Here's Your 20-Second Guide To What Aussie Traders Will Be Talking About This Morning

PLANICA, SLOVENIA – MARCH 22: Julia Clair of France competes during the first round of the FIS Women’s Ski Jumping World Cup on March 22, 2014 in Planica, Slovenia. (Photo by Srdjan Stevanovic/Getty Images)

WOW.

– What a huge revision to US first quarter GDP overnight. The original 0.1% growth rate had already been revised to -1% on the second read but last night’s third read showed a monstrous 2.9% contraction. That’s the worst outcome since 2009 but somewhat rubbery given the big revision to healthcare services from +9.1% to -1.4%, which meant it went from adding 1% to GDP to subtracting 0.16%.

– In the end though, US stocks rallied regardless as the market shrugged off the weakness. That seems reasonable given this is a hindsight number and doesn’t seem to fit with the more recent data. Joe Weisenthal from BI US has a great piece about why we should all do as stocks did and ignore the GDP report.

– Bonds didn’t ignore the data however, with the weak GDP accompanied by a surprise 1% fall in durable goods which helped the US 10s rally down to 2.56% and sparked serious rallies in European bond markets. German 10-year Bunds rallied 6 basis points to 1.26% for a stunning 4.76% one-day capital gain. Italian 10s fell 2 points to 2.74%, Spanish 10s finished at 2.64% while in the UK, 10-year Gilts fell 9 points to 2.65% for a big 3.16% capital gain.

– So at the close, the Dow rose 50 points to 16,868 for a gain of 0.3%, the Nasdaq rose 0.68% and the S&P 500 was up 10 points 1,960 for a 0.51% gain.

– In Europe, it was a sea of red however, with the FTSE down 0.78% to 6,734. The DAX was 0.71% lower at 9,868 and the CAC fell 1.27% to 4,461. In Spain, stocks dropped 1.25% while Milanese stocks are down 0.8%.

– Locally, the recovery in the US market helped the SPI 200 futures contract gain 8 points on the September contract to 5361. No doubt Iron Ore’s continued recovery won’t hurt prospects for an even better day on the physical market when it opens this morning.

– In Asia yesterday, it was a tough day in reaction to the falls in US markets. The Nikkei was 0.71% at 15,287, the Hang Seng was roughly unchanged at 22,867 while in Shanghai, stocks finished down 0.39% to 2,026. Again it’s a quiet day in Asia with only foreign investment in Japan to be released, but it is likely to be a more positive day after last night’s US moves.

– On Currency markets, the US dollar was hit by the weakness in the data which has pushed the Aussie dollar back above 94 cents at 0.9403. Euro is up at 1.3629 and sterling is at 1.6979. USDJPY sits at 101.84 this morning.

– On Commodity markets, the big news for Australia is the continuation of Iron Ore’s recovery from last week’s sub-$90 tonne lows. At $95.13, up $1.38 overnight, Iron Ore is now up 7.29% from the low. Newcastle Coal for September delivery also rose, up 35 cents a tonne to $70.70.

– June Nymex Crude was up 0.73% to $106.08, Gold is breaking out of a huge downtrend at $1,321.80 this morning and Silver sits at $20.86. Copper gained another cent to $3.16 and even Wheat rose up 0.79%, although Corn dropped back 0.45% and Soybeans were largely unchanged.

On the data front today, it is another quiet day in Asia before we hear from BoE Governor Mark Carney tonight and also receive the BoE’s financial stability report. In the US tonight we see jobless claims, personal income and consumption data along with the Kansas Fed manufacturing index.

And now from CMC Markets’ Ric Spooner is today’s Stock of the Day

Commonwealth Bank
There’s plenty of trader interest in CBA’s chart at the moment. Recent nudges below trend channel support combined with a failure to rally back to the resistance line have created an impression of fatigue. Not only that, all this up and down on the spot action formed into the classic chart head and shoulder pattern.

It seems an act of bravery to suggest that Aussie dividend hunters might be missing in action, even temporarily. But they weren’t out in force yesterday. In another sign of weakness, price gapped below the neck line of the head and shoulder. For chartists this creates a negative bias for a while. At this stage it would take a move back above the $82.68 high to dispel that bias.

Ric Spooner, chief market analyst, CMC Markets

You can follow Ric on Twitter @ricspooner_CMC

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