The energy complex closed broadly lower Thursday, inline with decline in stock markets, as led by 9% drop in natural gas price. A series of economic indicators released dented market confidence about economic recovery. WTI crude oil lost -1.6% to settle at 61.05 while Brent crude slid -1.1% to close at 59.93. Gasoline and heating oil ended with -0.5% and -0.8% decline, respectively.
Sovereign credit concerns haunted the market once again after the BOE announced to extend the asset purchase program to 125B pound in early May while the Fed suggested further easing measures would be adopted. The S&P yesterday downgraded the UK's economic outlook to negative from stable amid deterioration of government finance and commented that the nation may lose its AAA rating while some analysts on the street anticipate the US will also eventually lose its top credit rating.
The situation was aggravated by the US data in which the Philly Fed survey came in at -22.6 in Mac, worse than consensus of -18, from -24.4 a month ago. Initial jobless claims increased to 631K for the week ended May 16 from a revised 643K the prior week. Despite a decline, it came in higher than market expectation and suggested the turnaround may not arrive as soon and as strong as originally estimated. The good news supporting the market was the better-than-expected reading of leading indicators which rose 1% in April, the biggest gain since November 2005.
The US equity market plunged yesterday with 1.5% and 1.7% decline in the Dow Jones Industrial Average and the S&P 500 Index respectively. In Asia, stock performance is mixed. Japan's Nikkei 225 Stock Average opened 100 points lower to 9156 as strength in Japanese yen generated concerns in the nation's export economy. However, the index recovers as the BOJ will upgrade the economic outlook for the first time in 3 years. In Hong Kong the Hang Seng Index slipped 0.7% while shares in South Korea and Taiwan climbed modestly.
Natural gas tumbled 9% to close at 3.6 after the US Energy Department said that gas storage rose 103 bcf, compared with market expectation of 95 bcf gain, last week. Supplies were 225 higher than 5-year average.
Despite a temporary setback in risk appetite, USD failed to reverse its losing ground as the concerns this time is about government finance due to excessive money printing. The dollar index fell for the 4th consecutive days to close as at 80.5 Thursday and further decline today is likely. Against the euro, USD drops to 4-month low and this helps support gold's rally.
Gold surged 1.5% to settle at 951.2 yesterday as weakness in the dollar and growing expectation of inflation spurred demand. The 10-year TIPS breakeven rate, a gauge to measure inflation expectation, surged to as high as 174.94 bps yesterday, up +15% from the previous week and the highest since September 15, 2008.
Sovereign credit concerns haunted the market once again after the BOE announced to extend the asset purchase program to 125B pound in early May while the Fed suggested further easing measures would be adopted. The S&P yesterday downgraded the UK's economic outlook to negative from stable amid deterioration of government finance and commented that the nation may lose its AAA rating while some analysts on the street anticipate the US will also eventually lose its top credit rating.
The situation was aggravated by the US data in which the Philly Fed survey came in at -22.6 in Mac, worse than consensus of -18, from -24.4 a month ago. Initial jobless claims increased to 631K for the week ended May 16 from a revised 643K the prior week. Despite a decline, it came in higher than market expectation and suggested the turnaround may not arrive as soon and as strong as originally estimated. The good news supporting the market was the better-than-expected reading of leading indicators which rose 1% in April, the biggest gain since November 2005.
The US equity market plunged yesterday with 1.5% and 1.7% decline in the Dow Jones Industrial Average and the S&P 500 Index respectively. In Asia, stock performance is mixed. Japan's Nikkei 225 Stock Average opened 100 points lower to 9156 as strength in Japanese yen generated concerns in the nation's export economy. However, the index recovers as the BOJ will upgrade the economic outlook for the first time in 3 years. In Hong Kong the Hang Seng Index slipped 0.7% while shares in South Korea and Taiwan climbed modestly.
Natural gas tumbled 9% to close at 3.6 after the US Energy Department said that gas storage rose 103 bcf, compared with market expectation of 95 bcf gain, last week. Supplies were 225 higher than 5-year average.
Despite a temporary setback in risk appetite, USD failed to reverse its losing ground as the concerns this time is about government finance due to excessive money printing. The dollar index fell for the 4th consecutive days to close as at 80.5 Thursday and further decline today is likely. Against the euro, USD drops to 4-month low and this helps support gold's rally.
Gold surged 1.5% to settle at 951.2 yesterday as weakness in the dollar and growing expectation of inflation spurred demand. The 10-year TIPS breakeven rate, a gauge to measure inflation expectation, surged to as high as 174.94 bps yesterday, up +15% from the previous week and the highest since September 15, 2008.
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