Good morning, it’s Wednesday. Here’s all you need to know so far.
– Another solid night for stocks in the US and Europe as traders’ mood swings continue from last week’s pessimism to this week’s ebullience. It is a very bipolar market at the moment in terms of the moods even though the overall uptrend has remained intact for a while now. One thing worth noting though is that when traders start bragging about how easy it is to buy the dip – well you know, maybe not all the time or next time…
– Anyway, at the close the Dow was up 81 points to 16,960 for a gain of 0.48%. The Nasdaq was 0.44% higher and the S&P rose 10 or 0.52% to 1,982.
– Of note was the big surge in Housing Starts to a 1,093,000 unit rate in July, a 15.7% jump. Equally Apple closed at a fresh all-time high of $100.53 last night – its first new high in almost 2 years.
– In Europe, the big news was the 1.6% print in UK CPI which was below the 1.8% year-on-year total. This was after a 0.3% fall in CPI for the month and the associated fall in PPI. Sterling was hit hard and the FTSE rose 0.56% to 6,779. The DAX rose 0.96% to 9,334 while the CAC was 0.55% higher in Paris. In Milan, stocks were very quiet while the IBEX 35 in Madrid rose 0.32%.
– Locally, the impact on the ASX 200 is muted it seems, because of BHP-specific features which have seen the Big Australian lose around 4% in overnight offshore trade. As a result, the SPI 200 futures bucked the offshore ebullience with the September contract down 8 points to 5574.
– On the reporting front, it is another big day. Of note are reports from AGL, Coca-Cola Amatil, Fortescue, Multiplex, Wesfarmers and Woodside.
– Asian stocks were universally positive yesterday with the Nikkei up 0.83%, the Hang Seng up 0.67% and stocks in Shanghai rising 0.25%.
– On Currency markets, the data in the US helped the US dollar hit its highest level in almost a year with euro falling around 40 points from the high to 1.3321. USDJPY surged back toward 103, sitting at the overnight high this morning of 102.92. Sterling was absolutely poleaxed by the inflation data in the UK, more than 100 points off the high of 1.6728, sitting at 1.6613 this morning. Likewise, the Aussie dollar was caught in the US dollar’s tractor beam, falling 45 points off the high to 0.9301 this morning.
– On Commodity markets, September 62% Fe Iron Ore futures were down 0.08% to $92.25 while Newcastle Coal for the same date fell 60 cents to $69.70. The big news on commodities though was the big fall in Nymex Crude which dipped 1.97% to $94.51 a barrel. Gold sits at $1,394 with Silver at $19.43 an ounce. Copper remains at $3.10 a pound while the Ags had a better night with Corn up 0.22% and Wheat up 0.87%. Soybeans, however, dipped 0.47%.
On the data front today, RBA governor Glenn Stevens addresses the the House of Representatives Standing Committee on Economics from 9.30am. His opening statement will hit the screens around that time and then he and his team will take questions after that.
Today we get Japanese trade data and tonight we get PPI in Germany, the Bank of England minutes from their last meeting and the vote count which in the wake of last night’s move in sterling are doubly important for currency traders and then later on the FOMC minutes as well. And, of course, Jackson Hole is on.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
In the thick of the reporting season we’ve seen a lot of significant market moves in both directions. Among the results that have seen stocks arrive at a significant technical position, pathology and radiology group Sonic looks interesting.
Despite a result largely in line with expectations, initial selling saw it fall to the trend line that has defined its rally since February last year. The 40 week moving average is tracking closely below that at $17.20. By yesterday’s close it had bounced off its lows.
In the longer term, Sonic is placed to benefit from growing and ageing populations as well as an increasing trend for governments to outsource health services. In the short term, the Australian government’s plans for a Medicare co-payment are a potential negative. Sonic derives about half its revenue from Australia. As a minimum, it’s looking as though this plan is going to be watered down with various low income groups excluded and the risk may well be factored into price.
At around 16.6 times F15 earnings, Sonic has some scope to fall a bit but probably not too much. On that basis the area around the 40 week moving average may again prove to be support.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC
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