Investors Wait On The FOMC

Asian markets saw early gains in today’s trading but reversed. They tracked heavy losses in global markets as investors are concerned over a potential reduction in monetary stimulus from the United States and how it will affect the world’s largest economy.

Investors are waiting for today’s release of the Federal Open Market Committee (FOMC) minutes from the last month’s meeting. They will be looking for signs and statements from Bernanke regarding when the Federal Reserve will start to taper back its massive stimulus program. Recent strong economic data from the U.S. could mean this move is imminent.

STOCKS

The Nikkei 225 lost 0.5 percent today as it reversed earlier gains. The benchmark has now hit its lowest level in almost two months at 13,305.14. The Kospi fell o.6 percent today and the Hang Seng in Hong Kong tumbled over 1 percent. The Shanghai Composite, on the Chinese Mainland, lost 0.3 percent to finish at 2,067. Australia’s S&P/ASX closed higher on the day up 0.34 percent to end at 5,095.80.

European markets also followed market sentiment and Fed fears as the closed lower for the day. The DAX led losers closing down nearly 67 points. The FTSE in London lost 12 points while the CAC was unchanged.

U.S. markets are now in the midst of a five day losing streak and the Dow is trading dangerously around the 15,000 level. The markets reversed session gains to close the day narrowly mixed. U.S. Bonds moved off two year highs as well.

The DJIA moved lower in the final minutes to close down 7.75 points to 15,002.99. A break below 15,000 could be bearish indeed. This is now a five day losing streak for the U.S. benchmark. The S&P 500 rose 6 points on the day to close at 1,652.35 and the NASDAQ was up 24 points to 3,613.59.

Best Buy (NYSE:BBY) surged nearly 14 percent after the consumer electronics giant easily topped Wall Street expectations with solid retail earnings.

CURRENCIES

EUR/USD (1.3423) the market is now above 1.3400. We look bullish while above 1.3378 for a test of 1.3490 and then 1.3500, please see the below chart. The GBP/USD (1.5665) is now testing a key resistance level at 1.5690. These two currencies are stronger after several days of indecision.

The USD/JPY (97.25) has moved lower. Which means the yen got stronger. Instead of a test of 98.40, we reversed lower. We are now testing 97.25 with a break lower targeting 97.00.

COMMODITIES

Copper (3.328) fell yesterday to test 3.00. We seem to be consolidating sideways between 3.2500 and 3.3490 before we see a move in either direction. Brent WTI (109.73) has been seeing tough resistance at 110.90 for several days. However, while above 108.00 we remain bullish and could still target 113.90.

Gold (1371.50) is trading near its 20 day moving average (DMA) A break higher can test 1429.50. Watch the Dollar Index as it moves lower. Should that index break below 80.80, then the yellow metal will strengthen as assets poor into the safe haven.

TODAY’S OUTLOOK

Everyone is watching what Bernanke and Company will say in the FOMC minute release due earlier today. We will be listening to any signs of stimulus reduction and other dovish remarks regard interest rates. Pay attention!

Economic data will include mortgage applications, existing homes sales and oil inventories, all forward leading indicators.