– Stocks traded higher overnight after it became clear there’s a deal in Ukraine – both for a ceasefire and IMF loan. Traders also like the mildly positive fact that the Eurogroup meeting the day before had at least made an agreement to keep talking. It’s worth noting that news emerged last night (via the FT) that an agreement, which satisfied all parties, was formed – including Greece’s new Finance Minister and Deputy PM – but it was scotched by Athens. The situation remains fluid, but that’s for next week.
– The positivity in Europe was good for the Euro which rose to 1.1410 against the US dollar. Weaker than expected retail sales for January, which fell 0.8% against expectations of a 0.5% fall, also put the US dollar on the back foot. Add in a big lift in jobless claims of 20,000 to 304,000 and a fairly benign BoE inflation outlook (which helped GBP surge to 1.5403) and we get the first signs of a US dollar reversal. The Aussie is back above 77 cents at 0.7746 after the big post-employment fall yesterday. The Yen is stronger as well with USDJPY dropping back to 118.87.
– Crude oil was also in the news overnight with a solid 4.65% rally to $51.11. That helped stocks and the risk on overnight trade. Commsec Chief economist Craig James said the rally was a result of, “further cuts to CAPEX by major oil producers and a weak US dollar spurred buying. A stronger greenback makes US-denominated commodities more expensive for European and Asian buyers.”
– At the close, the scoreboard in the US reads:
- Dow Jones up 0.62%, 110 points to 17,972
- Nasdaq yp 1.18%, 57 points to 4,858
- S&P up 19 points, 0.94% to 2,088
– European markets finished higher with the Club Med countries doing best. Tomas Hirst of BI UK reckons the ECB has been propping up sentiment. An acceleration of German deflation (-1.1% in January) helped confirm – if it necessary – that the ECB QE will keep on keeping on.
At the close:
- London(FTSE 100) up 0.14%, 10 points to 6,828
- Frankfurt (DAX) up 1.56%, 168 points to 10,920
- Paris (CAC) up 1%, 47 points to 4,726
- Milan (FTSEMIB) fairly surged 2.13%, 437 points to 21,003/li>
- Madrid (IBEX) up 1.90%, 197 points to 10,562
– Locally after a couple of days of weakness and a really important technical test yesterday ASX futures traders are pointing higher. March SPI 200 futures are up 35 points.
– In Asia yesterday it was a very interesting day. Shanghai opened under pressure and in the red but rallied strongly as the day wore on. The composite finished up 0.48%, 15 points at 3,173. In Tokyo the Nikkei ripped higher on the back of acute weakness in the Yen. Stocks closed up 1.85%, 327 points at 17,980. The overnight fall in USDJPY would usually put Japanese stocks under pressure but the positivity in the US sees futures indicating only a small fall of 20 points for Tokyo today. In Hong Kong stocks rose 0.44% to 24,422.
– On rates markets US 10’s closed at 1.99%, UK 10 year gilts finished at 1.67% and German Bonds ended at 0.29%.
– On commodity markets gold is at $1,221, copper is up 2.46% at $2.60. On the bulks there is an interesting drive in prices for delivery in 2015. These contracts all rallied $1 or more a tonne while the contracts in 2016 rose by much smaller amounts. March 2015 coal finished at $68.85 a tonne. March’s iron ore rose 80 cents to $68.85.
On the data front today we hear from RBA Governor Stevens this morning at 9.30am. He’ll be addressing the House of Reps Economics Committee. Tonight German and EU wide GDP are going to be huge. US import and export data will be worth watching.