Monday, 02 April 2012: China reported positive news on their industrial production over the past weekend, which should give some positive support for global markets and commodities. The current Crude oil price of $105 is about $30 more than its 5 year futures, which indicates that crude oil prices can come down if favorable political events take place to reduce middle-east geo-political tensions, but the chances of such positive events is slim, so we will have to work with constant upward movement in crude oil prices till some event creates genuine risk to crude oil prices.
As of now, a significant amount of risk capital has moved into crude oil, because global economic growth scenario looks more likely than global recession. Meanwhile, Natural Gas prices have been hitting 8 year lows, and huge price variations from $2 per mmbtu in USA to $8 per mmbtu in India/Asia because it is not mobile like crude oil. Continue reading Crude Oil Prices and Global Economic Recovery→
China’s central bank said over the weekend it will lower the reserve requirement ratio (RRR) that banks must hold as reserves to 20.5 percent from 21 percent, effective Friday. This 50 basis points (bp) reduction will free up tens of billions of dollars for loans at a time when the growth rate is expected to drop from last quarter’s 8.9 percent to closer to 8 percent. This is the second rate cut in two months.
Chinese real construction companies, and global commodity stocks, especially base metals like copper and aluminium, should benefit from this move. Investors hoping for more lending in the real estate sector pushed up Chinese property shares and banks. Hong Kong-listed China Resources Land Ltd. rose 1 percent and China Overseas Land & Investment Ltd. added 1.3 percent. China Construction Bank Corp. added 1.1 percent.
World stock markets were also positive on hope that Greece will clinch the aid to avoid bankruptcy. Whether Greece can actually implement and deliver an auterity plan is not a consideration for now! Continue reading China reduces Reserve Requirement Ratio by 50bp→
History: The Dow Jones Industrial Average (DJIA) is the world’s most well-known stock market index, and it represents the global equity market mood and global economic conditions. It started on May 26, 1896 comprising 12 stocks. The Dow Jones Industrial Average was created by Dow Jones & Company co-founder and Wall Street Journal editor Charles Dow. The index was created to measure the performance of the industrial sector of the American stock market. Dow first created the Dow Jones Transportation Average & then after created the Dow Jones Industrial Average. The Dow Jones Industrial Average consists of 30 stocks. The price-weighted average of the 30 stocks determines the index value.
The index is currently a scaled average & not the actual average of the prices of its component stocks. To compensate for the effects of stock splits and other adjustments,—the sum of the component prices is divided by a divisor, which changes whenever one of the component stocks has a stock split or stock dividend, to generate the value of the index. Since the divisor is currently less than one, the value of the index is higher than the sum of the component prices. Continue reading Dow Jones Industrial Average (DJIA)→