Welcome to your working week. Here’s a morning market update to get things started:
– An ugly end to the week on stock markets with the US firmly in the black as Thursday’s positivity washed out of the market. The Dow and S&P finished their worst month since May 2012 and the first loss for January since 2010. Some pundits like to say where goes January, there goes the year, but time obviously will tell. At the close, the Dow was down 150 points or 0.9% to 15,699 for a loss of 5.3% on the month. The S&P 500 lost 12 points (0.6%) to 1783 for a 3.56% drop in January, while the Nasdaq lost only 1.7% during January and 0.5% on Friday.
– San Francisco Fed President Williams said the stock markets gyrations wouldn’t change the Fed’s outlook, which is of course true when the magnitude of the moves above are factored in. But a crash, or even a mini crash – that’s likely another story entirely. You can read Henry Blodget’s take on the current market outlook here this morning.
– In Europe, stocks were in the red and also had a bad month. The big news was the European CPI data and German retail sales. CPI printed just 0.7% year-on-year in January while German retail sales unexpectedly fell 2.5% on the month and 2.4% year-on-year. The risk is that deflation and a Japanese future is not far away for the EU. At the close, the FTSE was down 0.44%, the DAX fell 0.72% and the CAC fell 0.34%. In Milan, stocks rose marginally up 0.03%, while in Spain the IBEX fell 0.45%.
– Closer to home, the March SPI 200 contract on the ASX is down 23 points to 5119 bid.
– On FX markets, the euro was hardest hit and is back below 1.35 this morning, sitting at 1.3483. Sterling also came under pressure and sits at 1.6441 in early Asian trade, while USDJPY is under 102 and at 101.93 this morning, reflects the overall fear factor in markets at the moment. Should stocks fall further and fear rise, then the yen will continue to strengthen, pushing USDJPY lower. The Aussie ended the week under pressure again and is at 0.8744 this morning. It has been trying to build a base but with fear rising in markets, it will struggle. Worth noting is that the Turkish lira is trading above the level it was before the shock and awe of the big rate hike last week and at 2.26, speaks of continued EM fears.
– Chinese official PMI was out over the weekend and while better than the HSBC measure with a 50.5 print (expansion zone), it was still down from a month ago.
– On commodity markets, Gold strengthened a little but didn’t gain as much as traders might have thought in the current environment, which will worry the bulls. It sits at 1244.20 oz this morning. Crude fell 0.75% to $97.41 Bbl, Dr Copper fell again and sits at $3.21 lb and possibly reflects the fall in global economic sentiment better than almost any other traded asset. The Ags didn’t move too far, with Corn up 0.12%, Wheat up 0.41% and Soybeans rallying 0.6%.
– Datawise, it is going to be a big week and our Trader Diary is here. The week kicks off strongly with the AiG performance of industry survey this morning in Australia along with the TD inflation report, ANZ job ads and building permits. China has non-manufacturing PMI and then a raft of PMI around the world today and tonight, including the US ISM manufacturing data.