Commodities and Equities Trade Strong

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All the Asian indices are trading on a positive note with South Korea’s Kospi and Japan’s Nikkei being the top two gainers, up 1.4% each. Hang Seng is up by 1.1%, while Strait Times and Taiwan are trading higher by 0.4% and 0.9% respectively. Shanghai is trading marginally up by 0.2%. U.S. stocks advanced on Tuesday, rebounding from the previous day’s pullback, as investors geared up for key decisions out of Europe and from the Federal Reserve later this week. The Dow rose 0.5% and the S&P 500 rose 0.3%. The day’s gains put the Dow back at its highest level since December 2007, while the S&P 500 is within spitting distance of the multi-year high it reached last week. The tech-heavy NASDAQ finished flat.

Investors are waiting to hear whether the Fed will announce new stimulus measures when it wraps up its two-day policy meeting Thursday afternoon. It’s expected that the weak August jobs report gives the central bank even more reason to enact a third round of quantitative easing. Investors are waiting to see how the ruling may impact the European Central Bank’s plans to preserve the euro, which remains near its highest level against the U.S. dollar since May. Global markets finished mixed ahead of the decision

The European markets ended Tuesday’s session with mixed results. The markets had been largely negative in early trade, but the positive open of the U.S. markets in the afternoon provided a boost, which allowed several markets to finish in positive territory. Britain’s FTSE 100 was down 0.02% while DAX in Germany ended up 1.3%. France’s CAC 40 rose 0.9%.

Gold futures rose toward a 6-month high, as the dollar fell following a warning by Moody’s Investors Service on US credit-worthiness while demand remained strong among investors for ETF products.

Holdings of bullion in exchange-traded products (ETPs), often used as a gauge of investor appetite for gold, rose by 91,932 ounces on the day to record 72.49mn ounces, following broad based inflows into most major ETPs.

Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, increased to 1,293.14 tons, as on Sept 4. Silver holdings of iShares silver trust, the largest ETF backed by the metal, increased to 9,803.55 tons, as on Sept 10.

Credit rating agency Moody’s said the United States may lose its “triple-A” debt rating if next year’s budget negotiations do not produce policies that decrease debt.

The ICE dollar index, a gauge of the greenback’s moves against six other major currencies, fell at 79.866, down from 80.408 on late Monday.

Copper rose to a 4-month high, on speculation that the Federal Reserve will announce more measures to boost the US economy, brightening the outlook for commodity demand.

Aluminum stocks held at three major Japanese ports stood at 261,000 tons at the end of August, up 11% from 235,100 tons a month earlier, as per trading house Marubeni Corp.

Crude oil futures extended their gains to a fifth session, on expectation that central banks will move to stimulate growth and the dollar weakened after a warning that US could lose its top-notch debt rating.

Oil consumers have enough crude supply in the market and the risk to global demand growth remains skewed downside, exporter group OPEC said in a report that builds a case against any use of strategic reserves by consumer nations to lower prices.

The OPEC countries oil production rose by about 260,000 barrels per day in August, despite a European Union embargo on Iran’s exports. Crude oil stocks rose 221,000 barrels, Gasoline stocks fell 4.2mn barrels and distillate stocks rose 2.5mn barrels, as per API.

Natural gas rallied more than 6% and topped $3 per mmbtu for the first time since August, on speculation that production cuts in the Gulf of Mexico last week helped reduce a supply glut.

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About:FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

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