From Greg McKenna at GlobalFX and Lighthouse Securities, here’s a quick guide to what’s on the minds of Australian traders heading into the day:
– Data and Central banks were the key overnight with the combination of a nascent economic recovery in Europe, improving recovery in the US and a reaffirmation of low rates for the long term for the 3 big central banks (Fed, BoE and ECB) combining to push stocks and the US dollar higher across the bourses and board.
– So it was new highs for the US stock market. The Dow (+128 pts, 0.83% @15,628), Nasdaq (+50 pts, 1.37% @3,676) and the S&P 500 (+21 pts!, 1.26% @1,707) were all stronger and crucially closed around their highs of the day.
– Stocks in Europe also got a lift from US sentiment and their own improving data, closing on the highs of the day. In the UK and on the continent it was a sea of green with the FTSE (+0.92%), DAX (+1.63%), CAC (+1.26%), FTSE MIB (Milan, +2.04%) and IBEX 35 (Madird, +1.26%) all finishing strongly.
– In Australia the SPI200 is currently up 41 so it is going to be a good day – or at least a start to the day – and we’ll see what the actual budgetary announcement and bank deposit levy does to the market.
– Turning to Global FX markets and it was the night when “King Dollar” resumed the throne. Euro (1.3209) is down more than a big figure, as is Sterling (1.5117) while USDJPY (99.54) is up almost 2 big figures and may approach resistance at 100 today.
– Against this backdrop the Aussie did fairly well having already been hit hard against the USD the previous session so it gained on the crosses but still sits lower at 0.8927 this morning.
– Looking at the data if we ignore Portugal, the Markit PMI’s for Italy, Germany, UK, EU were all much better than expected although France missed by 0.1%. In the US, the ISM manufacturing index fairly surged printing 55.4 against expectations of 51.5 for the best result in two years but just like the GDP data yesterday prices paid were lower than expected (49 v 53.8) – so the US just might be having a mini-Goldilocks moment which has to be good for stocks. Also out in the US was the jobless claims which dropped back to 326,000 from 346,000 previous.
– Bonds didn’t like the strong data though which will worry the Fed, with US 10 year yields rising 13 bps to 2.71% for a loss on the day of almost 5% which, if it was stocks, would be hitting the headlines very hard. Bunds (1.67%) were unchanged while Italian and Spanish bond yields fell a little on improved sentiment. In the UK gilts rose 4 bps to 2.40%.
– On Commodity markets, Nymex crude ($107.75) surged on the better data even though the US dollar strengthened for an incredibly strong result. Copper ($3.15 lb.) rallied 1.46% but Gold has slipped back to $1310 oz. and our friends Corn, Wheat and Soybeans were all under pressure again falling 2.40%, 0.94% and 1.18% respectively.
And of course we have 24 hours of trade left and still yet a monstrous outturn with the release of the non-farm payrolls tonight. Before that though we have Australian and European PPI and we also see personal income and consumption data in the US as well as the ISM in New York.
Good hunting and good luck today.