Shanghai jumps on policy support

The Shanghai composite index jumped with 1,2 percent this morning as the governor of the Chinese central bank stressed the need for monetary flexibility, sustained growth and financial reform. The statement was seen as Chinese political willingness to take necessary steps to encourage the economy which according to the last global economic analysis from the International Monetary Fund (IMF), will grew 7,8 % in 2012. IMF has lowered its forecast for global economic growth from 3,5% in July to 3,3 percent. IMF is painting a grim picture especially of the development in the euro zone where economic growth forecasts are lowered from 0,5 to 0, 3 %.
Other Asian exchanges were also up in Asian trading except for the Japanese Nikkei which falls 0,3 %. MSCI for the south east Asian Pacific is up 0,6 and Australia with 0,5 percent helped by higher copper and precious metal prices. Oil prices are also up. Brent crude is at 112,67. Futures for the stock exchanges in Europe and the US are pointing to a positive start after concern over China and weaker third quarter profit earnings for US-companies, spoiled the party both in Europe and US yesterday. Dow Jones was down 0,19 percent while the technology stock index, Nasdaq, fell with 0,69 percent.
EURO/USD has been trading far below its Friday peak on 1.3172. The Euro fall below 1.29, but has recovered slightly at 1.2987 in early morning trade. The EU Finance Ministers met in Luxembourg and have agreed on an emergency fund on 472 billion Euros to eventually pump into banks and sovereign states. The ministers seem also to have agreed on a single supervision for euro zone bank which will strengthen cohesion and the mutual currency. Spain has not yet decided on whether to ask for a sovereign bail-out. German chancellor Angela Merkel is visiting Athens today in an effort to boost the three party coalition governments which has come under increased pressure following new scandals and accusations of cover up of a list of Greek politicians and business people seeking to avoid taxes by stuffing funds in Swiss banking accounts.
The USD/JPY has recovered from yesterday’s low trading at 78,40. The Australian dollar which reached a three week low yesterday, has gained 0,5 % in relation to dollar on the statement from the Chinese central bank governor. Precious metals are on rise. Gold which fell to 1771 yesterday is trading eight dollars up at 1779. Silver is recovering from the low of 33,75 and trades at 34,20. In Europe the Swiss franc is under pressure.
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Currencies mixed after jobless data

The United States unemployment rate dropped to 7,8 percent, a near four-year low, down from 8,1 percent, on Friday giving markets a welcome boost at the end of last week. There are different interpretations of the better unemployment figures, but the overall picture is that America’s labor market appears to be in better shape than originally thought, if only slightly. The chief economist of one of the world’s biggest banks stated that “The labor market situation in US is slowly improving”.

The most encouraging aspect of the data is the large and unexpected decline in the jobless rate which gives President Barack Obama some reason for joy after a disappointing first debate with this Republican opponent, Mitt Romney, last Wednesday. The fall in unemployment occurred due to the numbers of employed Americans soared by 873 000 while the number of unemployed fell by 456 000. A worrying signal though is the jump in part-time workers suggesting that many Americans are not finding the well paying full time positions they would like to see.

The dollar index fell 0,2 percent as the euro gained 0,3 percent to USD 1.3049. The euro is falling back in Asian trade during the morning hours and is at 1.2987 against the USD. There are nervousness regarding the meeting with EU finance ministers in Brussels today and Angela Merkel’s surprise visit to Greece tomorrow where an apparent cover up of a memory stick with a list of nearly 2 000 Greeks with Swiss bank accounts threatens to become a political firestorm with demonstrations against the Samaras-government.

The dollar, however, surged against the Japanese yen, gaining 0,5 % after the release of the better unemployment figures. The Yen also fell against the EURO. USD/JPY has recovered slightly in morning trade and stand at 78,54. Both crude oil and precious metals fell on the unemployment news. Brent crude is trading at USD 11,40 a barrel and gold is at 1772. The Asian stock exchanges are all trading down before the Brussels finance ministers meeting. Shanghai composite index fell 0,9 % after being closed one week for holidays.

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Statements of European Central Bank and data on unemployment support markets

On Thursday, October 4, key indexes of the USA finished the trading session in the positive territory due to Mario Dragi's statements, and also the publication of data from a labor market, which have surpassed expectations of analysts.
Yesterday the head of European Central Bank confirmed the readiness to activate, in case of need, the Outright Monetary Transaction (OMT) program if certain conditions will be performed and declared that taken before measures helped to facilitate intensity in the markets in recent weeks.
Following the results of the trading session the indicator of "blue chips" the index of Dow Jones Industrial Average raised for 0,598 % to value 13575,36 points, the index of the wide market S&P 500 left in plus for 0,717 % to level 1461,40 points, and the index of the hi-tech companies Nasdaq raised for 0,454 %, having closed on a level of 3149,46 points.
The market of oil should be noted separately, now future contracts are corrected down, loss makes 0,5% and 0,3% on Brent and WTI. Yesterday there was a sharp splash on top, oil returned to those levels which we saw at the beginning of the current week. Uncertainty again appeared in the Middle East, connected with the conflict between Turkey and Syria. Military operations shortly are possible, respectively the geopolitical factor comes back to the market, but today's morning correction is absolutely natural to that growth which was yesterday.
The price for futures for gold with delivery in December today following the results of the session on COMEX rose for 16.70 dollars or 0.9 % to value of 1796.50 dollars for ounce. Gold added in the price owing to weakening of dollar towards all competing reserve currencies.
In the currency market first of all we note actions of European Central Bank, well more exactly it is Mario Dragi's statement and respectively favorable macroeconomic statistics in America - this allowed Euro to become stronger, it left at a boundary 1,3020-1,3025, now besides small correction at level 1,3014.
The main event of today is certainly data on the American unemployment.

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