– A better night for stocks as traders shrugged off somewhat disappointing data from Asia, Europe and the US and focused on the outlook for interest rates globally.
– In the US, retail sales in July were flat against an expectation of a rise of 0.2% which helped US 10-year treasuries rally 3 points to 2.41% and set the scene for stocks to pop.
– At the close, the Dow was 91 points higher at 16,652 for a rise of 0.55%. The Nasdaq was 1.02% at 4,434 and the S&P 500 is up 13 points or 0.69% to 1,947.
– In Europe, the big loser of the past few days, the DAX was the big winner, rising 1.43%. The CAC was 0.79% to 4,195 while stocks in Milan and Madrid were 0.62% and 0.61% respectively.
– UK stocks were only up 0.37% even though the Bank of England governor seemed to dampen the chances of a rate rise this year. Sterling didn’t miss the import of this, falling heavily to 1.6686 against the US dollar.
– In overnight futures trade, the wash-up has been a solid performance with the SPI 200 Septmeber futures up 22 points to 5479.
– Yesterday’s crash in Chinese lending was a shock as lending fell to its lowest level in July since October 2008. It prompted the PBOC to issue a statement saying the fall was due to their oversight program and “adjustments in the property sector”.
– Equally, Japanese GDP was down sharply in Q2, printing -1.7% in the quarter but the deflator which came in at +2% suggests that Abenomics is working on one front at least.
– Asian markets still shrugged off the data as the Nikkei rose 0.35% to 15,214, the Hang Seng rose 0.81% to 24,890 and Shanghai was largely unchanged at 2,223. Today there is little of note out in Asia.
– As noted above, US 10-year treasuries rallied 3 points to 2.42%, German Bunds fell the same amount to 1.03% and UK 10-year Gilts were down 5 points after Mark Carney’s interest rate outlook, finishing at 2.45%.
– On Currency markets, the US dollar was stronger across the majors with euro a little weaker at 1.3366, USDJPY at 102.44 and sterling the huge mover, down below 1.67. The Aussie is doing okay back at 93 cents as offshore investors react to the fact we’ve good stable rates here and rates offshore are perhaps not rising as much as they thought (at least, that is last night’s meme).
– On Commodity markets, Iron Ore for September delivery was unchanged at $93.25 a tonne. Newcastle September Coal rose 20 cents to $70.95 a tonne. Elsewhere, Nymex Crude was pretty solid given a huge rise in stocks, finishing at $97.38 a Bbl. Gold is still marching on the spot at $1,312 as is Silver at $19.92 an ounce. Copper is off at $3.11 a pound while the Ags had a poor night with Soybeans down 1.98%, Wheat falling 1.44% and Corn rising just 0.21%.
On the data front today, we’ll be keeping an eye on Australian consumer inflation expectations but the real focus over the next 24 hours is the raft of GDP date in Europe. Germany, France, Portugal and the EU itself will all be reporting. Tomorrow is the Feast of the Assumption in many European nations so trade in Europe might close early tonight.
In the US, it’s jobless claims and trade price index.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
CSL ticked the boxes yesterday with a solid profit result, an outlook for 12% profit growth and news that it may add $950m to its share buyback program.
The stock finished up 2.6% but the news was not good enough for investors to take it past the resistance zone of its 200-day moving average and the old support trend line ($68.75/69.25).
Still, market reactions to profit results often take a while to play out. Numbers have to be crunched and investment committees need to meet. Traders seeing a break of this resistance as a sign of renewed confidence in this stock will be watching developments over coming days. If CSL can break resistance it will be doing so from an oversold position which is often a good sign.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC
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