– The recovery in US markets kicked into a sixth day overnight with a solid move higher taking a lead from European stocks. This has left the local market up 26 points in overnight futures trade on the ASX with the June SPI 200 contract at 5497 bid. This generalised risk-on atmosphere has helped the Aussie dollar rise as well and it is trading at 0.9367 this morning.
– Key to the move has been M&A activity in the pharmaceutical sector, earnings and data in the US with the Richmond Fed Manufacturing index surging from -7 to +7 in April, while existing home sales fell 0.2% to 4.59 million annual rate but still better than expected. Home prices as measured by the FHFA rose 0.6% in February.
– At the close, the Dow was up 65 points for a gain of 0.39% to 16,514. The Nasdaq rose 0.96% to 4,161 and the S&P 500 was up another 8 points to 1,880 for a gain of 0.43%.
– In Europe after the extended break, there was some catch but equally some bouncy on the back of the pharma M&A activity. Craig James from Commsec said that “Shares in AstraZeneca rose by 4.7% on newspaper reports of a 60 billion pound (US$101 billion) takeover bid by Pfizer. Shares in GlaxoSmithKline rose by 5.2% after it agreed to sell its oncology products to Novartis for $14.5 billion.”
– At the close, the DAX leapt 2.02% to 9,600, the CAC rose 1.18% to 4,484 while the FTSE lagged a little, up just 0.86% to 6,682. In Milan and Madrid, stocks rose 1.49% and 1.41% respectively.
– After another poor day in Asia yesterday, traders will be hoping this positivity rubs off on sentiment in our time zone, with the Nikkei down 0.85% in trade. Shanghai shares rose 0.35%, which isn’t much of a reaction to the Government’s move to free up lending in the rural sector by cutting the reserve requirement for banks to this sector. Today is potentially huge with the release of the “flash” estimate for the HSBC Chinese Manufacturing PMI.
– On Currency markets, the moves were fairly muted and the US dollar didn’t kick on with the strength that many thought it would after the close into the Easter break. The Euro snuck back above 1.38 and sits at 1.3804 this morning, the pound is at 1.6825 while USDJPY is essentially unchanged at 102.60. The Aussie is higher as noted above at 0.9361.
– On Commodity markets, things were much more positive than the night before but Nymex crude fell 2.15%, $2.24 Bbl, to $101.69. Gold is down at $1,282.30 oz while Copper rose a cent to $3.08 lb. On the Ags, Soybeans lost 1.25%, while Corn and Wheat rose 1.59% and 0.71% respectively.
On the data front, today is huge for Australia with the release of first quarter CPI. The previous data was highish and fears are that this data will take the year-on-year rate well through the top of the RBA’s 2-3% band – we’ll know at 11.30am. Fifteen minutes later, Chinese Flash PMI will be released so it is going to be a pretty busy time around lunchtime.
Tonight we get the global flash PMI from Europe and the US as well as the BoE minutes and new home sales in the US.
Here is CMC Markets’ Stock To Watch from chief market analyst Ric Spooner
Press reports that Crown is considering spinning the wheel for a chance at buying a Las Vegas casino saw its share price down 1.1% yesterday. General talk of a possible acquisition without details of the price to be paid usually makes investors nervous.
This price action has brought the Crown chart to an interesting place. Price came to rest right on trend line support at yesterday’s close. The possible significance of this support is enhanced by the 200 day moving average which lurks just below at around $15.98. For chartists, a clear break of the support followed by a decisive break below the 200 day moving average would be a bearish development.