Here’s your Thursday market update, with added FOMC goodness.
– The Fed is the dominant theme with the March FOMC decision released this morning showing a continued, perhaps heightened resolve to continue to taper which was, as we know, reduced by another $10 billion to a still not insignificant $55 billion per month. But it is the dropping of the 6.5% threshold on unemployment along with guidance that rates are going to be higher in 2015 and 2016 than previously thought that seems to have spooked markets. As a result, the US dollar strengthened strongly while stocks fell.
– At the close, the Dow fell 114 points or 0.7% to 16,222. The Nasdaq dropped 0.58% while the S&P shed 11 points to 1,861 for a loss of 0.6%
– Europe was mixed, with the FTSE down 0.49%, the DAX up 0.37% and the CAC dropping 0.12%. Madrid and Milan were also mixed with Italian stocks off 0.29% and Spanish stocks up 0.41%.
– Locally on the ASX, the March SPI 200 contract has fallen 34 points to 5324 bid.
– On Forex markets, it was a morning of US dollar strength with the Aussie (0.9038), euro (1.3829) and pound (1.6535) all lower. Likewise, USDJPY leapt higher to 102.43. Key here will be questions on FX traders’ minds about what, if anything, the FOMC minutes mean to the recent weakness in the US dollar. Will this be enough to turn the trend in the recent amazing euro strength and continuation of Aussie Dollar resilience? Time will tell.
– On Commodity markets, Gold was poleaxed and has broken out of the recent uptrend it has been trading in, falling around $20 oz to $1329.95 this morning. Copper went the other way however, rising to $3.02 lb after a big fall early in the day, while Nymex Crude is back above $100 Bbl at $100.29. On the Ags, the surge continues with Wheat up 3.36%. Soybeans and Corn rose a less spectacular 0.92% and 0.31% respectively.
On the data front, it is very quiet at the moment, although we might check the RBA’s foreign exchange transaction data when it is released this morning to see if they have been leaning on the market. After that there is little out other than German PPI and then US jobless claims, existing home sales and the Philly Fed Manufacturing Index.
Here is Ric Spooners Stock to Watch Today
Agricultural chemical company, Nufarm, announced a restructure of its Australian operations on Tuesday. The market liked it, gapping higher on the open yesterday and moving straight to technical resistance around $4.20.
How the market handles this resistance over coming days may prove illuminating. A clear move through it may signal more to come and a change of attitude to this stock with investors prepared to re rate. If the rally fails around here, we may see Nufarm may settle down to some range trading following the initial bounce.
Ric Spooner, Chief Market Analyst CMC MArkets
You can follow Ric on Twitter @ricspooner_CMC