The Yen Weakens, Asian Markets Go Up

Asian markets rose today led by the Nikkei 25 as it surged ahead 1.5 percent on a weaker yen and new corporate tax cuts.

The Yen weakened in overnight trading to trade around $97. This helped the Nikkei move off from its previous close which was a 6 week low. The yen has weakened 3 percent since hitting a high of $99.90 earlier this month. Also boosting sentiment in Asian markets today was the news of a new round of corporate tax cuts in Japan. Apparently, Abe has called for a study regarding lowering the corporate tax rate to attract more foreign capital in order to boost growth. This will, they hope, offset the impact of the impending sales tax hike due in April.

STOCKS
The Japanese benchmark, the Nikkei 25, surged 1.5 percent to close at a three day high. The Australian S&P/ASX has now hit a three month high and the Kospi, in South Korea, has set a one week high. The Chinese benchmark, the Shanghai Composite, did see its highest level at 2,105 (June 20 High) but fell back to close at 2100.78.

Investors are finding little reason to buy U.S. equities. The American markets saw a tepid beginning this week, following their worst week since June. The Dow jones lost 5.83 points to close at 15,419.68. The NASDAQ, bucked the trend, closing up 9.84 points and the S&P 500 lost 1.95 point to close at 1,689.47.

Blackberry, LTD (NASDAQ: BBRY) soared over 10 percent after announcing the formation of a special committee to explore new strategic alternatives to help turn around the failing smart phone maker. This includes going private. We have seen the company’s shares fall 20 percent this year as its market value has tumbled from $84 billion, in 2008, to its current $4.8 billion.

CURRENCIES
The AUD/USD (0.9123) fell off sharply yesterday after rising on Friday. The market has been rather erratic making it hard to gauge. We could be stuck in a sideways range from 0.9050 (key support) to 0.9250 until investors figure out which direction and whether or not to buy or sell. Please see the Chart below.

The EUR/USD (1.3311) has moved lower overnight. We see key support at 1.3268 with a break below that testing a key support at 1.3250. We expect upcoming data being released today on the EU Industrial production and tomorrow’s GDP to help support the Euro. If those numbers miss, then we will be looking bearish.

COMMODTIES
Copper (3.305) is now consolidating a bit after rising strongly last week. We are short term bullish right now and could test 3.35 this week. Should we break above that we can then test the resistance at 3.39. This would be very good news for exporter nations like Australia.

Gold (1334.40) has been bullish as we have seen increased demand out of China. We see a key level at 1350.00/ounce which needs to be broken to sustain this up move and test 1375.00.

TODAY’S OUTLOOK
Investors will be watching as the EU releases its Industrial production numbers today. This is a big week or European data as a number of countries including Germany, England and the EU all release numbers.

The United States will release retail sales numbers today as well as business inventories. We will also hear a statement from the Fed’s Lockhart, pay attention to comments regarding when they will start tapering back their bond buying program.