Equities Took Rest While Commodities Shine

Last week saw emerging market Equities taking a breather after a steep rise from August month lows, while commodities like Gold and Crude Oil scaled new highs. It will be worthwhile that emerging market equities take some consolidation before they start upword march again, it seems stock markets want to see what the US federal reserve does on the interest rate front on October 30. This will be crucial factor in deciding ongoing sharp rally in emerging markets. Also with Japanese central bank deciding to hold rates at 0.5%, implying that deflation might re-surface in the absence of any solid economic growth on consistance basis, money from japanese investors will now look for growth which is happening outside their country, especially in India, China, Taiwan, HongKong, Russia. Having said that, emerging economies will be the key beneficiaries of this huge money flow.

Gold And Silver Have Corrected Sharply

Precious commodities like Gold and Silver have corrected over the past few days as investors took profits from these commodities after a descent run in them. Crude oil is also facing selling pressure at higher levels. Copper and Zinc prices too face possibility of profit booking from their recent hefty run. Agri commodities too look strong especially Wheat and Maize from long term point of view. Stocks in Hong Kong market took a much needed correction yesterday as well as today. Volatility in stocks among emerging markets especially in Hong Kong, India, Taiwan is rising due to extremely sharp rise in valuations in a very short span of time.

Gold And Crude Oil

After subprime mortgage mess happened in the US, gold is seing consistent buying and is ruling around all time highs of U.S.$736.
Crude oil is also creating new records with trading above U.S.$80 per barrel for the past few trading sessions. Both these commodities are expected to do well in the medium term as in case of gold, investors are seeing it as alternative investment avenue along with riskier stocks, and for crude oil, depleting oil stocks and continous demand from a growing world GDP and with winter approaching in the northern hemi-sphere crude oil will remain warm.

Falling Dollar Is Creating Asset Inflation

After US Fed had cut interest rates by 50 basis points, dollar has been falling steadly against major currencies. This will further lead to rise in other assets like commodities, stocks. Again for the past few trading sessions, gold, copper, zinc, lead, agri commodities and crude oil are rising and are at their all time highs. Stocks across the globe are rallying for the past few days. Dollar investors are pulling their money and pouring it into these assets. This is creating inflation in stocks, commodities and thus central bankers job is now much more difficult to manage inflation. This hightened levels of asset inflation does not agour well for growth and interest rates. Investors have a tough time managing their portfolio as volatility will rise along with hightened greed of market participants.

Gold Is Stable Amid This Stock Carnage

There is a old saying that in troubled times rely on Gold, well, that's seems to be the choice investors are choosing amid sell off's in stocks across the world. Gold is trading stable at U.S.$660 per ounce and so far escaped the carnage from stocks melt down. This precious commodity will continue to out-perform stocks in the short term as investors will consider it as a safe investment bet in these nervous and volatile times. As their is a serious erosion in the risk appetite of investors/traders, safer investment avenues like Gold and currency like Dollar will find favour. For the few weeks, stocks will bear the brunt of this yen carry trade un-winding currently under way. However, some very selective buying can be made in extremely resilient business fundamentals, but in very small quantities.It's however an individual choice and decision.