Caution is in the air before the European weekend summit
City Index October 21, 2011 9:03 PM
<p>Asian stocks were slightly lower at noon in Tokyo trading, with the MSCI Asia Pacific index down by around 0.3%. There is an air of […]</p>
Asian stocks were slightly lower at noon in Tokyo trading, with the MSCI Asia Pacific index down by around 0.3%.
There is an air of caution across the market going in to this weekend’s European summit. Most are unsure if the summit will bring out a definitive plan and are accordingly not holding on to any unnecessary positions.
In regional stock markets, Japan’s Nikkei 225 was 0.1% lower, South Korea’s Kospi up 1.2% while Australia’s S&P/ASX200 was slightly in negative territory in late afternoon trading, down by around 0.2%.
Our focus this week on the BRIC economies continues. We wrote yesterday about Brazil’s rate cutting plans despite inflationary problems.
Today we note India. India’s rupee weakened this morning, past 50 per dollar for the first time since May 2009. Oil is India’s largest import item and domestic oil refiners are the greatest purchasers of dollars in the local currency market.
Gold merchants also stepped up dollar demand as they scaled up imports of the precious metal before Diwali — the festival of light. But we think there is also an expectation that India might perhaps be watching Brazil closely, with fears that growth limitations might be too restrictive. India has plans to exceed China’s growth rate over the next few years and so a loose rate policy, or even one which isn’t as restrictive, might be prompting traders to loosen their currency exposure in the immediate term.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.