Gold hovers near 6-week top amid China slowdown woesREUTERS, Wed Oct 22, 2014 07:48 WIB - Gold was trading near its highest level since early September on Wednesday, supported...
Spot gold was little changed at $1,247.45 an ounce by 0036 GMT, not far below Tuesday's peak of $1,255.20, which was its loftiest since Sept. 10.
U.S. gold futures eased 0.3 percent to $1,248.10 an ounce.
China's central bank is likely to hold its line against an interest rate cut even as economic growth slows to a quarter-century trough, as the politics of reform influence the conduct of monetary policy.
Data released on Tuesday showed the world's second-largest economy grew an annual 7.3 percent in the third quarter, the weakest pace since early 2009.
The European Central Bank is considering buying corporate bonds on the secondary market and may decide as soon as December with a view to begin purchases early next year. Policymakers are desperate to revive the euro zone economy, which is barely growing.
The Shanghai Gold Exchange is working on plans for China's first forwards and options in gold, potentially putting China ahead in the race to set an Asian pricing benchmark that might eventually rival the London gold fix.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 1.18 percent to 751.97 tonnes on Monday - the biggest daily percentage drop in a year.
The euro flirted with one-week lows following a Reuters report that the European Central Bank is considering buying corporate bonds, while Asian shares tracked strong gains on Wall Street.
DATA AHEAD (GMT)
1100 U.S. Weekly mortgage market index
1230 U.S. Consumer prices Sep
1530 U.S. Cleveland Fed consumer prices Sep
Asian shares bask in glow of U.S. tech earningsREUTERS, Wed Oct 22, 2014 07:33 WIB - Asian shares pulled ahead on Wednesday, taking their cue from Wall Street's strong...
In U.S. trading, shares of Apple Inc (AAPL.O) and Texas Instruments Inc (TXN.O) gained on stronger-than-expected quarterly earnings, lifting the tech-heavy Nasdaq Composite index .IXIC more than 2 percent. The S&P 500 .SPX added 1.96 percent to mark its biggest daily percentage gain since October 2013 and its fourth straight rising session.
European shares also posted gains on a Reuters report that the ECB was readying a plan to buy corporate bonds, a step that would help banks free up more of their balance sheets for lending.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.2 percent, while Japan's Nikkei stock average .N225 was up 2 percent in early trade, rebounding from a sharp drop of a similar magnitude on Tuesday.
Japanese trade data released early Wednesday underpinned sentiment, as it showed Japan's exports rose 6.9 percent in September from a year earlier, a tentative sign that external demand is starting to pick up.
The upbeat mood in equities markets sapped the safe-haven appeal of U.S. Treasuries, pushing up their yields. The yield on benchmark 10-year U.S. Treasury notes stood at 2.227 percent in Asian trade, up from Tuesday's U.S. close of 2.208 percent.
Data showing a stronger-than-expected 2.4 percent rise in U.S. domestic home resales last month provided evidence that the U.S. economic recovery maintained momentum and also put upward pressure on yields.
Higher U.S. yields helped bolster the greenback, with the dollar index .DXY rising to 85.381.
"Given heightened concern about falling inflation expectations, attention turns to the US September CPI report," strategists at Barclays said. "Our thesis of USD outperformance driven by relative US strength and interest rate divergence remains intact, but is at risk of delay pending soft underlying inflation trends."
The dollar was steady on the day against the yen at 107.04 yen, holding its overnight gains, while the euro nursed its losses after dropping on the ECB news, and stood at $1.2713 in early Asian trade.
In commodities markets, Brent crude LCOc1 inched up about 0.1 percent to $86.29 a barrel after posting solid gains on Tuesday, helped by data showing stronger-than-expected China demand and some technical price recovery after weeks of almost uninterrupted selling.
Spot gold was steady at $1,248.59, not far from a six-week high marked in the previous session.
Wall St. extends rebound on earnings, ECB reportREUTERS, Wed Oct 22, 2014 07:33 WIB - U.S. stocks rallied on Tuesday, with the S&P 500 notching a fourth straight session...
The S&P 500 and Dow Jones were up more than 1 percent while the Nasdaq rose more than 2 percent, thanks to better-than-expected results from several major tech companies.
The bullish tone was helped by a Reuters story that said the European Central Bank is considering buying corporate bonds. It led to active futures trading before the opening bell and helped lift European stocks from last week's 13-month low.
“That is allowing the market to breathe a little sigh of relief,” said Kevin Caron, market strategist at Stifel, Nicolaus & Co in Florham Park, New Jersey. “The market has come to fear the absence of central banks."
The S&P 500 has gained more than 6 percent from its session low last Wednesday, when the benchmark nearly reached correction territory. It closed Tuesday above both its 14-day moving average and its 200-day average.
The Dow Jones industrial average .DJI rose 215.14 points, or 1.31 percent, to 16,614.81, the S&P 500 .SPX gained 37.27 points, or 1.96 percent, to 1,941.28 and the Nasdaq Composite .IXIC added 103.40 points, or 2.4 percent, to 4,419.48.
Apple Inc (AAPL.O) rose 2.7 percent to $102.47 a day after revenue topped expectations, helped by strong iPhone sales. It also gave a strong outlook for the holiday quarter.
The largest percentage gainer and decliner on the S&P 500 were both related to earnings. The top gainer was Waters Corp (WAT.N), which rose 9.9 percent, while the largest decliner was Chipotle (CMG.N), down 7 percent.
The largest gainer on the Nasdaq 100 was Illumina Inc (ILMN.O), which rose 9.2 percent and the largest decliner was Starbucks (SBUX.O), down only 0.5 percent.
While earnings have largely come in strong so far this quarter, concerns continue to swirl over the pace of global economic growth. China's gross domestic product grew 7.3 percent in the third quarter, the slowest pace since the first quarter of 2009.
"This rebound is going to be short-term in nature," said Mohannad Aama, managing director at Beam Capital Management LLC in New York. "The reasons for the market meltdown from last week are still there."
U.S. existing home sales rose 2.4 percent in September, above expectations, hitting their highest level in a year. The PHLX Housing index .HGX rose 1.2 percent.
Advancing issues outnumbered decliners on the NYSE by 2,557 to 538, for a 4.75-to-1 ratio on the upside; on the Nasdaq, 2,008 issues rose and 668 fell for a 3.01-to-1 ratio.
The benchmark S&P 500 index posted 24 new 52-week highs and 1 new low; the Nasdaq Composite showed 45 new highs and 30 new lows.
About 7.2 billion shares changed hands on U.S. exchanges, below the 8.3 billion October average, according to BATS Global Markets.
Euro sells off after report ECB considering corporate bond buysREUTERS, Wed Oct 22, 2014 03:50 WIB - The euro fell sharply against the dollar on Tuesday after Reuters reported the European...
The move, if realized, would expand the private-sector asset-buying program the ECB began on Monday, which is aimed at fostering lending to businesses in hopes of spurring growth.
"Headlines on the market today about the ECB potentially buying corporate bonds has reinvigorated attention on the downside for the euro," said Richard Cochinos, head of Americas G10 FX strategy at Citi in New York.
"What the headlines have done is remind the market that essentially policy is dynamic and alternative options could potentially be considered,” he said.
Flows of leveraged accounts, which largely include hedge funds, have started shifting from profit-taking on short euro positions to funding emerging market trades with euros, Cochinos added.
The euro's early gains evaporated after the publication of the story, and losses extended during the New York trading session. The euro hovered just above the session low of $1.2715, off 0.58 percent. Against the yen, the euro traded at 135.98 yen, a loss of 0.65 percent.
The dollar recovered some lost ground against the Japanese currency, but was still down 0.05 percent at 106.88 yen.
If the ECB should follow through with this plan, it would likely also suppress yields on bonds held in euros in general. However, German government bond yields rose after the story was published, reflecting a repricing of expectations for inflation and a declining appetite for low-risk assets.
"That reinforces market confidence in Mr. Draghi's pledge to increase the bank's balance sheet by a significant amount," said Lee Hardman, a strategist with Bank of Tokyo-Mitsubishi in London, referring to the ECB president, Mario Draghi. "The ECB is still under pressure to do more."
The diverging directions of monetary policy between Europe and the United States have been the central argument supporting a run higher for the dollar since May.
Most major banks have lined up behind a shift in the dollar's value over the next year or two that should take it at least another 10 percent higher and potentially close to parity with the single currency.
But that move has stalled amid broader doubts about the strength of global growth and likelihood that U.S. policymakers will push ahead with rises in interest rates next year.
Early Tuesday currency trading was dominated by Chinese economic data that showed third-quarter gross domestic product growth of 7.3 percent, slightly above forecast for the world's second-largest economy. The Aussie dollar, often seen as a liquid proxy of Chinese growth prospects given Australia's large trade exposure to China, was boosted by the data, but by the end of trade on Tuesday those gains had faded. The Aussie dollar traded unchanged on the day at US$0.8779 having been as strong as US$0.8832.
The dollar did get a modest boost from the strongest U.S. existing homes sales data in a year.
Gold hits 6-week high on China growth worry, commodities gainREUTERS, Wed Oct 22, 2014 02:10 WIB - Gold rose to a six-week high at above $1,250 an ounce on Tuesday, lifted by broad-based...
A sharp outflow in gold-backed exchange-traded funds and lackluster Asian physical demand, however, indicate a vulnerable price outlook for bullion, analysts said.
The yellow metal rose in the face of a stronger dollar and Wall Street rally after data showed U.S. home resales raced to a one-year high in September.
China grew at its slowest pace since the global financial crisis in the September quarter and risks missing its official target for the first time in 15 years, adding to concerns the world's second-largest economy is becoming a drag on global growth.
However, overall sentiment towards gold remained wary. Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 1.18 percent to 751.97 tonnes on Monday - the biggest daily percentage drop in a year.
"Given the numerous risks on the market, we are surprised that there is still any substantial retreat at all from gold ETFs," said Eugen Weinberg, head of commodity research at Commerzbank.
Spot gold hit its highest since Sept. 10 at $1,255.20. It was up 0.3 percent at $1,249.86 by 2:40 p.m. EDT (1840 GMT).
Gold has now broken its 50-day moving average at $1,248 for the first time since Aug. 15.
U.S. COMEX gold futures for December delivery settled up $7 an ounce at $1,251.70, with trading volume in line with their 30-day average, preliminary Reuters data shows.
Widespread gains in commodities led by copper and crude oil also underpinned gold and platinum group metals.
The dollar rose 0.6 percent against the euro after Reuters reported the European Central Bank was looking at buying corporate bonds as soon as December in its efforts to revive the stagnating euro zone economy.
The dollar has lost ground in recent weeks as concerns about slowing global growth prompted investors to trim bets that the U.S. Federal Reserve will raise interest rates soon after an expected end to its monetary stimulus this month.
Analysts, however, said gold's performance was relatively lagging at a time when demand from Asia, the top-consuming region, is traditionally the strongest.
India, the second-biggest gold buyer, celebrates the Hindu festivals and major gold-buying events of Dhanteras on Tuesday and Diwali on Wednesday.
Weinberg said that a sustained gold price recovery must be supported by an increase in Asian gold demand.
Among other precious metals, silver was up 0.6 percent at $17.48 an ounce. Platinum gained 1.2 percent to $1,273.70 an ounce, while palladium rose 1.4 percent to $770.60 an ounce.