WTI crude oil extends further gain above 67 in European morning as investors anticipate impressive improvement in US' economy in 2Q09. Stocks rally in both European and Asian sessions while safe havens such as Japanese yen and USD plunged.
The market forecast GDP contracted -1.5% qoq in the US in 2Q09, after a -5.5% decline in the prior quarter, as driven by increase in government expenditure , as well as improvements in exports and business investments.
In Europe, shares edge higher with UK's FTSE adding +0.06% to 4635 and France's CAC 40 Index rises +0.1% to 3439. However, Germany's DAX Index fluctuates between gains and losses and is currently trading at 5358. Data released in the 16-nation region were mixed. CPI declined -0.6% yoy in June, compared with consensus of -0.4% and -0.1% in the previous month. This was the biggest fall in 13 years. Unemployment rate rose to 9.4% in June, less than market expectation of 9.7%. Last month's reading was also revised down to 9.3%.
In Asia, the MSCI Asia Pacific Index gained +1.5% with Japan's Nikkei 225 Stock Average rallied +1.9% on strong earnings results from Sony. In China the Shanghai Composite Index surged +2.7% as led by rallies in metal companies.
Raw material demand in China spurred speculations that purchase of gold will also be increased. In fact, according to World Gold Council, gold demand in China has outpaced that in India, formerly the largest consumer for gold, in 1Q09.
Gold futures rises on the second day and is currently trading at 940.Weakness in USD remains the main price driver. The greenback slides to 1.413 against the euro. Against commodity currencies, USD declines to 0.8281 against Australian dollar, approach test the 10-month high formed on July 28.
Platinum soars +1.2% to 1203 after rising +1.5% yesterday. Higher risk appetite and improved sentiment on economic outlook offered help as platinum, as well as palladium, has large application in auto industry.