– A better close to the week for US stocks after housing starts (+13.2%) and building permits (+8%) rose strongly in April. These data are important because just two weeks ago Fed chair Janet Yellen voiced her concerns about the slowing housing market, so this should assuage those concerns. Yellen’s colleague James Bullard was, for him, relatively upbeat on growth and employment in his speech on Friday.
– So at the close, the Dow rose 0.27% to 16,491, the Nasdaq was 0.53% higher at 4,091 and the S&P climbed 7 points to 1,878 for a gain of 0.38%. US Treasuries were a little higher with 10’s finishig at 2.52%, helping the dollar a little.
– In Europe, shares were higher as well, with Spanish and Italian stocks leading the way with increases of 1.10% and 1.12% respectively. In the UK, the FTSE rose 0.22% to 6,856, the CAC rose 0.25% to 4,456 while the DAX in Germany fell 0.28% to 9,689.
– The impact on local markets has been an increase of 7 points in overnight trade but the budget malaise that it seems is about to hit the Australian economy could turn stocks lower today, as might the move in Iron Ore prices. At the close on Saturday morning, the June SPI 200 finished up 7 at 5497 bid.
– The Nikkei fell 1.41% on Friday to 14,097 and the jury is out on whether it can get a sustainable lift from US and European moves due to the level of the yen at 101.50 versus the dollar. The crash in EURJPY as euro heads lower will also be weighing on the market. Over the weekend, the release of the Chinese house price index which printed +6.7% in April from +7.7% last could weigh on sentiment in the region and unemployment in Hong Kong is certainly worth watching.
– On Currency markets, the Aussie is holding in at 0.9366 but a budget impasse is something to watch in the weeks ahead as a big potential headwind. The euro slipped back below 1.37 and sits at 1.3695 this morning. The pound’s recovery off the trendline support continued and it sits at 1.6816 while USDJPY still languishes around 101.50.
– Gold is back below $1300 at $1,296 oz, Silver is trading at $19.31 oz while Nymex Crude for May expiry is at $102.51. Copper sits at $3.16 lb this morning. On the Ags, it was a relatively quiet night.
On the data front, there is nothing of note in Australia, and only machinery orders in Japan while unemployment is released in Hong Kong. Tonight is also quiet with just EU construction data.
Here is today’s Stock To Watch from CMC chief market analyst Ric Spooner:
Resmed’s share price woke with a start after the release of its quarterly results on 24 April but has shown signs of nodding off recently. In doing so it has developed divergence with the RSI. Price has made a marginally higher high while the RSI has made lower highs, dropping out of the overbought zone.
The RSI has also broken below its recent support indicating a correction could be in store for Resmed.
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