– The bulls are firmly in control of the stock market today with the S&P 500 making a new intraday high and the Eurostoxx 600 (EU wide benchmark) hitting a 6 year high.
– What actually drove the bullishness is hard to fathom given the weakness in Asia stocks yesterday after the Chinese house price index with the only reasonable candidate the better than expected German IFO business climate index which printed 111.3 versus 110.6 last and expected. Perhaps also it was the 1.1% fall in EU consumer prices which will put pressure on the ECB to join the quantitative easing party with the BoE, BoJ and Fed. Or perhaps is the weak data in the US which is again raising questions of whether the fed will have to taper the taper.
– So, at the close US stocks are off their highs but the Dow is up 104 points or 0.64% to 16,207, the Nasdaq is 0.69% higher and the S&P after making a new intra-day high at 1,859 is up 12 points or 0.64% to 1,852..
– In Europe stocks were in the black all day but really zipped higher once US markets started trading. The Stoxx 600 finished at 338, a 6 year high while the FTSE was up 0.41%, the DAX 0.54% and the CAC was 0.87% higher. the FTSE MIB in Milan rose 0.42% and the IBEX 35 was up 1.21%.
– Locally the SPI 200 March contract was up around 43 points with 10 minutes to 8am but has lost a few points and is up 27 points to 5449 bid but still continuing its strong rally.
– It was the US dollar that bore the brunt of the weak US data which saw the Markit Services PMI drop to 52.7 from 56.7 last, the Dallas Fed Index dropped to 0.3 from 3.8 while the Chicago national activity index fell to -0.39 from -0.03.
– All of which meant that the Aussie, Sterling, CAD and Gold (amongst others) rallied against the US dollar. The Aussie’s move is the strongest because it was weakest yesterday trading down to 0.8935 before rallying more than a full cent to a 0.9049 before settling back a little to 0.9035 this morning for a gain of 0.61%. Sterling rose 0.29% to 1.6667 while the Yen and Euro were largely unchanged day on day at 1.3736 and 102.45 respectively.
– On commodity markets the stand out was one we don’t usually report with Nat Gas tanking 10.68% after last week’s big move up. Nymex crude rose another 0.51% to $102.72, Copper lost 1 cent to $3.32lb and while corn fell 0.33% wheat and soybeans were up strongly rising 1.31% and 1.08% respectively. Turning to gold it has ripped $13.80 oz higher for a gain of 1.04% and it sits this morning at $1337.70 not far below last week’s high at $1339ish.
On the data front today the Chinese Economic Leading Index is out and then tonight we get German GDP, French Business Climate, Italian retail sales and in the UK mortgage approvals and inflation hearings which will be important for sterling.
In the US the redbook index is released along with the Case Shiller home price indices, consumer confidence and the Richmond Fed manufacturing index.
And from Ric Spooner at CMC Markets, here’s your stock to watch on the ASX today:
Transfield Services. Yesterday was a day to remember for shareholders in asset and project management group, Transfield. The stock closed up 24.5% at .99c after announcing that it has won a $1.2bn contract to provide security and catering services to asylum seekers on Manus and Nauru. Despite this great result, the stock was unable to close above its 200 day moving average which currently sits just above $1.00. With the company reporting on Thursday and with investors crunching the numbers on yesterday’s contract news, the 200 day average might now act as a useful indicator of ongoing market sentiment in this stock.