Here it is – your bang up to date rundown on what’s been going on overnight. Also, it’s Friday!
– After a cracking day on the ASX yesterday which gained around 1.6%, traders overnight were less ebullient after US stocks fought hard all day to get back in the black. Really good economic news in the Philly Fed index which popped to 17.8 from 14 expected saw Myles Udland from BI US reporting that “70% of respondents expect the firm’s production to increase during the second half of the year”.
– That’s good news but it’s easily discounted because Fed chair Janet Yellen told us yesterday she’s a big dove on rates and the economy. But it is a good number nonetheless and Joe Weisenthal has a great take on where the US economy is going to be in half two, 2014. US dollar bulls, there is hope for you yet, it seems.
– At the close, the Dow climbed back above even, rising 0.1% to 16,921 while the S&P 500 was up a similar amount, closing at 1,959. The Nasdaq fell 0.1% to 4,359.
– In Europe, stocks played catch-up to the previous night’s US move with the FTSE up 0.43% to 6,808, the DAX rising 0.74% and back atop 10,000 at 10,004 while the CAC in Paris was 0.72% higher at 4,563. In Milan and Madrid, stocks rose 0.85% and 0.68% respectively.
– Locally the September SPI 200 contract lost 4 points overnight to 5,417 bid. But the rally in September Iron Ore – back above $90 tonne – and Gold’s surge of more than $40 oz. might help the locally market a little today.
– In Asia yesterday, the Nikkei seemed to cheer the weaker economic activity suggested by the fall in leading and coincident indices which means the BoJ will keep its policy unchanged for longer as well as following the US market higher from the previous night. At the close the Nikkei rose 1.62%. But Shanghai was not so keen after comments from Premier Li Keqiang that China would achieve its 7.5% growth target appeared to dash hopes of further economic stimulus. The index closed 1.53% while stocks in Hong Kong were largely unchanged, down 0.06%. Today in Asia we get a speech from BoJ Governor Kuroda.
– On global bonds, traders in the US didn’t miss the import of the data with 10s up 3 points (1.3%) to 2.62% but European bonds need a catch-up on Yellen’s comments and closed lower across the board. Locally on the SFE overnight, 3-year bonds dropped 2 points to 97.20 (2.8%) while the 10s move in line with the US markets, dropping 3.5 points to 96.29(3.71%).
– On Currency markets, the US dollar was weaker early as European traders caught up with the Yellen comments and closed out short positions. But the data in the US put paid to this pretty quickly. The Aussie topped at 0.9430 but it is back at 0.9397 now. Euro climbed to 1.3643 before slipping to 1.3607 while USDJPY is at 101.93. Only sterling resisted the US dollar’s late charms, closing at 1.7037 this morning.
– On Commodity markets, Gold surged more than 3% to $1320 and Silver is back over $20 oz. Iron Ore for September delivery rose $1 to $90.50 tonne while September Newcastle coal fell 40 cents to $71.40. Copper climbed 2 cents to $3.07 and June Nymex Crude was 0.43% higher to $106.62. On the Ags, Corn surged 2%, Wheat was up 1.11% and Soybeans climbed 0.78%.
It’s a data-free zone in Australia today and only EU current account may be interesting tonight with nothing of note in the US.
Next week though… flash PMIs from China and beyond.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
Newcrest shareholders should send flowers to Mrs Yellen today. This might be a decent session after a big overnight jump in Gold.
In terms of what’s next, the chart might provide a couple of benchmarks. The blue trend line on the weekly chart below looks pretty significant. A break through that from current levels would complete a head and shoulder pattern, a potentially bullish development for the big picture. Depending on how quickly we get there, this line intersects at around $11.50.
Space doesn’t permit two charts but the Gold chart has a similar pattern. For Gold, the trend line intersects at around $1375.
Thinking defensively, a rally to but rejection of, this trend line might be a profit-taking opportunity. A move under the March low at $9.40 would be a negative development. I won’t be marking the right hand shoulder onto my chart unless and until things become a bit better defined.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC