Precious metals are near unchanged this morning as the meltdown in emerging markets has paused ahead of the Federal Reserve meeting in the U.S. Gold, silver, and platinum saw light support in Asia after a late-day sell-off in New York. Gold had hit a 10-week high of $1,279 on Monday, but profit-taking and a technical correction ended the yellow metal’s longest rally in 16 months.
Wall St stocks were unable to eke out a gain yesterday, as new home sales were reported down 7% – the second decline in a row. Now that emerging markets seem to have stabilized, at least temporarily, and China has averted its first large default in its “shadow banking” sector, U.S. stocks are expected to open higher.
The dollar saw moderate gains in Europe overnight, but gave it all back this morning when durable goods orders for December fell 4.3%. Analysts had expected a gain of 1.8%. The greenback is still stronger against the euro and yen, as the yen drops from lower safe haven demand in Asia.
In Asia, the “Credit = Gold” high-yield investment vehicle that had made “shadow loans” to distressed Chinese coal companies was bailed out by “unidentified buyers,” that many presume is either ICBC, China’s largest bank, which marketed the trust to clients, or the central bank itself. Combined with more liquidity injected into the market by the central bank, this was enough to let Shanghai shares post a .26% gain. The Hang Seng is still near five-month lows, and the Nikkei hit a two-month low as parts suppliers for Apple’s iPhone and iPad products suffered. Apple stock is down on concerns over future growth.
Euro stock indices are up from one-month lows after Siemens posted a 15% increase in profits and Spanish banks seemed to be recovering from that nation’s financial crisis.
In emerging markets, India raised interest rates in an effort to defend the rupee, and Turkey is expected to follow suit today in an emergency meeting of their own. The “Credit Equals Gold” trust crisis has been resolved (some say because wealthy, influential people were caught up in it,) which has averted the spectre of cascading defaults in these high-yield investment products.
Everyone is now waiting for tomorrow afternoon’s close of the FOMC meeting, to see if the Fed will continue to reduce its massive bond buying program. While the consensus is that they will reduce those monthly purchases by another $10 billion, the Fed has surprised people before (remember the Septaper that wasn’t?)