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Analysis details (11:46)
- Overnight Platinum prices were already under pressure as it was reported during Asian hours that workers at Anglo American Platinum had returned to work.
- In addition to this spot gold broke firmly below the USD 1600 level and tripped stops at last Friday's low at USD 1598. Technically, the 50DMA in gold has also moved below the 200DMA "death cross". In terms of volumes both silver and platinum are trading double their average volume.
- Most recently as precious metals in particular have come under heavy selling pressure unconfirmed talk has swirled that a commodity fund may be in trouble and is liquidating positions. However, this remains purely speculative at this stage.
- WTI crude has also not escaped the aggressive moves lower in commodities with the expiration of the March futures contract also adding fuel to the volatility. The April WTI contract breaking the USD 96.00 level looked to have been a catalyst for the leg lower with analysts noting that the market is positioned overtly long given nine consecutive weeks of long accumulation.
- In terms of the S&P break down the basic materials sector has been the under-performer since the open reflecting the weakness in metals. In addition, news that Foxxconn had frozen recruitment at its factories in China as it slows production of its Apple iPhone 5 weighed on the tech giant with sentiment also dampened by disappointing Caterpillar sales.
- One thing to keep in mind is that yesterday the S&P 500 and Dow Jones Industrial Average both closed at a 5yr high yesterday with the Nasdaq 100 up at 12mth highs so a pull back from these multi-year high levels is not entirely surprising.
- Looking forward the market now awaits the FOMC minutes where some are looking for potential shift in the Fed's policy outlook. Both Pianalto and Bullard have been looking uneasy about continuing QE and the issues that unwinding a multi-trillion USD balance sheet will bring. Minutes due for release at 1900GMT/1300CST.
- Rate lock unwinds have also been noted in the latest Treasury flow with the 10yr trading up +5 ticks at 131.16 (1634GMT).
20 Feb 2013 - 11:15 - Equities Bank Speaker - Source: RANsquawk