Market Overview 2nd July 2012

Monday, 2nd July 2012. The FBM KLCI recovered amid positive outcome on EU summit on previous Friday as European leaders aimed for better and banks reforms to tackle their financial credibility. Other news to follow.

"- U.S. stocks leapt on Friday, with the Dow Jones Industrial Average posting its best month of the year, after Europe agreed on steps to bolster the economies of its more troubled nations. The Dow Jones Industrial AverageDJIA +2.20%  rose 277.83 points, or 2.2%, to 12,880.09, with Bank of America Corp.BAC +5.68%  leading the rise. The blue-chip index is up 1.9% for the week; up 3.9% for the month; off 2.5% for the quarter; and up 5.4% for the year. The S&P 500 Index SPX +2.49%  added 33.12 points, or 2.5%, to 1,362.16, with industrials faring best among its 10 major sectors. The index is up 2% for the week; up 4% for June; off 3.3% for the quarter; and up 8.3% year-to-date. The Nasdaq Composite COMP +3.00%  climbed 85.56 points, or 3%, to 2,935.05. The index is up 1.5% for the week; up 3.8% for June; down 5.1% for the quarter; and up nearly 13% year-to date."

"- Asian stocks were bolstered Friday as traders jumped in to buy risk assets ahead of the weekend, following news that European leaders had unexpectedly agreed on various measures to address the euro-zone debt crisis. Hong Kong’s Hang Seng IndexHK:HSI +2.19%  jumped 2.2% ahead of a three-day weekend, while Japan’s Nikkei Stock Average JP:100000018 +1.50% , which was trading lower at the midday break, shot up as Tokyo reopened for afternoon trading to finish 1.5% higher.

Elsewhere, China’s Shanghai Composite Index CN:000001 +1.35% gained 1.4%, South Korea’s Kospi KR:SEU +1.91%  climbed 1.9%, Australia’s S&P/ASX 200 index AU:XJO +1.23% rose 1.2%, and Taiwan’s Taiex XX:Y9999 +1.77% advanced 1.8%."

"-USDA report summary- There were few surprises in Friday morning's USDA Grain Stocks and Acreage reports for corn, while soybean acres came in toward the high end of expectations and quarterly soybean stocks were larger than traders expected. "

"-August Soybeans finished up 35 1/4 at 1481 1/2, 5 off the high and 40 1/2 up from the low. November Soybeans closed up 25 1/4 at 1428 3/4. This was 27 3/4 up from the low and 7 1/4 off the high. August Soymeal closed up 8.2 at 429.5. This was 9.6 up from the low and 2.7 off the high. August Soybean Oil finished up 1.3 at 52.39, 0.18 off the high and 1.45 up from the low. The soybean market was sharply higher into the closing bell. The November contract flirted with Wednesday highs at 14.39 3/4 but failed to make a new high for the move. November soybeans traded no less than a 30 cent range each day this week. July soybeans gained on the August contract as there were no deliveries on first notice day today. August soybean oil traded sharply higher and pushed to the highest level since May 14th. August soybean meal also traded higher on the day. The USDA reports were considered negative for soybeans but after a minor sell-off, the market saw strong gains. Traders believe the higher acreage estimate is partially based on acres which may not get planted with dry soils in double-cropped areas of the southern Midwest. Furthermore, the market is anticipating increased international demand for U.S. soybeans after a disastrous year of production in South America. Planted acreage for soybeans came in at 76.08 million acres, which was above trade expectations for 75.5 million. The USDA pegged June 1st stocks at 667 million bushels compared with trade expectations near 640 million. This news was also bearish with stocks coming in 37 million above expectations and above the high end of trade expectations. Weather forecasts call for slightly wetter conditions in parts of the central Midwest to eastern Midwest next Monday through Wednesday. The excessive heat is also expected to affect a smaller portion of the lower Midwest over the weekend. The northern Soybean Belt saw showers this morning and afternoon. The storms systems should track southeast from Chicago and run through north-central Indiana and Ohio. The soybean market is also seeing support on expectations that the Crop Progress report on Monday will show lower soybean conditions. Commodity markets saw broad based support after positive news came out of the European Leaders Summit overnight and the US Dollar sank to it's lowest level since June 20th."

FKLI- Jumped On EU Summit Positive Development

The gains on main market will not easily give up at the moment judging on the strong rebound (again) occur on both stock index and index futures on previous Friday. Most all major indices are taking some positive ride from recent Euro Summit development. The Eurozone leaders vouch to use the massive bailout fund to capitalize banks in all over EU financial institution which will target the major problems of debt crisis. Getting the rally, FBM KLCI rose about 4.91 points to 1,599.15 level while July contract went up about 11.50 points to 1,606 level, the high and low of the day were 1,611.50 ~ 1,596. For today, market is likely open gap up judging from better than expected performance on U.S stock index on previous Friday. Technically, on short term basis the July contract is coming to a crossroads whether it will retrace slightly judging from lower highs formation or to continue its preceding uptrend. Technical perspective for medium term is more clear cut with no visible sign for major correction yet. After considering what happened externally, the market is likely to pay heed to positive news over the weekend. It would be a surprise event if the index futures breach the all time high above 1,615 level.

Daily Pivot Point
R2= 1619
R1= 1612
S1= 1597
S2= 1589

FCPO- Rose Amid Steadier Price Outlook On Soy Oil 

CPO futures bounced back promisingly after it retrace to previous short term support trend line on last week Thursday. The benchmark Sept rose about RM22 to settle higher at 3,020 while the high and low of the day were 3,030 ~ 2,991. We are going more gains to be made soon amid short term positive price outlook from Soy oil and other broader commodities prices. Market just cheered on latest Eurozone debt crisis news as the European leaders agreed to target most of the bailout fund to strengthen their banks and minimize the possibilities debt default. The most actively traded Soy oil surge about 1.3 cents to 52.39 cents per pound, enough to make Short holder to be concern about their position big time. Technically, we are likely looking at medium term trend changing or reversal its previous down trend to further price recovery. This is due to market has gone thru a two weeks consolidation phase travelling from a big sideways market and it is likely to take off to a new high if the weekly resistance level at 3.060 is breached. This is also an important resistance level as the benchmark months has tested numerous times but failed to go pass it. Conclusively, market is likely turned Bullish if there is continues rally above 3,060 level and it is best to accompany the rally with higher open interest.

Daily Pivot Point
R2= 3052
R1= 3036
S1= 2997
S2= 2974

 Disclaimer: Information and opinions contained in this report are for educational purposes only. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness.