Your Friday morning market update is a bloodbath. Lucky there’s a weekend within sight.
– A huge night of red ink across global stock and currency markets after the weak Chinese PMI yesterday and the fall in the US Markit PMI overnight (53.7 from 55 expected and last) gave the sellers the upper hand in what morphed into a huge risk off night with currencies hit, bonds rallying and gold trying, ever so hard, to get through trendline resistance.
– At the close the Dow has recovered from earlier loses of more than 200 points to sit at 16,198 down 1.07% or 176 points. The Nasdaq is off 0.59% and the S&P 500 is down 17 points or 0.91% to 1,829.
– It was a similar story in Europe with the FTSE down 0.78%, the DAX off 0.92% and the CAC down 1.02%. In Milan, stocks lost 0.72% and Madrid’s outperformance in 2014 continues with a loss of just 0.38%.
– On the local market the pressure we saw in trade yesterday continued overnight with BHP under pressure in London and the March SPI 200 contract 33 points lower to 5,193 bid. On the Bonds, this week’s inflation report seems to have meant that the Aussie market couldn’t keep up with a 9-point rally in US 10 years to 2.78% or an 8-point rally in UK 10’s to 2.81%, with the 3’s and 10’s only 1 point higher overnight.
– On Forex markets, there was carnage in some emerging market currencies, especially with the Argentinean peso getting whacked after the central bank stopped intervening to support it. It wasn’t much better for the Aussie dollar really, which traded down to a 3.5-year low of 0.8730, just above the bottom of the big downtrend the Aussie has been in for a couple of years now.
– But just because the Aussie lost ground against the US dollar doesn’t mean that the US dollar was stronger. In fact, it has lost a lot of ground against the yen, which rallied 1.25% to drive USDJPY down to 103.19. The euro also marched higher, no doubt on the back of better German manufacturing PMI (56.3 versus 54.6 expected), rising 1.06% to 1.3689. The USD lost 1.53% against the Swiss franc and 0.24% against the pound, which sits at 1.6614.
– On commodity markets, Crude rallied 0.67% to $97.38 Bbl but it is to Gold that all eyes turn this morning as it tries to break higher. Overnight it is up 2.03% to $1264.20 oz. Copper was slammed by the weak Chineses data, falling 6 cents a lb to $3.32. The Ags were mixed again with Corn and Wheat up 0.65% and 1.56% respectively, while Soybeans fell 0.20%. Bitcoin sits at $952.
On the data front, this pre-holiday trading day in Australia is likely to be fraught early and then settle down around lunch time with nothing material to be released in our time zone. Tonight the key is a speech by BoE Governor Carney along with Canadian CPI.