SHANGHAI, Jul. 23 (SMM) –
1. Quarterly reports from IBM and eBay were better than forecasts, boosting US stocks. 19% of the S&P 500 constituent stocks have now released their quarter reports, with 65% of companies reporting better than expected results.
2． US economic data was disappointing. The number of jobless claims from two weeks ago was 386,000, higher than the expected 364,000. New home sales during June fell 5.4%, more than the expected 1.5%, and hitting a new 8-month low of 4.37 million. The Philadelphia Federal Reserve's manufacturing index was -12.9, worse than the forecasted -8.0. The Conference Board's monthly rate of leading indicators was -0.3%, also worse than the -0.1% forecast. Continuous poor economic results will raise QE3 expectations.
3. China's central bank injected RMB 80 billion into the economy through 7-day bond reverse repurchasing last Thursday, a signal that government is loosening monetary policies. Premier Wen Jiabao expressed recently China will take measures to increase employment, so additional easing policies are expected sometime in the next two weeks.
4. LME nickel prices remain firm and will find strong support at USD 16,000/mt. The US dollar index will not likely rise further, so declines in LME nickel prices should be limited.
Results from Spain's government bond auction last Thursday were disappointing, with 2-year government bonds yields rising to 5.204% and 7-year government bonds yields rising from 4.8% in February to the current 6.7%. Yields for Spain's 10-year government bonds yields in secondary markets broke through 7.0%, so euro and base metals prices should fall as a result.
In general, news is mainly positive, but given the ongoing European debt crisis, gains by LME nickel prices will be limited. LME nickel prices should fluctuate or inch up slightly.
Spot markets will remain sluggish through next week.