Welcome back, Australia.
– Markets ended last week under pressure with Gold up, stocks and USDJPY down and a rally from 10-year US Treasuries. Yesterday in Asia and Europe the carnage continued but overnight, while volatile, US stocks are trying to drag themselves back into the black.
– The big news overnight has been some big selling in tech shares but also the fact that the German IFO Business Climate (110.6) and Current Conditions (112.4) were both stronger and at multi-month highs. The DAX couldn’t benefit due to the overall bearish bias of markets but it is a good sign for the German economy nonetheless. Also of note – and more troubling for the US economy – the 7% fall in new home sales suggests some loss of momentum in this sector of the economy as rates have risen over the past few months.
– The wash-up is that at the close, the Dow sits at 15,837.88 for a loss of 0.26%, the S&P 500 is down 0.49% to 1,781.56 and the Nasdaq is under pressure from tech shares and is down 1.08%.
– In Europe, it was a bad night with the FTSE under acute pressure as British Gas declared Force Majeure in Egypt which weighed on the index. It closed down 1.69%. The DAX couldn’t get a lift from the better data and fell 0.46%, the CAC fell 0.40% and in Milan and Madrid, stocks were down 0.44% and 1.12% respectively.
– Australian markets were closed yesterday but Asia had an ugly day with the Nikkei and Hang Seng both down more than 2%. On local Futures trade, the SPI 200 is off 24 points at 5133 bid, which is not too bad, and the Australia Day holiday has saved the local market from some extra volatility.
– There has been plenty of volatility however in Global FX markets over the past few days. The last 12 hours saw some reversal of fortune as US stocks didn’t continue to tank. The euro sits at 1.3670 off the high of 1.3716, sterling is up 0.57% to 1.6575 and USDJPy reversed some of the yen strength and is up 0.24% at 102.62. The low yesterday during the period of acute equity weakness was 101.77. The Aussie dollar has proved resilient also and sits at 0.8749, well above yesterday’s low of 0.8675.
– On Commodity markets, the gold bulls will be disappointed by the apparent break and then failure above important trendline resistance. The last 24-hour high has been $1278.98 but Gold is sitting at $1253.41 this morning. Happily though, Crude is off a little at $95.65, down 1%, and Copper is back below $3.30 lb and sits at $3.29 this morning. Corn rose 0.52%, Wheat was 0.31% lower and Soybeans rose 0.23%. Bitcoin on Mt Gox is $970 but you can get it elsewhere much cheaper.
On the data front we see the release of the South Korean manufacturing index, while in Australia we get the leading indicator and NAB Business survey. Tonight, German import prices and UK GDP which will be a huge number for the pound before we get durable goods, Case-Shiller house price index, consumer confidence and Richmond Fed manufacturing index.