Here’s what you missed. Get cracking.
– The conversation that is markets continued overnight with more evidence of weakness in Europe but emerging strength in the US economy. Once again we have a bit of a focus on Ukraine, as it is now unequivocally clear that the sanctions on Russia are going to add to the weak economic outlook for the region. Last night the release of the ZEW business showed sentiment survey fell to an 18-month low of 8.6 against expectations of 18.2 and from 27 last month. The current situation also fell heavily to 44.3 from 61.8 last.
– In the US, NFIB business optimism was a little higher at 95.7 from 95 last but it was the JOLT survey which shows the improvement in the US economic outlook. The report from the BLS showed that job openings grew again in June, to 4.67 million from 4.635 million in May. Also worth noting is that the US Treasury released its latest budget showing a fall in the monthly deficit and a huge $200 billion fall in the deficit so far this year – hopefully its tax receipts, hence economic growth, are driving the improvement.
– The Dow bounced around all day to finish down 0.05% to 16,561, the Nasdaq fell 0.28% to 4,389 and the S&P 500 dipped 3 points or 0.15% to 1,934.
– In Europe, at the close the DAX in Germany was down another 1.22% to 9,069, the CAC fell 0.85% to 4,162 while stocks in Milan dropped 0.23%. In London, stocks barely changed on the day, closing at 6,632 while Spanish stocks managed to rally 0.48%.
– Overnight, the August and December SPI 200 futures are down a few points but it seems the September futures are unchanged at 5467. The CBA, which makes up close to 9% of the ASX market capitalisation, will report earnings this morning which will impact direction on the overall market today.
– It was fairly quiet in Asia yesterday but the release of Japanese Q2 GDP is going to be huge today with most pundits expecting a contraction. The market forecast is that growth in the second quarter fell 1.8%.
– On Currency markets, the euro was under intense pressure early after the German ZEW survey data but it held above last week’s lows and is at 1.3367 this morning, suggesting the euro is trying to find a base. USDJPY is at 102.24 and sterling sits back above 1.68 at 1.6810. After dipping yesterday toward last week’s lows, the Aussie likewise has lifted a little and sits roughly unchanged at 0.9268 this morning.
– On Commodity markets, Iron Ore slipped $1.25 a tonne for September delivery to $93.25. Newcastle Coal fell 90 cents to $70.75 a tonne. Nymex Crude fell 84 cents a Bbl to $97.24, Gold is still floating around the $1,310 an ounce mark with Silver at $19.95. Copper dipped a few cents to $3.15 a pound while on the Ags, Wheat fell 1.54%, Soybeans fell 0.63% but Corn rose half a per cent.
On the data front today, Japanese GDP is very important in a macro sense but locally the focus will be on the release of the Westpac Melbourne Institute Consumer Sentiment Index. Prior to last week’s big jump in unemployment and yesterday’s crash in the ANZ weekly series, there was some hope this might be a good number. Whatever the outcome, it is an important number as a pointer to domestic consumption.
Tonight German, French and Spanish CPI are all very important as is UK labour and unemployment data and the BoE quarterly inflation result. Then we get the retail sales data for last month in the US, which is very important as well.
A big 24 hours of data.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
If the stocks you own don’t have to be trendy dinner party topics and if your trading style includes picking through the beaten up brigade in search of value, Arrium might be worth having on the radar.
The steel and iron ore group goes into next Tuesday’s profit result at around 8.5 times F15 earnings and with its chart looking as though it may be in a basing formation.
The chart basing pattern is looking like a potential head and shoulder. If price can hold above the potential “right shoulder” at 74.5c and then go on to break through the neck line resistance, the head and shoulder will be completed, indicating higher prices to come.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC
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