Hello and welcome to your short week. For some.
– It’s a huge week for markets with Friday’s US 4th of July celebrations shortening trade on US markets by a day and making Thursday night Australian time one of the biggest nights of the year.
– We’ll get to that later in the week but looking back on Friday night we see that after a topsy-turvy night’s trade in the US, the Dow dragged itself back into the black up 0.03% to 16,852, the Nasdaq was 0.43% higher and the S&P 500 was up 0.19% to 1,961. Datawise, the only release was the Uni of Michigan consumer sentiment which printed 82.5 against 82 expected – a solid result.
– Across the Atlantic there was finally a positive economic surprise in France with consumer spending up 1% in May. But Q1 GDP printed 0% growth taking the year-on-year rate to just 0.7%. In the UK GDP was a smidge lower at 3% year-on-year and 0.8% on the quarter. EU consumer confidence printed at a disappointing -7.5 while German CPI came in at 0.3% in June for a 1% tone.
– At the close, the FTSE was 0.34% higher with the London Stock Exchange announcing plans to buy US index group Frank Russell for $2.7 billion. The DAX was up 0.1% to 9,815 and the CAC fell 0.06%. In Milan, stocks fell 0.3% while in Madrid, Spanish shares fell 0.26%.
– The local market saw September SPI 200 futures rise 8 points to 5,421 after the physical market was lower on Friday. Iron ore was lower by $1.50 tonne Friday night which may slow the miners down a little today.
– In Asia, the big news is the break lower from the recent range of the USDJPY and the impact this has had on the Nikkei, which was off 1.39% at 15,095. Driving the move in USDJPY, and the Nikkei, was the solid retail trade data for May which leapt 4.6% while the National CPI accelerated to a year-on-year rate of 3.7% with ex-food and energy up a still solid year-on-year result of 2.2%. Shanghai stocks fell marginally to 0.08% and doubts are being raised again about the outlook for growth as BI US colleague Mamta Badkar wrote over the weekend. Today we get the release of Japanese vehicle and housing data.
– On Currency markets, the US dollar lost ground across the board as the yen crosses drove a number of markets. The euro has rallied up to 1.3647 while sterling is up at 1.7039 and the Aussie sits at 0.9422.
– On Commodity markets, Iron Ore dropped back $1.50 tonne to $95.75 for September 62% Fe swaps. Newcastle Coal rose 40 cents to $71.35. Nymex Crude sits at $105.75, Gold is largely unchanged but not through the big down trend yet at $1,315.40 while Silver is at $20.91 oz. Copper is at $3.15 lb while Corn was unchanged, Wheat rose 0.52% and Soybeans 0.35%.
On the data front, TD inflation is out for June this morning along with HIA home sales and private sector credit. German retail sales are out as is Italian PPI and UK lending data. A few days before the ECB meeting, EU CPI is critical for markets. In the Americas, Canadian GDP is out along with the Chicago PMI and pending home sales and Dallas Fed manufacturing.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
Iron ore and steel stock, Arrium might be one to watch for traders scouring the “beaten up” brigade in search of recovery opportunities.
From a technical point of view, last week’s break of the down trend line dating back to the April peak at $1.42 is a sign that some relief from recent relentless selling might be in sight.
On Friday, the market began to think about following the trend line break with a push through the 20 day moving average. A move above the low at .905 would be a more significant sign of strength. This would suggest that a retracement of the whole decline from $1.42 is in prospect.
Another alternative, might be some basing behaviour with price hanging around current levels for a while before ultimately making a break to the upside.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC