Financial markets in Asia moved modestly lower on Monday, carrying forward last Friday’s selloff in the US session. The US earnings season sent mixed signals to the market. Of the 117 US companies that have reported earnings for the third quarter, banks and consumer-related stocks sent pleasant surprises while technology, energy and mining sectors were rather disappointing in terms of sales revenue and earnings. The EU summit contained few surprises. The summit mainly concentrated on establishment of a unified banking system for European nations with operations starting on January 1, 2013. Yet, German Chancellor Merkel doubted whether the timing would be too aggressive.
Japan’s trade deficit widened sharply to 0.98 trillion yen in September from 0.46 trillion yen a month ago. The result was the worst on record and was mainly driven by the increase in imports and the huge drop in exports. Geographically, Exports to mainland China declined -14.1% due to tensions between China and Japan on the Diaoyu Islands dispute. The economy probably contracted in the third quarter hurt by deterioration in the exports sector. In a speech at a quarterly meeting, BOJ governor Masaaki Shirakawa warned of the global economic uncertainty ahead and indicated that the central bank would continue with its ultra accommodative monetary policy. According to the governor, "overseas economies have moved somewhat deeper into a deceleration phase. Investors' risk aversion, driven by Europe's debt problems, has eased somewhat but we must carefully watch market developments". Economists currently anticipated that the BOJ would adopt further easing measures by the end of this month.
Commitments of Traders:
Speculators were mixed towards the energy complex in the week ended October 16. Net length for heating oil added +10 505 contracts to 37 442 while that for gasoline climbed +864 contracts to 74 053. However, net length for crude oil futures fell -7 126 contracts to 206 472 while net short for natural gas slipped -6 613 contracts to 61 112.
Similarly, speculators were also mixed towards precious metals during the week. Net length for silver futures gained +303 contracts to 40 128 while that for platinum rise +851 contracts to 47 128. Net length for gold future plunged -17 929 while that for palladium dipped -347 contracts to 11 842.
Oil and Gold Reports contributed by Oil N' Gold