Precious metals are up modestly this morning as improvements in European trading continue in New York. We’re seeing some mild safe harbor action as reports from Egypt indicate that at least 42 people were killed when the army fired on a large Muslim Brotherhood demonstration at the army barracks where their leader, deposed president Mursi is being held. There is also some short covering amid a technical correction after Friday’s drubbing of gold and silver.
A wildcat strike by at least 5,600 miners in South Africa against leading platinum producer AmPlats has resulted in the the PGMs seeing gains.
U.S. stocks opened higher, while the dollar backed off a three-year high hit overnight as profit takers cashed in. The euro is up slightly after falling Friday, and the yen is still over the 101 mark to the dollar. Oil futures are slightly off $108, with the dollar strength being counteracted by fears the violence in Egypt could spread.
In Asia, Chinese stocks were down 2.4% on news the government is cutting off cheap credit to industries with overcapacity. The corporations, such as the steel industry, were using their good credit to take out loans, then re-lend the money at higher interest rates to smaller companies who could not get credit. Stamping out this rampant “shadow economy” has been behind PBoC’s recent moves to restrict money supply to what is needed for above-board activities, much to the chagrin and wailing of banks.
Hong Kong stocks were down 1.4% as real estate tumbled due to rising interest rates, and the Nikkei was down 1.4% in sympathy to Chinese market drops. The rupee hit another all-time low, as more restrictions on the sale of gold are piled on by the government. This one-two punch is suppressing gold demand in the world’s largest importer of the precious metal, but reports out of India indicate that smuggling is now out of control.
European stocks were up almost 2.3% as news that Greece had come to an agreement on extending repayment of bailout funds with the troika of the ECB, IMF and EC. Portugal averted a government collapse over austerity measures as well, as German bund yields dropped slightly. Gains were muted by news that German exports fell more than expected.
The big news for world markets will be Wednesday’s release of the minutes of last month’s Federal Reserve Open Market Committee meeting. Expect this information (or what people think they see in the information) to affect markets globally.