Good Monday to you. Here’s all you may have missed.
– Stocks continued to rally on Friday night with new record closing highs. Indeed, as high as stock valuations are on various measures, one of the world’s biggest fund managers said valuations aren’t high enough to end the bull market.
– So with a close at 1,924, up another 4 points or 0.21%, this rally might continue yet if Blackrock is right. The Dow eked out a 0.11% gain to 16,717 while the Nasdaq fell 0.12% to 4,243. It’s not like the data in the US was strong – or as it may be, weak. Rather it just seems after such a long rally, one which defies gravity, sellers are more wary than buyers.
– In Europe, miners continued to hit the FTSE which fell 0.38% to 6,845 at the low of the day. The CAC also fell 0.23% to 4,520 while the DAX managed to eke out a 0.04% gain to 9,943. That came even though German retail sales fell 0.9% in April, showing Germany is not immune from Europe’s economic malaise. In Italy and Spain, stocks rose however, no doubt in the hope that German economic weakness will help the ECB make the move that most expect this week and cut rates further. At the close of the day, Milan and Madrid were up 0.55% and 0.60% respectively.
– The wash-up of the above is that the ASX is looking at a weaker open this morning with the ASX SPI 200 June contract down another 8 points in futures trade to 5495 bid. The crash in iron ore, which continued on Friday night with another $2.50 fall in futures trade on the September contract to $92.38, is likely to hit miners again today.
– On the bond boards, the US 10’s were up 1 point to 2.48% but well off the 2.40% low of the week. Locally, the 3-years were down a point to 97.22 (2.78%) while the 10-year June contract also moved just one point to close at 96.34 (3.66%).
– Turning to Asian markets and the massive print in inflation data on Friday which showed the CPI rose 3.4% year on year – the highest in two decades – with the “core” CPI up 2.3%. This has already lead to calls for an end to to QE in Japan, dampening the Nikkei, which fell 0.34% and initially pushing USDJPY lower. At the close, the Nikkei was 0.34% lower at 14,632. In Shanghai, stocks were largely unchanged at 2,039 while the Hang Seng rose 0.31% to 23,082. The region today will be influenced by the NBS national manufacturing PMI in China which was released yesterday and showed a lift of 0.4 to 50.8 in May.
– On Currency markets, the lack of volatility continues but Aussie dollar remains fairly strong at 0.9309 before a huge week of data. Euro, somewhat incongruously, climber back above 1.36 and is at 1.3630 while the pound rallied to 1.6757. USDJPY fell initially but like the previous day found support in the 101.30/40 region.
– On Commodity markets, the good news is that June Nymex Crude was down again with a fall of 87 cents or 0.84% to $102.93 Bbl. Gold’s sell-off continues and it lost another %10 oz or 0.85% to $1,250, Silver dropped 1.74% to $18.75. Copper is back at $3.15 lb while on the Ags, Corn and Wheat fell around 0.8% with Soybeans off 0.38%.
On the data front, this week is a huge one locally and across the globe. Chinese PMI kicks things off and we get the AiG PMI and TD inflation data in Australia along with building permits and company gross profits which feed into the GDP data released Wednesday.
Tonight, it’s a raft of Markit and HSBS PMIs across the globe and German CPI which is likely to be seen as an indicator for the ECB later this week. In the US, we get the Markit and ISM PMIs along with construction spending.