Welcome to your week. Here’s how to start it in great shape.
– Amazon managed to knock the Nasdaq sharply lower on Friday night with the stock down 9.9% after disappointing earnings results. Ford also let investors down, dropping 3.3% after its earnings which added downward pressure in the broader market. These disappointments followed a drop in the flash services PMI to 54.2 from 55.3 although consumer sentiment rose to 84.1 – a nine-month high.
– So at the close the Dow was 141 points lower, dropping 0.85% to 16,361, the S&P 500 dropped 16 points for a fall of 0.83% to 1,863 while the Nasdaq lost 1.74% to 4,076.
– Locally that means we’ll start under pressure on the ASX, which closed down 23 points in futures trade with the June SPI 200 at 5505 bid.
– European shares were under pressure as well, with the simmering tensions in the Ukraine and the fall in US stocks weighing. The FTSE fell 0.25% in the UK to 6,686 and the DAX was off 1.54%, with Craig James from Commsec saying Deutsche Bank lost 2% on concerns it has to raise more capital or fail bank stress test. In Paris, the CAC dropped 0.79% to 4,444. Stocks in Milan and Madrid came under heavy selling pressure, dropping 1.73% and 1.49% respectively.
– In Asia, markets had a poor end to the week with Shanghai stocks down 0.97%, while the Hang Seng dropped 1.5%. Across Asia, the composite Asia Dow fell 21 points or 0.67% to 3,083. In Tokyo, the Nikkei was marginally higher, up 0.17% to 14,429. Retail data in Japan is out today.
– On Currency markets it has been fairly quiet as Forex traders wait for the next macro shoe to drop. Euro is still above 1.38 at 1.3839, the pound is stuck to 1.38 still and USDJPY is at 102.24. The Aussie is also fairly becalmed at the moment, sitting at 0.9272 this morning.
– On Commodity markets, keep an eye on Nymex crude which has broken a recent uptrend and sits back at $100.69 Bbl off 1.31%. Gold has managed to regain $1300 just over the weekend and sits at $1300.50 this morning. Copper bounced higher in London on Friday which helped drive prices in US trading to $3.12 lb. On the Ags, it was positivity across the board with Corn 1.15% higher and Wheat and Soybeans rising 1.63% and 1.77% respectively.
On the data front, today is quiet with no Australian data scheduled. As noted above, retail sales data is out in Japan before German import price data and then pending home sales and the Dallas Fed manufacturing survey in the US tonight.
Here is CMC Markets Stock To Watch Today from Chief market Analyst Ric Spooner
The current sell off in the US technology sector remains a key to near term sentiment in world equity markets. Looked at in traditional price: earnings terms, valuations remain very high. Prices are all about momentum and anticipation that future earnings growth will be very strong. This makes it more than usually difficult to judge where some of these stocks may eventually form a base.
Given this background, the Amazon chart looks interesting. On Friday, it came to rest at the first of 2 long term trend lines. A clear break below this line might indicate there is more selling to come. On the other hand, signs of basing behaviour around this level might provide investors with some comfort.