low as at 68.59 earlier the day. We will see if oil can regain the 70-level today or tomorrow. If not, further decline to 65 is likely.
Commitments of Traders
* Crude Oil: Net speculative long positions declined -8.6K to 76.4K. Sovereignty risks in Dubai, Greece and Spain, together sluggish energy demand outlook, weighed on price. We expected net longs will continue to fall in coming weeks as price broke below 70
* Natural Gas: Net speculative short positions dropped to 156K contracts last week. Gas price staged strong rally after the US Energy Department reported bigger-than-expected draw of gas storage. While the end of injection season and abnormally low weather in the Northern hemisphere should support price, industrial demand remains weak. This may cause price to fall even more severely after these temporary factors fade
* Gold: Net longs slid for the second week to 154K. Strength in USD and broad-based decline in commodities triggered massive selloff in gold price. Profit-taking was another reason for the slump in price last week
* Silver: Net speculative long positions plummeted almost -3K to 42.5K last week . Price in movement in silver has been more erratic than gold as the white metal in not purely 'precious' metal. Its huge industrial applications
* Platinum: Despite positive data from auto sector, investment demand in platinum plunged and reduced net longs to 21K last week