Good morning. It’s been a big weekend.
– The US dollar was stronger early on Friday but it reversed after the data in Europe was more benign than many feared it might be. The result, according to the NAB’s economics and strategy team is that “The euro opens stronger this morning in the mid 1.25s after trading below 1.2430 Friday night. The AUD has also opened higher this morning against a softer USD.” Perhaps the US dollar’s run is about to enter a hiatus or consolidation phase?
– Looking at the data specifically, German GDP printed 1.2% year-on-year versus 1.0% expected with the quarterly result 0.1%. EU-wide GDP was 0.8% versus 0.7% year-on-year but that meant the quarterly rate was just 0.2%. In the US, retail sales were up 0.3% in October.
– It all combined to leave US stocks becalmed once more, with the Dow finishing down 0.1% to 17,635, the Nasdaq up 0.19% to 4,689 and the S&P 500 up just 1 point to 2,040.
– In Europe, the FTSE was up 0.28% to 6,654, the DAX was largely unchanged at 9,253 and the CAC was up 0.34% to 4,202. In Milan, stocks were 0.97% but those in Madrid rose just 0.07%.
– Locally, after a solid 1% rise on the physical Friday, the Dec SPI 200 contract was up 6 points to 5,474.
– In Asia today, the on switch between the Shanghai and Hong Kong exchanges is going to be flicked with expectations that this is a net positive to Shanghai. In the end, Shanghai finished down 0.27% but on the week it was up 2.52% at 2,479. Stocks in Hong Kong and Tokyo were also up on the week by more than 2% and 3% respectively.
– On Bond markets, it was calm with US 10s closing at 2.32%, German Bunds closing at 0.74% and UK 10s unchanged at 2.13%.
– On Currencies, the US dollar was strong early with the Aussie trading down to trendline support at 0.8650 before bouncing to 0.8765 this morning. Euro sits at 1.2533 and sterling is at 1.5686. USDJPY however continues to grind higher and sits at 116.51.
– On Commodity markets, Nymex crude was up more than 2% to $75.93 a barrel with gold up a similar amount, rallying to $1,187. Copper bounced all the way back to $3.045 while Newcastle coal rose 20 cents to $64.30 a tonne. Iron ore for the same delivery fell 48 cents to $74.75.
– On the data front, Japanese GDP is out today with the market expecting 0.5% for the third quarter. Locally the ABS will release new motor vehicle sales and tonight, Mario Draghi is speaking in Europe.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
The devil will be in the detail but this morning investors will be thinking about stocks that might benefit from the Free Trade Agreement with China.
With its proven capacity in international markets, Ramsay might be a stock in focus. Reports suggest that service industries will be a focus for the Trade Agreement with health providers given increased access to build and operate hospitals in China. Ramsay has already announced a non-binding agreement in relation to a five-hospital investment in Chengdu.
As the chart shows, Ramsay shares again rose to test all-time highs around $53.70 on Friday. One possibility with this chart is the formation of a large wedge formation. Resistance for that could be around $55 while the 200 day moving average and trend line might provide support around $48
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC
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