Asian Markets Track Higher

Asian markets started the week on a strong note as they followed the U.S. markets higher and in particular the record setting high set by the S&P 500. Investors seem to be taking cheer on the bet the Federal Reserve will not taper its asset purchase program till sometime in 2014.

We should note that this week will see a whole slew of U.S. economic data that was delayed by the recent government budget shutdown. On Tuesday investors will see the non-farms payroll (NFP). Data such as mortgages comes today. Because of the shutdown, it is highly unlikely the Fed will implement any reduction in its bond buying program this year.

U.S. markets were higher mainly on better than expected corporate earnings. The S&P 500 has hit a new weekly high and all three of the major U.S. Indexes were higher for the week.

STOCKS
The Nikkei 225 was up thanks to a weaker yen as the index rose above 14,640 points. The market is now at its highest level since September 27, 2013. The USD/JPY is around $98 as it continues off move off its one week low 97.56 set last Friday.

The Shanghai composite jumped 1.1 percent and has hit a three day high after stronger than expected GDP data. We will be waiting for Thursday’s release of the HSBC flash PMI. September came in at 50.2 and well below the expected 51.2 level.

The Australian S&P/ASX is above 5,300 and at its highest level since 2008. The Kospi did not follow the winning trend closing down about 0.11 percent for the day.

The DJIA was up 28 points to close at 15,399.65. We are just below the key 15,500 level which we need to break to bring back the bulls. The S&P 500 rose 11.35 points to end at 1,744.50. Suring the day we did see an intraday record high at 1,745.32. The Nasdaq Composite was up 51 points to close at 3,914.28. This is a new 13 year high for the tech heavy index. The small cap Russell 2000 has also hit a record high.

CURRENCIES
The USD/JPY (97.968) has fallen but we seem to be caught in a sideways trading pattern from 96.840 to 100.60. See the below chart.

The EUR/USD (1.3672) has fallen, as we expected, from 1.3700. We are testing the level near 1.3687 right now. We could fall to 1.3600 and if that breaks 1.3595 before another rise. The GBP/USD (1.6156) has fallen as 1.6205 is holding. We see a possible head and shoulders formation (bearish) forming. A break below 1.6139 confirms this.

COMMODITIES

Copper (1.2917) is moving sideways as it can dip to 3.25 while below 1.300. We could recover from there. We will wait and see. Gold (1318.22) is moving higher. We have resistance at 1325. A break above that targets 1360.

WTI CRUDE (100.87) is bearish as we are now targeting 99.00. A break below that can target 98.50 then 98.00.

TODAY’S OUTLOOK

This will be an event driven week as a bunch of delayed data will hit us. Today we get existing home sales and Fed President Evans will give some remarks.