– An ugly night on markets as tensions over the Ukraine rose in the lead up to this weekend’s referendum and a reported Russian build up on the Ukrainian border.
– At the close, and after a relentless day of falling stocks the Dow is down 231 points for a fall of 1.41%, the Nasdaq is down 1.46% and the S&P has lost a huge 22 points to 1,846 and a loss of 1.19%.
– The key seems to be more disappointment about the Chinese data yesterday in Europe and the US even though Asia seemed much less perturbed. Industrial production in China dropped to 8.6% year on year from 9.5% expected and 9.7% last. Retail sales also under shot expectations printing 11.8% against 13.5% expected.
– Looking at Europe and stocks were lower across the board but the big news was Mario Draghi finally getting religion on the threat of deflation and mirroring Charles Bean’s comments on the Pound saying that the Euro is too high and is now a factor in low inflation and the threat of deflation. At the close the FTSE lost 1.01%, the DAX 1.86%, CAC 1.28% while in Madrid and Milan stocks fell 1.2% and 0.9% respectively.
– Locally the ASX SPI 200 futures contract has dropped 58 points in overnight trade to 5354.
– Rates were lower as well overnight as a result even though the jobless claims was a good outcome economically in the US falling to 315,000 last week. US 10 year Treasuries fell 9 points to 2.65% taking UK, German and Australian rates lower as well. 10 year Aussie bonds on the ASX rallied 10.5 points to 95.985 (4.015%) overnight.
– On currency markets the ramp that drove the Aussie higher just before the super strong employment data yesterday hit a wall at 0.9103 as geopolitical concerns and Draghi’s comments helped the Us dollar. The Aussie sits at 0.9022 this morning still up strongly on yesterday’s open. Showing how the concerns impact on macro markets the Yen strengthened more than 1% with USDJPY falling to 101.62, Euro pulled back to 1.3864 and GBP is off almost 100 pips from the high at 1.6621 this morning.
– On commodities Nymex crude was up a smidge to $98.21 Bbl, Copper for march tanked again losing 4 cents to settle below $3 lb at $2.98 for the first time in ages while on the Ags corn lost 0.21%, wheat dropped 1.31% while soybeans rallied 0.65%.
On the data front after Draghi’s comment yesterday the German CPI tonight is going to be huge for European bourses and the Euro. UK trade balance is also important and US PPI is out. There is nothing material in Asia other than Singapore retail sales.
Now here is today’s Stock to Watch, today from Michael McCarthy at CMC Markets
Telstra approaching key support
After trading ex-dividend on February 24, Telstra is flying under the radar – a noteworthy feat from Australia’s most widely held stock. Telstra’s solid recent report and legislated income via the NBN have many analysts relaxed about the outlook. Many investors are comfortable holding the shares on the estimated dividend yield (8.1% including franking at yesterday’s close). Yet the share price is approaching a complacency rupturing point.
At $5.08, Telstra is just 5 cents or 1% above the uptrend line. A drop through this point, and a big figure change from $5 to $4, could spark a minor scramble to sell. With the RSI indicating negative momentum, and poor numbers out of China after the close yesterday, Telstra is one to watch.
If the selling feeds on itself, it’s easy to imagine a fall to the support around $4.78. Further deterioration could see it reach support around $4.50. It’s possible the support could hold, and Telstra start towards the 8 year highs above $5.30. However, a potential short term drop of around 11% versus a potential, eventual 5% gain should put Telstra on the radar screen.