– The IMF has cut its forecast for US growth for 2014 from 2.8% down to 2% as Q1 has under-performed and is at risk of a further downgrade at the final read to be released soon. Balancing this out though was the release of the New York Fed’s manufacturing index which rose to 19.28 against the 15 that the market expected.
– In the end though, the power of free money was evident with the Dow, Nasdaq and S&P 500 recovering from early weakness even though global geopolitics hasn’t been this fractious for years. The Nasdaq closed up 0.24% at 4,321, the Dow was up 5 points or 0.03% at 16,781 while the S&P 500 rose 2 points or 0.10%.
– In Europe, given proximity to the geopolitical action and missing the US rally, stocks were lower across the board with the FTSE down 0.34% to 6,755, the DAX dropping 0.29% to 9,884 and the CAC in Paris falling 0.73% to 4,510. Milan and Madrid also fell further, down 0.86% and 0.95% respectively.
– On global rates markets, US 10s fell a point to 2.6%, German Bunds, Italian and Spanish 10s all fell the same amount to 1.36%, 2.78% and 2.65% respectively. In the UK, rates were steady at 2.75%.
– Locally, the impact has seen June SPI 200 futures down 6 points to 5410 bid with September futures down 4 to 5,366 bid. On the Bond boards, Aussie 3s rose 2 points to 97.14 (2.86%) while the 10s closed at 96.245 (3.755%).
– In Asia yesterday, the Nikkei dipped back below 15,000, closing at 14,933 for a loss of 1.09% as safe haven flows are pushing the yen back below 102. It sits at 101.81 this morning. In China, the Shanghai composite rose 0.74% to 2,086 after banking and of course, energy shares pushed higher. Today the market will be interested in the Chinese FDI data but it’s unlikely to be a market mover unless it is a shock.
– On Currency markets, the US dollar lost its mojo a little with sterling pushing briefly again above 1.67, but it sits at 1.6980 this morning. Euro pushed higher after basing last week and sits at 1.3572 and the Aussie is becalmed 10 points either side of 94 cents.
– On Commodity markets, Iron Ore’s crash continues with the September 62% FE swap falling below $90 tonne to close at $88.67. Newcastle coal for September was down 15 cents a tonne to $72.70. Elsewhere, while Brent Crude (European based) surged, Nymex June futures hardly budged, closing at $106.58. Gold lost $3 oz to $1,271 while Silver sits at $19.72. Copper rose 2 cents lb to $3.05 while Corn lost 1.34%, Wheat was down 0.85% and Soybeans were relatively calm, dropping 0.28%.
On the data front today, we get new motor vehicle sales for May and then really important UK CPI and PPI tonight. In Germany, the ZEW economic sentiment is released along with US CPI, which is also super important in the run-up to the Fed’s meeting this week.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
These might be interesting times for the current BHP downtrend.
The price gapped below potential trend line support on Friday but has moved quickly to partly fill that gap with yesterday’s stronger close. Yesterday’s candle also changed the short term trend from down to up. The candle made both a higher low and a higher high.
The question now before traders is whether this is just another minor correction against the recent strong downtrend OR if it’s the start of something bigger. The latter would make Friday’s break look like a typical whipsaw. Another strong move under Friday’s low would favour the minor correction scenario bringing the October low at $34.35 into play as the next major test for BHP.
However with the market now oversold, the following might provide clues that a more significant corrective rally is getting underway;
- If price hangs around current levels, Friday’s gap may begin to look like an exhaustion gap;
- This scenario may be confirmed by an overlap back above the last minor low at $35.98;
- A move through the low at $36.80 and 200 day moving average just above that may be a sign of even more significant consolidation or strength
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC