Europe Appeals to China for Help

Euphoria has to be the most appropriate word to describe what occurred on the markets yesterday. The Euro and pound rose to highs not seen in weeks and stock markets rallied.
By: RoyalMaxBrokers Analytical Department
 
Oct. 28, 2011 - PRLog -- Euphoria has to be the most appropriate word to describe what occurred on the markets yesterday. The Euro and pound rose to highs not seen in weeks and stock markets rallied. This was all thanks to positive results from the EU leaders’ summit in Brussels, which was overlapped by positive data on US GDP growth in the third quarter that coincided with the predicted 2.5% q/q growth. All of this led to an appetite for risk among investors which the markets haven’t seen for a long time.

Even more amazing was the French stock market index CAC 40 6.3% rise! As a result, the Euro reached 1.4247 on the EUR/USD pair near the end of the American trading session, while the pound reached 1.6141 on the GBP/USD pair.

Strong GDP data nevertheless did not help the dollar to rise against the Japanese yen, which broke record highs twice yesterday, the highest being 75.65 yen per dollar.

RoyalMaxBrokers analysts noted that one of the more interesting results of the European debt crisis was the strengthening cooperation between Europe and China, the latter being in a position to provide the struggling region with the necessary assistance. Chinese Premier Wen Jiabao signaled earlier that China is ready to help the EU, whose financial troubles are threatening demand for Chinese exports, as Europe is the largest market for sales of Chinese goods. French President Nicholas Sarkozy is planning to speak to PRC President Hu Jintao by telephone today to discuss China’s participation in helping to resolve the Euro zone debt crisis.

One of the most notable corporate reports published yesterday was from automobile giant Volkswagen AG, which pleased investors with profit greatly exceeding the average forecast (41.2 Euros per share versus 6.3).

Today, the second-largest integrated energy company in the US after Exxon Mobil and one of the biggest corporations in the world will report its third quarter earnings to investors.

The Chinese Internet company Baidu Inc released its third quarter report today at 12:30AM (Moscow Time). Profit per share was at 5.380 yuan, which exceeded the average forecast of 5.277 by 2%.

RoyalMaxBrokers economists say that the most important event in the world of macroeconomic statistics today will be the publication of the personal spending index in the US and the University of Michigan’s consumer confidence index.

In trading on the COMEX, the most actively traded gold futures for December delivery went up $24.20, or 1.4%, to $1747.70/oz, the highest level since the close of trading on September 21.

Gold price quotes rose thanks to Wednesday’s EU summit, at which it was decided to expand the EFSF to 1 trillion Euros and to set aside about 106 billion Euros to recapitalize European banks. All of these measures will ultimately lead to increased inflation which will trigger additional demand for gold. Also, the American dollar, which fell sharply against the Euro during the day, encouraged growth of the asset’s dollar price.

The most actively traded silver futures for December delivery went up $1.802, or 5.4%, to $35.112/oz – the highest level since the close of trading on September 22.

In trading on the NYMEX, quotes on light sweet crude oil futures for December delivery rose $3.76, or 4.2%, to $93.96 per barrel. Brent oil futures on the ICE rose $2.91, or 2.9%, to $112.08 per barrel, the highest since October 14.

Oil price quotes reflected the positivity from Wednesday’s EU summit. Another positive event that supported oil price quotes was the publication of US GDP data for the third quarter (preliminary assessment), which coincided with the average prediction of 2.5% q/q, thus showing the US economy’s highest growth rate of the year.

The accelerated growth of the world’s leading economies is leading to increased demand on energy resources that are widely used in various sectors of the economy.
End
Source:RoyalMaxBrokers Analytical Department
Email:***@royalmaxbrokers.com
Zip:123317
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