Your morning markets update, fresh.
– Markets aren’t really functioning as they have over the past quarter century at the moment, as Emma Lawson noted in the NAB’s Market Today morning. “It comes to something when the US bond market reacts more to the UK’s inflation report and ECB chatter rather than its own inflation indicator (however flawed),”she said. “But, that’s the nature of markets at present. US 10-year yields slipped lower after the UK’s Bank of England were dovish and the ECB continued to outline possible easing measures.”
– Yep, it’s a very strange world indeed at the moment with many individual stocks under pressure, but the overall market in the US making all-time highs. In the US, the Dow opened at 16,718 but fell over the course of the day to lose 101 points or 0.61% to 16,614. The Nasdaq fell 0.71% to 4,101 while the S&P 500 opened at 1,897 before losing 8 points or 0.45% to 1,889.
– In Europe, with the BoE’s Governor Carney sounding quite dovish about the path of interest rates and the ECB dove and Bundesbank President Jens Weidmann saying Germany would support some easing measures, stocks recovered from early weakness. The FTSE, DAX and CAC were all largely unchanged at 6,878, 9,754 and 4,501 respectively. In Milan, stocks fell 0.33% while in Madrid, stocks rose 0.25%.
– For local markets after the weakness yesterday, which was largely associated with the ex-dividend status of two of the banks, the pullback in US stocks has seen the June SPI 200 fall 23 points in overnight trade to 5488 bid.
– In Asia yesterday, the Asia Dow was up 0.6% to 3,62, the Nikkei fell 0.13% to 14,406 while stocks in Hong Kong rose 1%. Stocks in Shanghai fell 0.13%. Today the focus will be firmly on Japanese GDP for the first quarter of 2014. The market is looking for a lift from last quarter’s 0.2% growth to 1% this quarter.
– On Currency markets, euro has stabilised above 1.37 and sits at 1.3713 this morning. The yen traded above 102 but is back at 101.81 this morning and the pound is rounding in on its big trendline support once again after the dovish comments from Carney overnight. It sits at 1.6765. For the Aussie, the sellers were out again over 94 cents last night and it sits at 0.9378 this morning but still in a solid, if gradual, uptrend.
– On Commodity markets, the big news was the end to the silver fix in London. Silver rose 1.18% to $19.74 oz with the London Gold ring looking into whether they will be able to offer something. Speaking of Gold, it has vaulted $1300 and sits at $1,306 oz this morning, up $11 or 0.86%. Nymex Crude is up 0.66% at $102.07 and Copper surged again and sits at $3.17 this morning. The Ags were lower, with Corn down 1.69%, Wheat dropping 2.71%, and Soybeans falling 0.4%.
On the data front, locally today we see consumer inflation expectations, new motor vehicle sales and the RBA FX transactions. Tonight the Opposition gives it’s budget reply statement but traders will be looking elsewhere at French, German, Italian and EU Zone GDP data before US CPI later on.
It is a huge 24 hours.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
The budget confirmed bad news for pathology provider, Sonic Healthcare. The introduction of co-payments for both GP visits as well as pathology and radiology items is likely to have a negative impact on use of pathology services.
Yesterday’s post-budget sell-off leaves Sonic’s share price testing the support of its recent trading range. If selling continues and this is broken, the bottom of the longer term trend channel and 200-day moving average around $16.50 may come into play.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC
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