Here's Your 20-Second Guide To What Aussie Traders Will Be Talking About This Morning

CAPE TOWN, SOUTH AFRICA – SEPTEMBER 23: Joe Tomane climbs a climbing wall during the Australia Wallaby gym and recovery session held at the Virgin Active gym on September 23, 2014 in Cape Town, South Africa. (Photo by David Rogers/Getty Images)

– Retail sales in the US for November were released overnight and painted a robust picture of the US economy as it heads toward the end of 2014. The print of +0.7% easily beat the market expectation of +0.4% with the ex-auto component a very robust 0.5%. That’s good news for the economy and even though it reinforces that the Fed’s message about the path of interest rates may change after next weeks FOMC meeting it does suggest that the US economy can withstand some interest rate increases next year.

– The when is of course the big question. This is particularly so given that the poor results of the ECB’s LTRO, announced overnight, point toward a need for QE if the banks are not going to get busy and lend on their own.

– The other big news was that crude oil slumped again, dropping 1.87% to $59.80. But that is not a bad thing as I have written here before. Certainly it tells you something about global demand and growth now but it is a tax cut for the global economy. So as Glenn Stevens said in an interview overnight, “historically, low oil prices have been good for the global economy. In my opinion on the whole, this is good news, not bad news.” Indeed.

– At the close, US stock markets are up but off their highs for the day.

  • Dow Jones uip 0.33% to 17,592
  • Nasdaq up 0.56% to 4,710
  • S&P 500 up 9 points or 0.44% to 2,035

European Markets were mixed with UK stocks buffeted by the miners once again but the DAX bucked the trend. German CPI printed 0.0% for November for a year on year result of CPI growth of just 0.6%. France reported deflation in prices of 0.2% in November and a year on year rate of 0.4%.

So, at the close.

  • London(FTSE 100) down 0.59% to 6,462
  • Frankfurt (DAX) up 0.64% to 9,863
  • Paris (CAC) flattish of just 0.05% at 4,226
  • Milan (FTSEMIB) also flattish down 0.09% to 19,201 1
  • Madrid (IBEX) up 0.34% to 10,432

– Locally the impact of overnight trade has been fairly muted with the March SPI 200 contract down just 6 points to 5,181 after yesterday losing ground on the physical market.

– In Asia yesterday, it was a day of red ink with the Nikkei not too keen on the stronger yen, which saw it dip along with stocks in Hong Kong and Shanghai which came under pressure after an early rally. Today we’ll all be waiting for Chinese retail sales.

At the close:

  • Tokyo (Nikkei Average) down 0.89% to 17,257
  • Hong Kong (Hang Seng Index) down 0.90% to 23,313
  • Shanghai (Shanghai Composite Index) down 0.49% to 2,926. The WSJ had a very scary article on the level of Chinese margin debt which had been driving the SHCOMP recently and which suggests it’s going to struggle for a while now

– On bond markets, US 10s mclosed at 2.18%, German 10s at 0.68% – incredible still – and UK 10-year Gilts closed at 1.91%.

– On currency markets, the euro, GBP and yen rallies have failed to launch after the very solid retail sales. The euro is down 110 points below the 1.2494 at 1.2383. GBP is at 1.5712 doing better than the euro while the USDJPY is back up at 119.26 150 points of yesterday’s low of 117.43. The Aussie is also down more than a cent from the post-employment spike which took it to 0.8375 – it sits at 0.8258 this morning.

– On commodities, oil, as noted above, is under $60 a barrel. Gold is at $1,223 an ounce, copper rallied to $2.93 a pound and the Ags were all higher with wheat up 2.87%, corn up 1.96% and soybeans up 0.99%. Australia’s bulks were fairly quiet with March iron ore at $67.96 a tonne. Newcastle coal for the same delivery was at $63.20 a tonne.

On the data front, the retail sales in China today is going to be huge as an indicator of where the economy is at presently. Tonight we see Europe PPI and CPI data, EU employment and then US PPI.

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