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India Equity Research Reports, IPO and Stock News
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Overview
Purchasing manager indices (PMIs) in the US and Europe are getting hit hard in May by the impact of two factors: first, the run up in commodity prices, and
second, the impact of the automobile supply disruption associated with the Japanese earthquake/tsunami. Further bad news on jobless claims and
employment indicators is worrying. The consensus for 4% GDP growth in 2011
is under strain and commodities and equities markets are reacting synchronously to the newsflow. The good news for investors is that average monthly oil prices
fell by nearly USD10/bbl from April to May, and this is likely to be reflected in
retail prices in June. Meanwhile, automobile production appears likely to pick up strongly in June. The factors that caused PMIs to plummet in May have already
reversed and this is should eventually help stabilize investor sentiment. Industrial metals traded lower weighed by slowing Chinese manufacturing PMI and weaker than expected US ISM. We expect selling pressure in the complex to continue in the near term as inflationary pressure in China remains elevated and
monetary tightening is likely to remain a focus. China’s NDRC decided to raise electricity prices for industrial, commercial and agricultural users by 4-5% yesterday. This is the first time China raised electricity prices in more than a year,
with the aim to maintain power supply and mitigate financial losses at electricity
generators. Currently around 40% of the power generators are operating at a
loss, therefore more tariffs hikes are likely. We believe this could introduce inflationary pressure. Furthermore, rice prices in the Yangtze River region have
been rising due to drought. Our China economics team expects CPI to rise in
May and peak in June around 6% y-o-y. Among industrial metals, we expect
outperformance in zinc and aluminum over the next month.
Gold prices rebounded on safe-haven buying after US manufacturing data disappointed. We expect that gold could be a key outperformer vs. the rest of the commodity complex near-term as deflationary or stagflationary worries build. Looking at today’s calendar, in the US initial jobless claims will provide important
guidance for the non-farm payroll report on Friday. Factory orders will shed light on the health of manufacturing sector. In China, non-manufacturing PMI will be
released on Friday morning local time. In energy, EIA will publish its weekly
crude oil and natural gas inventory reports.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Overview
Purchasing manager indices (PMIs) in the US and Europe are getting hit hard in May by the impact of two factors: first, the run up in commodity prices, and
second, the impact of the automobile supply disruption associated with the Japanese earthquake/tsunami. Further bad news on jobless claims and
employment indicators is worrying. The consensus for 4% GDP growth in 2011
is under strain and commodities and equities markets are reacting synchronously to the newsflow. The good news for investors is that average monthly oil prices
fell by nearly USD10/bbl from April to May, and this is likely to be reflected in
retail prices in June. Meanwhile, automobile production appears likely to pick up strongly in June. The factors that caused PMIs to plummet in May have already
reversed and this is should eventually help stabilize investor sentiment. Industrial metals traded lower weighed by slowing Chinese manufacturing PMI and weaker than expected US ISM. We expect selling pressure in the complex to continue in the near term as inflationary pressure in China remains elevated and
monetary tightening is likely to remain a focus. China’s NDRC decided to raise electricity prices for industrial, commercial and agricultural users by 4-5% yesterday. This is the first time China raised electricity prices in more than a year,
with the aim to maintain power supply and mitigate financial losses at electricity
generators. Currently around 40% of the power generators are operating at a
loss, therefore more tariffs hikes are likely. We believe this could introduce inflationary pressure. Furthermore, rice prices in the Yangtze River region have
been rising due to drought. Our China economics team expects CPI to rise in
May and peak in June around 6% y-o-y. Among industrial metals, we expect
outperformance in zinc and aluminum over the next month.
Gold prices rebounded on safe-haven buying after US manufacturing data disappointed. We expect that gold could be a key outperformer vs. the rest of the commodity complex near-term as deflationary or stagflationary worries build. Looking at today’s calendar, in the US initial jobless claims will provide important
guidance for the non-farm payroll report on Friday. Factory orders will shed light on the health of manufacturing sector. In China, non-manufacturing PMI will be
released on Friday morning local time. In energy, EIA will publish its weekly
crude oil and natural gas inventory reports.
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