The data is getting ugly. Here’s your morning market update on that:
– There is a global disconnect between stock markets and the deteriorating economic data flow around the developed world. It’s not exactly the bad-news-is-good-news meme we had at some stages over the past year or two but certainly there is scant recognition that stocks are on weaker ground than a few months ago. So I’m sure traders will be wondering about this today and certainly what it means for monetary policy around the world.
– To this end, the release of UK inflation – which fell below the BoE’s 2% threshold for the first time in 4 years with a 1.9% print in December – builds on Mark Carney’s soothing words the night before that the BoE is in no hurry to change tack.
– Likewise, the big fall in the US NAHB (home builders) index from 56 to 46 and the dip of the New York Empire manufacturing index in February from 12.51 to 4.48 is another sign that the Fed might need to taper the taper at some point. Adding to the deteriorating economic outlook in the US over the past month has been a new Gallup poll that shows Americans are now saying unemployment is once again their biggest fear. It’s at 23% in February, up from 16% in January.
– Also worth noting in a global macro sense was the fact that China’s central bank expressed its opinion on the recent spike in lending yesterday by withdrawing $8 billion in liquidity unexpectedly via forward repos. As a result, stocks in Shanghai fell 0.77%.
– In the wash-up though, US stock traders are hardly bothered at present and the Dow has closed down 0.06%, the Nasdaq is up 0.73% and the S&P 500 has gained 3 points, or 0.18%, to 1842.
– In Europe, the FTSE was driven higher by miners, particularly BHP, with the index closing up 0.89%. On the Continent, things weren’t so hot with the DAX up just 0.03% after the big fall in the German ZEW survey of 6 points to 55.7. The CAC in Paris fell 0.10%. Stocks in Milan rose 0.09%, while in Madrid they fell 0.75%.
– Locally on the ASX futures market overnight, the SPI 200 March contract was up 6 points to 5368 bid. On the bond boards, the 3’s rose 2 points to 96.98 (3.02%) while the 10’s were 3 points higher at 95.90 (4.10%). Offshore in the US, the 10’s rallied 4 points to 2.71%.
– On global FX markets, euro has ripped higher and sits at 1.3757 but sterling was under a little pressure after the inflation rate dipped below 2%. Good news if you want the BoE to hold off raising rates but bad news if you are a GBP bull. The Aussie is largely unchanged after a spike yesterday post-RBA minutes and sits at 0.9031 this morning. USDJPY is higher after the BoJ extended some of its accommodative measures on signs the economy and Abenomics isn’t working to plan.
– On commodity markets, Gold dropped back and sits at $1523 this morning after crashing into some solid resistance yesterday morning. Nymex crude bolted higher, rising 2.43% to $102.74 mostly on weather-related news, it seems. Copper is unchanged at $3.34 while the Ags had a huge night with Corn up 0.95%, Soybeans up 1.87% and Wheat up 2.26%.
On the data front today, we have the release of the RBA leading index and ABS wage data. In Japan, it’s the BoJ economic survey and then the BoE’s minutes and vote cut as well as jobs data. In the US, we’ll be watching the housing data, PPI and Fed minutes very closely.