Well hello, Friday. It’s been too long.
– The data in the US overnight suggested the economy might be getting back on track and that the dip in the housing market might have ended. The data showed that existing home sales rose for only the second time in nine months with an increase of 1.3% in April. Even though this was lower than expected, it was still a positive result when coupled with the Flash US Markit PMI which printed 56.2 versus 55.5 expected and the Kansas Fed manufacturing index, which rose to 14 from 12 last. The Chicago Fed national activity index was, however, a little weaker than last time.
– In the end, the the Dow was roughly unchanged at 16.543 but that masks an early dip, rally then sell-off toward the close. The Nasdaq rose 0.54% to 4,154 and the S&P 500 rose 4 points or 0.21% to close at 1,892. The S&P is now back at the top end of the recent trading band in futures terms, with 1,901 the big level to watch.
– In Europe, it seems the FTSE was nonplussed, with GDP printing at 3.1% as expected of the pick-up in business investment in Q1 2014 to 2.7%, suggesting much of the good news is priced in (GBP fall overnight supports this). In the end, the FTSE was unchanged at 6,821. In Germany, the DAX rose 0.24% to 9,721 while the CAC in Paris rose 0.2% to 4,478. In Milan and Madrid, stocks fell 1.09% and 0.1% respectively.
– Locally, after a solid day yesterday for the ASX Futures market, the June SPI 200 contract is up 14 points above the 5500 level at 5501. The SPI 200 is now testing the underside of the previous uptrend it broke down through earlier this week.
– In Asia, the lead from the US and Europe coupled with a big surprise from the HSBC Flash PMI saw a very good day across the region with the Asia Dow up 1.01% to 3,185, the Nikkei 2.11% higher (yen weakness helped as well) to 14,338 and the Hang Seng rising 0.51% to 22,954. Strangely though – but not uncommonly – Shanghai shares fell 0.2%. In the region today, it is fairly quiet and the Thai coup should only impact Thailand, not the bigger markets as it is an internal issue. Data-wise, the release of the Chinese leading economic indicator and Singaporean CPI are the only areas of interest.
– Turning to Currency markets and the US dollar found its mojo overnight, driving the majors all lower. The Aussie could not hold onto the Chinese data-induced gains and sits back at 0.9227 this morning. Euro looks like it could break wide open fairly soon if it takes out the 200-day moving average at 1.3630 – it sits at 1.3655 at the moment. To put some context around Euro weakness, weaker than expected French, German and EU-wide Flash PMI’s showed the divergent economic outlook. USDJPY is up at 101.73 while GBP is back at 1.6869, off the day’s high of 1.6916.
– Looking at Commodities, Gold is up $6.90 in spite of the US dollar’s solid night at $1,294, Nymex June Crude is off a little at $103.78 and Silver rose a little less than 1% to $19.55 oz. Copper sits at $3.15 while the Ags were mixed with Corn up 0.53%, Wheat down 0.75% and Soybeans rising 0.78%.
On the data front, German GDP for Q1 and the release of the IFO business climate data will be important, as will US home sales later in the night. Otherwise it will be fairly quiet.
Here is Ric Spooner, CMC Markets’ chief market analyst, with his Stock to Watch:
Fortescue has been at the epicentre of market concerns about China’s property market and the shrinking iron ore price.
The share price has barely looked back since it fell through its 200-day moving average. Yesterday though, chartists saw a glimmer of hope courtesy of China’s better than expected PMI. Price kicked off its low and returned to the resistance of previous lows between $4.62 and $4.67. If Fortescue can muster the strength to break (overlap) through the $4.67 resistance in coming days it might be a positive sign suggesting the downtrend is losing its impulsive momentum.
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