Saturday is so close you can smell the leather and willow. But first:
– A solid night on US markets – stocks – saw the Dow rally more than 200 points but traders on Bond markets in the US are less happy, with rates on US 10-year Treasuries up 5 basis points to 2.27%. That is still super low but represents a capital loss of 2.33% on bonds held.
– News of an Ebola evaluation of a healthcare worker in New York took stocks off their highs, with the Dow dipping from 16,768 to close at 16,678, a gain of 217 points or 1.32%. The Nasdaq rose 1.6% to 4,453 while the S&P 500 is up 24 points to 1,951 for a gain of 1.24%.
– The big news was in the big stocks with Caterpillar smashing estimates – $1.72 per share against expectations of $1.35 with a revenue beat, i.e. not just cost-cutting. 3M was also up 5% after an earnings beat. Both these factors, the recovery off last week’s 2011 trendline and jobless claims printing well below 300,000 at 283,000 again all combine to question the bears.
– In Europe, markets rallied strongly as well with the CAC up 1.29% in Paris, the DAX up 1.20% and the FTSE up 0.3% to 6,419. In Milan and Madrid, stocks were up 0.88% and 0.82% respectively.
– Locally, traders overnight were happy to follow the moves offshore, with the SPI 200 December futures up 17 basis points to 5,389. As is ever the case though, the market’s giveth and they taketh away. So the fact that gold dipped 1% to $1,232 and iron ore dropped across the board – especially in the 2015 and 2016 contracts – is likely to provide some headwinds.
– Surely Asia will have a good day today. Yesterday’s selling in Shanghai, which saw the index down 1.06% to 2,302, is an interesting take on the HSBC Flash PMI which was slightly better than expected at 50.4. The Hang Seng fell 0.3% and the Nikkei was down 0.37% to 15,139. The Nikkei should love both the US move and the fact that the USDJPY surged more than 100 points to 108.29, making the Japanese economy and exports more competitive.
– As noted above, Bonds were a little bit higher, with the bigger sell-offs in the US and UK where Gilts rose 6 points to 2.25%. 10-year Bunds rose 3 points to 0.86% while rates in Italy and Spain were largely unchanged, reflecting the risk-on action overnight.
– On Currency markets, the Aussie dollar is becalmed but at the bottom of its 0.8750/0820 range for the week at 0.8757 this morning. It is resting on a knife edge. Elsewhere, the US dollar was better bid and the euro is at 1.2646 and the pound at 1.60306.
– On Commodities, iron ore is off with the Dec 2014 contract losing 46 cents a tonne to $79.04 but Dec 2015 lost $2.03 to $77.06, not a good sign for prices in the future. Newcastle coal settled at $65.45, down 5 cents. Elsewhere, crude was 1.76% higher with Nymex settling at $81.94, gold was lower as noted above and copper rose to $3.03 a pound. On the Ags, corn was up 1.53%, soybeans rose 3.85% and wheat was up 0.46%.
On the data front today, Chinese house prices and leading index are out in Asia and then UK GDP tonight. Over the weekend we get the results of the European bank stress tests and then next week we get the FOMC meeting and the end of QE – MAYBE!
Have a great weekend.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
SAI Global Limited
We are well into the Annual General meeting season and here’s one the market liked. SAI Global is a spin off from Standards Australia and, amongst other things provides industry standards and code of practice references as well as assurance and compliance services to companies.
Its shareholders have had a rollercoaster ride in recent times. The stock price jumped sharply a few months ago when SAI announced that it had received an unsolicited bid from private equity groups. The bid came to nothing and the SAI also rejected subsequent offers to buy parts of the company. This all saw the stock price fall 33% from its peak in June.
The company is getting back to basics cutting costs and conducting its own strategic review of divisions and operations. So far so good, yesterday SAI announced solid EBITDA gains for its info services and assurance divisions in the September quarter. This news was greeted by a gain of more than 6% in SAI’s share price and a strong gap through the 20 day moving average yesterday. Technically, it’s not hard to imagine a retracement back to at least the 38.2% Fibonacci level at $4.06 or potentially the 61.8% level and 200 day moving average around $4.40.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC