Profit taking follows rallies

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Oil prices dropped sharply yesterday as Asian shares fall back from a four week-high last this morning.  Also the US stock markets, gold, copper and other commodities retreated from last week’s high. As markets digested the growth impact from the Federal Reserve’s aggressive stimulus. Eyes were again on the debt crisis in Europe. The big question is whether Spain will request a bailout to ease its fiscal strains.  Concerns about growth slowdown in China also weighed in on investors sentiment as investors took profit from last week’s rallies.

Brent crude fell more than 5 dollar a barrel in late trade in US on Monday. The high volume selling seemed to stem from an automated computer trading program. The oil prices recovered this morning and are at present trading at 114. Euro/USD is continuing down from its peak on 1.3169 on Friday and consolidating around 1.31.  USD/JPY is at 78,50. The MSCI-index for South East Asia outside Japan retreated 0,4 percent after five winning days in row. In the United States Apple again saved the day posting orders for USD 700 million for its iPhone 5 models. Also European stocks slipped from a 14 months high on Monday mainly on profit taking.  Gold has fallen close to 20 dollar an ounce trading at 1759.

The Japanese Nikkei bucked the trend in the stock markets this morning up 0,2 % helped by a weaker yen. This offset concerns over Japanese firms having large exposure to China where anti-Japanese sentiments have been running wild on escalating tensions over territorial disputes between Asia’s two biggest economies. There are increasing fears that the conflict between the Asian giants might run out of control and lead to a bigger confrontation.

In Asia there are furthermore strong rumors that Japan will follow FED and undertake its own stimulus measures to stem the Yen’s appreciation after FED’s move. The Bank of Japan ends its two day meeting tomorrow.  FED’s move undermined the dollar and lifted the Yen to a seven month high to 77.13 last Thursday. The development of the Yen in relation to both Euro, USD and other currencies is to be closely followed during the next days.

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