Risk appetite diminished markedly on Friday as US economic data was disappointing and earnings from Citigroup, Bank of America and GE missed market expectations. Weak sentiment triggering slump in Wall Street (DJIA: -2.5%, S&P 500: -2.9%) was carried forward to Asian markets today. In the commodity market, oil remains under pressure, while precious metal eased after Friday's selloff.

Currently trading at 75.7, WTI crude oil continues trading with a soft tone following a broad-based decline last Friday. It's likely for the black gold to register a 4th consecutive day of drop as market sentiment remains fragile and equities slide.

The MSCI Asia Pacific Index excluding Japan plunged more than 1% with Australia's ASX/S&P Index losing -1.4%. Investors dump stocks amid worries about global economic slowdown. Apart from weaker-than-expected CPI that indicated deflationary pressures persist, the University of Michigan Index tumbled to 66.5 in July from 76 a month ago. The market had anticipated a milder drop to 74.

Gold recovers modestly after plummeting to 1188.2, down -1.66%, last Friday. Others in the precious metal complex are also a tad higher.

For the week ahead, the focus will be on European bank stress test on Friday. Other important events include BOC's meeting on Tuesday. The market has priced in another +25 bps hike to 0.75% given Canada's strong domestic economic growth.

Commitments of Traders

The speculative community turned more bullish towards the energy complex (except for natural gas) in the week ended July 13 as driven by encouraging macroeconomic developments and IMF's upgrades on growth forecasts. Net length in WTI crude increased +8.43K to 34.65K. However, current level remains over -70% below the average net length in April 2009, suggesting traders have turned more cautious after European woes. Net length in heating oil rose +4.20K to 12.65K, after plunging to the lowest since March 2009 last week, while that for gasoline added +3.27K to 39.34K. Net shorts in natural gas increased for the first time in 3 weeks in tandem with price fall. We expect net length for most energy commodities will fall in the coming week as there're renewed concerns over global economic slowdown as driven disappointing Chinese and US data.

Speculators were mixed towards the precious metal complex last week. Net length in gold slid -4.12K to 204.92K despite surge in price while net length for silver, platinum and palladium climbed during the week. The reason for the diverse performance was that gold's safe haven status diminished as market sentiment improved. Silver and PGMs are also precious metals but their industrial applications usually dominate and price movements are more in sync with global economic outlook.