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Global uncertainties linger; Gold price extends strength

The US market extended its strength amid M&A activity which lifted confidence that there is still value in equity market. S&P500 touched a record high during intraday session. However, economic data came in weak. The preliminary results of Markit’s monthly US Services PMI survey revealed a sharp slowdown in business activity for this month. February preliminary figures came in at 52.7 which declined from a month earlier (56.7). February results marked the lowest since last year October. In China, banks have started to regulate real-estate loans. Industrial Bank and others tightened lending to property companies and some related industries, such as steel and cement. Moreover, according to recent data, average new home prices in China’s 70 major cities rose c. 9% in January compared with a year earlier which marks a drop from December’s 9.2% rise as well as November’s 9.1%.

·         Energy: Crude swings high on falling stockpiles – WTI swung between gains and losses near USD103 a barrel amid speculation that crude stockpiles are easing. Supplies at Cushing (US’s largest oil-storage hub) are forecasted to drop for a fourth week, according to Bloomberg survey on the back of continued cold weather. Currently carrying around 290,000 barrels per day, Cushing’s pipeline is expected to reach its full capacity of 700,000 barrels per day through the year.

·         Precious metals: Global uncertainties push up prices – Economic data releases from US and China pushed up gold prices. In addition, we believe the Ukraine crisis is likely to keep prices high for the time being. As we are witnessing stress events across board from Ukraine, Venezuela, Egypt, etc. we expect to see further strength in gold prices. Silver prices are also gaining steam on the back of higher demand for precious metals. Silver price surpassed USD22/oz. since October of last year.

·         Non-ferrous metal: Copper declines amid weak economic data from China – Copper prices declined amid speculation that Chinese demand may weaken. Weakening home price and tightening real-estate loan policy from banks have weakened investor sentiment, in our view. Given 40% of copper demand is consumed by the co