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Weekly Commodity: The counter witnessed continuous downside on poor data

SMC | 19 Jun, 2017  | Follow Author | Add to my Favourites 
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Weekly Commentary           


There was no relief for commodities and it witnessed continuous downside on poor data amid interest rate hike by Fed. Fed raised interest rates on Wednesday for the second time in three months and said it would begin cutting its holdings of bonds and other securities this year, signaling its confidence in a growing U.S. economy and strengthening job market. CRB saw nonstop downside from past six months. Historically, CRB and the dollar tend to move opposite each other. But now, they are moving in near tandem. Despite rate hike the greenback nursed losses, after weak U.S. inflation data left investors wondering if the Federal Reserve would be able to follow up its latest rate hike with another later this year. Bullion counter surrendered its previous gain for the same reason of rate hike as highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion, while boosting the dollar. Gold and silver traded near 28700 and 38700 respectively. In energy counter, natural gas covered its weekly losses on lower than expected buildups in inventory whereas crude saw no respite on lower than expected decline in inventory. Natural gas stockpiles fell week over week to 10.6% below last year's level, but they remain 9.2% above the five-year average. Oil prices dropped to their lowest settlement in seven months Wednesday, after U.S. government data showed a smaller-than-expected weekly decline in domestic supplies and an increase in gasoline stockpiles and crude production. Crude has been under pressure also this week after OPEC reported ramped-up supplies from Libya and Nigeria, while OPEC and Russia recently sealed a deal to extend their 1.8 million barrels a day in production cuts for another nine months. Industrial metals fell too on rate hike issue.

In agri commodities, ICE cotton futures dropped to their lowest since end-January on expectations of a robust harvest of the natural fiber. Impact was seen on Indian cotton too. Spices prices augmented on renewed buying. Oil seeds and edible oil counter performed mix on lack of cues. Oilseeds and refined soya oil prices moved up whereas CPO closed the week on weaker note despite some rebound in the international market.

About SMC
SMC Research, founded in 1990, is India’s leading share and stock broker, provides a wide range of financial services and investment solutions. A blend of extensive experience, diverse talent and client focus has made us the 4th largest broking house in India(Source: Dun and Bradstreet, 2008). Over the years, SMC has expanded its operations domestically as well as internationally. Existing network includes regional offices at Mumbai, Kolkata, Chennai, Cochin, Ahmedabad, Jaipur, Hyderabad, Bangalore plus a growing network of 2100+ offices spread across 425 cities/towns in India.

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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.

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