IRCo's WEEKLY MARKET SNAPSHOT: 20 - 24 December 2010

IRCo's DCP rose consecutively during the week and stayed at 491.11 US cents/kg on Friday. Both rubber futures and physical markets also moved in the same direction due mainly to the extension of firm market fundamentals, high crude oil futures, and positive sentiment about continued growth of the global economy next year. The National Development and Reform Commission of China said on Friday that it would order price surveillance authorities to keep prices of agricultural products stable over the coming year. This announcement should make Chinese rubber manufacturers more comfortable with the coming year of the Rabbit.

Asian stock markets still stayed on an upward trend on Friday on the back of strongly economic growth and continued inflows of cheap money from the West, while European stock markets still showed uncertainty in the wake of tough austerity measures of many European countries on Thursday ahead of the Christmas holiday. On the contrary, the Dow Jones Industrial Average rose to a fresh two-year closing high on Thursday as U.S. consumers were more optimistic about the U.S. economy for the coming year that partially pulled up crude oil futures on Nymex to hit fresh two-year highs at US$91.51 per barrel on Thursday.

The People's Bank of China (PBOC) unexpectedly raised the one-year lending and deposit rates by 25 basis points each on Saturday, Christmas day, to curb borrowing, rein in property prices, and tame inflation. The move took the rates to 5.81% and to 2.75% respectively from Sunday. The PBOC repeated that a variety of tools will be used, including interest rate hikes and tighter lending restrictions, over the next 12 months to curb inflation and to prevent an asset price bubble. Currently faster growth in emerging and developing economies than advanced economies is slowly leading their currencies to strengthen further next year.

(Source: http://www.irco.biz/MarketWise.php)