Good morning. Here’s what you missed.
– It’s going to be a good day on the ASX today with September Futures up 18 to 5,489 bid. But it’s not just the offshore moves which are driving the strength, with the miners stronger in London. BHP was up 1.6% and Rio Tinto up 1.2%. Iron Ore ripped another $1.41 tonne higher to $98.58 so watch out for Arrium, BC Iron and Atlas Iron amongst others as well.
– On the banks, watch for the interim report of David Murray’s financial system inquiry and any impacts on competitive position or profitability going forward. But remember this is an interim report only.
– Turning offshore and the Dow had a triple-digit gain of 111 points, closing up 0.66% at 17,055. The Nasdaq climbed 0.56% to 4,440 and the S&P 500 rallied 9 points to 1,977 for a gain of 0.48%. One of the key drivers was Citigroup’s earnings and its seemingly light fine of just $7 billion to settle a Federal investigation.
– In Europe, stocks bounced at the open and stayed strong all day. Appearing before the EU Parliament, ECB boss Mario Draghi told legislators that the governing council is unanimous in its support for unconventional monetary tools and that “the ECB continues to stand ready to take action, if necessary, to further address risks of too prolonged a period of low inflation.”
– At the close, the FTSE was 0.83% higher at 6,746, the DAX rose 1.21% to 9,783 and the CAC was 0.78% higher at 4,350. Stocks in Milan and Madrid were higher but less so than the bigger markets, rising 0.4% and 0.64%.
– Rallies in stocks weighed a little on long bond rates in the US which were up 2 points to a still low 2.54%. UK rates rose 1 point to 2.61% but German Bunds were unchanged at 1.21%.
– In Asia yesterday, the yen was lower and the Nikkei higher with a gain of 0.88% to 15,297. Shanghai ripped higher, rising 0.98% on automakers again on the government pledge to buy more alternative energy cars. On the data front today we see Chinese FDI and new loans data along with its FX reserves position.
– On Currency markets, it was running on the spot for the Aussie dollar which sits at 0.9392 this morning while the euro is up a little at 1.3619, even though ECB boss Draghi signaled both that its strength was an economic issue (“in the present context, an appreciated exchange rate is a risk to the sustainability of the recovery”) and that more easing is coming. The IMF also told the ECB to get on with it. USDJPY is sitting at 101.54 while of the majors, only sterling had a decent move, falling to 1.7081 around 60 points of the high of the day.
– On Commodities, as noted in the intro, Iron Ore ripped higher and is closing in on $100 tonne but Newcastle Coal slid another 35 cents to $69.15 tonne for September delivery.
– Gold had a meltdown, losing $30 oz to $1308 for a loss of 2.3% while Silver slipped 2.55% to $20.88. Copper lost 2 cents to $3.24 and July Nymex Crude settled at $101.14. On the Ags, it’s volatility time with Wheat bouncing 6.8% off four-year lows but Corn fell 2.38% and Soybeans were largely unchanged.
On the data front today, we get the release of the Murray Financial System Inquiry at 8am and then motor vehicles and RBA board minutes at 11.30am.
In Europe tonight we get Italian CPI, UK CPI, PPI and retail prices as well as the German ZEW survey. In the US we get retail sales, a speech from Fed chair Janet Yellen, New York Empire manufacturing index and trade data.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
BT Investment Management
The market liked yesterday’s report that total funds under management increased 5.2% in the June quarter.
However, the re rate was not enough to push the stock through chart resistance around $6.90. Naturally, fund management stocks love a bull market. Higher valuations mean higher management fees! More drifting around by the overall market might see sellers come in again here. A push below yesterday’s low around $6.60 could herald another return to trend channel support and the 40-week moving average around $6.10
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC