Crude oil rebounds for a second day as the market awaits the Fed’s annual symposium in Jackson Hole. The Fed Chairman Ben Bernanke is expected to unveil more about his policy outlook. As the broad market sentiment remains fragile after downside surprises from recent economic data, the bounce should be temporary. There’re chances that WTI crude oil prices will fall below 70.

Base metals gained with copper rising from a 1-week low for the first time in 3 days. The International Copper Study Group said the apparent refined copper market recorded production deficit of 190 000 metric tons (a seasonally adjusted surplus of 46,000 metric tons) in the first month of the year. This compares with a production surplus of around 8 000 metric tons (a seasonally adjusted surplus of about 223 000 metric tons) for the same period in 2009. There was a deficit as consumption outpaced production. Meanwhile, a report from the International Zinc and Lead Study Group shows that refined lead and zinc recorded surpluses of 50 000 metric tons and 176 000 metric tons, respectively in the first half of 2010. These readings indicate divergent supply/demand balances within the base metal complex. While the copper market may tighten further, other markets such as lead, zinc and aluminum may witness further increases in stockpiles.

In Asia, stocks climbed modestly. The MSCI Asia Pacific index added+0.5% with Japan’s Nikkei 225 Stock Average gaining +0.7% and Australia’s S&P/ASX 200 Index rising +0.8%. USDJPY remained steady at around 85 after yesterday’s surge from a 15-year low of 83.62. There have been speculations about government intervention on appreciation of Japanese. Yet, we believe policymakers are still fond of using verbiage tactics to monitor market reactions. Japanese Finance Minister Yoshihiko Noda said the government has to ‘take appropriate action when necessary’. This is probably the ‘strongest’ language Noda used recently. In fact, no concrete action has been announced from either the BOJ or the Ministry of Finance so far. The market anticipates any easing measures will only take place after BOJ Chairman Masaaki Shirakawa returned from the Fed’s annual symposium.

European bourses open higher with UK’s FTSE 100 Index climbing +0.7% after CBI’s reported sales improved to 35 in August from 33 in July. The market had anticipated a dip to 29. Germany’s DAX and France’s CAC 40 Indices adding around +0.5%.