By Muhammad Fadzil Abd. Rahman & Wuttipun Supina
A. THE MOVEMENTS OF GLOBAL STOCKS, CURRENCIES AND ENERGY
i. Global Stock Market
The Dow Jones moved up and down during the week before closing at 16,302.77 on Friday which was higher than 16,247.22 on the first trading day of the week (Monday, 17 March). The movements were influenced by the decision of Fed to further reduce US$10 billion of its QE3 i.e. from US$65 billion to US$55 billion a month, effective April 2014. This was in line with market expectations. However, there were concerns on possibility of Fed increasing its benchmark interest rates earlier than expected.
Whereas, the European STOXX600 rose throughout the week and closed at 327.91 on Friday. This was contributed by the reports that even though Russian President Vladimir Putin had signed a treaty on Tuesday annexing Crimea to be part of Russia, but his statement on having no plan to seize other region of Ukraine eased market concerns on further escalation of the tension between Russia and Ukraine. This issue is likely to continue influencing the European stock market in the coming weeks.
The Japanese stocks closed higher on Tuesday and Wednesday contributed by the weakening of yen before closing lower on Thursday after the announcement of the Fed’s decision. The Japanese Nikkei was closed on Friday (public holiday in Japan).
China’s Shanghai Composite Index started higher on the first two trading days before falling on Wednesday and Thursday due to the news on default loan payment amounting to US$400 million by one property developer in Shanghai. Nevertheless, the Composite Index rose sharply on Friday after the statement by the Chinese Premier on plans to accelerate investment and construction as an effort to encourage domestic demand towards achieving a stable rate of growth.
ii. Currencies : Foreign Exchange
The dollar appreciated against major currencies including the currencies of ITRC member countries (Thailand, Indonesia and Malaysia), influenced mainly by the decision of Fed to further taper its QE3.
iii. Energy : Crude Oil Prices
The Crude Oil futures on Nymex were volatile throughout the week before settling higher at US$99.46 per barrel on Friday supported by concerns on possibility of supply disruption resulting from the crisis in Ukraine.
B. RUBBER MARKETS
Natural rubber (NR) is still in its wintering season particularly in major NR producing countries in South East Asia. Although the NR supply is low during wintering, but NR prices moved in a downward trend throughout the week.
IRCo’s DCP fell from 207.24 US cents/kg on Monday to 204.14 US cents/kg on Friday. The main negative factors influencing the DCP were :
· Continuous rising of NR stocks in Qingdao, China and Japan
· The decision by FED to further taper its QE3
· The appreciation of US$ as compared to other major currencies including Thai Baht, Indonesian Rupiah and Malaysian Ringgit
The physical and futures prices in details are shown in the table below :-
|
Description |
21-Mar-14 |
14-Mar-14 |
Change |
Unit |
|
IRCo’s DCP |
204.14 |
210.10 |
-5.96 |
US cents/kg |
|
TOCOM/RSS3 * |
|
|
|
|
|
– Mar 14 |
245.00 |
245.80 |
-0.80 |
Yen/kg |
|
– Aug 14 |
234.70 |
240.20 |
-5.50 |
Yen/kg |
|
– Volume |
6,183.00 |
13,846.00 |
-7,663.00 |
Lots |
|
SHFE/RSS3 ** |
15,035.00 |
15,610.00 |
-575.00 |
Yuan/ton |
|
AFET/RSS3 |
|
|
|
|
|
– Apr 14 |
74.00 |
75.00 |
-1.00 |
THB/kg |
|
– Oct 14 |
73.70 |
75.55 |
-1.85 |
THB/kg |
|
– Volume |
54.00 |
320.00 |
-266.00 |
Lots |
|
SMR20 *** |
192.15 |
206.00 |
-13.85 |
US cents/kg |
|
SIR20 *** |
203.00 |
202.00 |
1.00 |
US cents/kg |
|
RRIT |
|
|
|
|
|
– RSS3 |
74.20 |
74.80 |
-0.60 |
THB/kg |
|
– STR20 |
63.25 |
63.80 |
-0.55 |
THB/kg |
|
– USS3 |
67.58 |
67.20 |
0.38 |
THB/kg |
|
– Conc. Latex |
49.55 |
49.85 |
-0.30 |
THB/kg |
|
– Field Latex |
67.00 |
66.00 |
1.00 |
THB/kg |
|
Notes: * the day sessions ** the most active month is Sep 14 *** offers, fob prices for Mar/Apr 14 deliveries **** Figures on 20 Mar 14 as 21 Mar 14 was a public holiday |
||||
Even though IRCo’s DCP hovered above 200 US cents/kg but the analysis in IRCo’s technical MACD and Signal Line indicated that the current NR prices is still in a downward trend.
The severe wintering and prolonged dry season due to El Nino in the producing region could provide some support on NR prices as its supply will be disrupted in the coming weeks.
Source: IRCo
