– Not only is this week going to be a huge week of data here in Australia as well as around the world but it has been made doubly difficult because of Russia’s military intervention in the Crimea and the impotence of the West in dealing with this twist in Ukraine’s political mess. Hopefully for the Ukrainians this doesn’t turn into a rerun of Georgia back in 2008.
– The impacts on the markets are that uncertainty will rise and already this morning the Aussie dollar is trading below 89 cents for the first time in a month. Put that down to the rising tensions and also the continued fall in the Chinese Official PMI data which was released over the weekend, printing 50.2. While this is still in expansion territory – relative to the flash estimate of the HSBC PMI which was recently recently at 48.5 – the trend is certainly for a weakening in Chinese data.
– Today traders will get another filip on PMI data from around the world with the actual release of the HSBC Chinese PMI and then markit PMIs from around the world. These are likely to drive markets and the Aussie dollar today along with Ukrainian news.
– But quickly looking back on the data from Friday, US Q4 GDP printed 2.4% at the latest update as expected, Chicago PMI printed a still-strong 59.8 but pending home sales rose only 0.1%. At the close, US markets recovered from a plunge into the red with the Dow up 0.30% and the S&P 500 at 1859 for a gain of 5 points to an all-time closing high of 1859. The Nasdaq also recovered off its lows but couldn’t sneak into the black, closing down 0.25%.
– In Europe, the FTSE was unchanged. The DAX gain of 1.08% would be expected to be unwound tonight given proximity to the Ukrainian hotspot and need for Europe to deal with Russia directly, given it was the move toward Europe and then President Yanuschenko’s move back toward Russia which caused the ructions. The CAC was up 0.26% while stocks in Milan and Madrid moved in opposites, up 0.60% and down 0.49% respectively.
– Locally on the ASX, the SPI 200 March futures contract was up 21 points, but it would be fair to expect this to back off a bit in Asian trade today before it becomes clear what is going to happen tonight.
– On global FX markets this morning, the US dollar is gaining on all currencies, with the euro trading at 1.3763 from a 1.3801 close Friday. Similarly, sterling has lost 20 points this morning to 1.6720 and USDJPY is at 101.37. The Aussie is sitting at 0.8899, having made a low of 0.8888 so far this morning but it was already under pressure on Friday night, closing lower on the day as tensions and concerns about China weigh. The RBA and it’s statement tomorrow will be watched closely by AUD traders as well.
– On commodity markets, Gold and Oil are likely to gain this week, which should reverse the weakness in Gold we saw last week with a close of $1325 on Friday night and push Nymex crude toward $104 bbl from $102.76. Copper closed last week at $3.23 and is likely to remain pressured lower as global growth slows. On the Ags it was a universally positive day, with Wheat up 2.88%, Corn up 2.12% and Soybeans rising 1.49%.
On the data front, it is a huge huge week and you can find our Trader Diary here. On the day however, we get the TD inflation data, AiG PMI, HIA home sales, ANZ job ads and then in the lead-up to the GDP data this week we see the release of Q4 company gross operating profits.
Offshore, we get the next round of Markit PMIs which kicks off with the HSBC Chinese PMI and then moves through Europe and the US. Also out tonight is UK credit data and US personal consumption.
Have a great day and good hunting.
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And this morning Ric Spooner has a bit of a different take on the markets today with the Oscars happening. You can see it here