Thank (insert chosen deity) it’s Friday. Here’s your market update:
– An interesting performance on stocks given the weak data overnight in the US and Europe. Data which was ignored, it seems, in favour of Jeff Gundlach’s view that the recent run of data will see the Fed taper the Taper – that is stop reducing its bond purchases. So does that mean we are back on the “bad news is good news” train? If we are, stocks and risk are pointed higher. But it’s a question traders will be asking themselves – when they are not talking about Mitchell Johnson’s demolition of South Africa.
– Looking at the data, we see that German Consumer Prices fell 0.6% in January which, while expected, hint that the negative rates ECB member Coeure discussed yesterday must really be on the table regardless of what Mario Draghi says about Europe not being Japan. In the US, jobless claims ticked up a little to 339,000 but it was the miss on retail sales which printed -0.4% (versus already anaemic expectations of no rise over the month) that really suggests US economic momentum has started to fade.
– But that didn’t bother stocks, with the Dow, Nasdaq and S&P 500 all in solid positive territory at the close. The Dow is up 0.4%, the Nasdaq 0.95% and the S&p 500 is up another 11 points or 0.59% to 1830.
– In Europe, things were more mixed with the FTSE down 0.24% (not helped by a Lloyds loss for the year) and Rolls Royce guidance. On the continent, it was more positive, except in Italy with Milanese stocks down 0.17% after the PM resigned when his party ganged up on him. The DAX rose 0.6%, the CAC rose 0.17% and in Madrid, stocks were 0.17% higher.
– Locally on the SFE overnight, the SPI 200 contract continued its solid recovery from last week’s move under 5000 with a rise of another 34 points to 5297 bid. On the bonds, the 3’s and 10’s have rallied 2 points and 2.5 points respectively, reflecting the rally in US 10’s which initially sold off to 2.80% before rallying back to 2.73%.
– On FX markets, the US dollar suffered against the euro and sterling, which both rose. The euro is up 0.64% to 1.3679 and sterling sits at 1.6657, up 0.39%. It lost ground against the Swiss as well, falling 0.77% to .8937) while the yen strengthened a little with USDJPY falling 0.26% to 102.25. The Aussie benefited from this USD weakness and rallied back to 0.89990 this morning, still down 0.45% on yesterday but a lot stronger than the low of 0.8924 after the weak employment data. A strong Swissie and higher gold suggest this is not an environment to get too aggressive Aussie.
– On commodities, Gold has regained $1300 for the first time since November 2013 and is up 0.93% to $1301.68 this morning. Nymex Crude is still atop $100 at $100.28 and Copper sits at $3.31 lb. On the Ags, Wheat and Soybean fairly roared up 1.36% and 1.46% respectively while Corn lagged up just 0.11%.
On the data front today, we have a speech by RBA assistant governor Kent before Chinese CPI data and then French, German, Italian and EU-wide GDP tonight, which should be interesting. US industrial production and capacity utilization is also out.