Good morning and welcome to Wednesday. Let’s get this over with, pronto.
– Solid. There is no other way to describe the overnight stock market price action in Europe and the United States and traders bought and indices rose strongly.
– The US dollar was also stronger and Gold fell after data in the US showed a benign inflation outcome (0.3% mom and 2.1% yoy), a solid rise in existing home sales (2.6%) and a relatively impressive print of 7 for the Richmond Fed manufacturing index.
– So at the close, the Dow was up 0.37% to 17,114, the Nasdaq was 0.71% higher while the S&P 500 is closing back in on 2000 was 10 points higher at 1,984 up 0.53%.
– In Europe, the co-operation between Ukraine and Russia along with strong earnings kicked stocks higher, according to CommSec chief economist Craig James. At the close, the FTSE lagged rising only 0.99% to 6,795 while the DAX was up 1.27% to 9,734 and the CAC leapt 1.52% to 4,370. Stocks in Madrid were up 1.59% while stocks in Milan were 2.17% higher.
– The impact on the local futures traders overnight has been to drive the SPI 200 September 16 points higher to 5,510.
– After a day of strong equity gains, it might be reasonable to expect that bonds sold off. But that is not the case today with US 10s down a pip to 2.46% after the inflation data. German Bunds rose just 2 points to 1.17% with a similar move in UK 10s to 2.59%.
– In many ways, last night’s moves started in Asia as the UN resolution success emboldened traders. Certainly the Chinese leading index of 1.3 was good news, as was the coincident index in Japan even though the leading index was a bit disappointing. In the end the Nikkei was up 0.84% to 15,343, the Hang Seng was 1.69% higher to 23,782 and stocks in Shanghai climbed 1% to 2,075.
– On Currency markets, it was a bad night for Euro bulls with the single currency hitting its lowest levels of the year at 1.3465 this morning. Sterling is also lower with GBPUSD a touch lower as well at 1.7063. USDJPY is at 101.42 while the Aussie was higher at 0.9421 at one stage last night before pulling back to 0.9392. But a bit of volatility is back with a 63-point range – just a bit though.
– On Commodity markets, Iron Ore slipped again with September 62% Fe swap futures down 17 cents to $94.33. Newcastle September Coal rose 80 cents to $68.45 tonne. Nymex July Crude was down 17 cents to $103.89, Gold settled at $1,313 and Silver is at $20.99 oz. Copper closed at $2.19 up 1 cent lb and the Ags couldn’t help themselves with both Wheat and Corn falling 1% each. Soybeans rose 0.74%.
On the data front today, it is a big day locally. The release of the second quarter CPI has the market expecting 0.5% headline and 0.6% core increases. This should, subject to revisions, take the inflation rate to the top of the RBA’s 2-3% band.
Tonight sees the release of the BoE minutes and a speech by Governor Carney along with US mortgage application data.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
Even if you’re not really a chartist here’s a way fundamental traders can combine charts and opinion to develop trade entry levels.
Seek fans just love the “rivers of gold” that once belonged to Fairfax shareholders and used to flow from classified ads. Now they flow to Seek shareholders via a torrent of online bits and bytes.
Optimists see this river becoming a flood as world job markets hit their stride. For Seek fans, the classic triangle set up would be to buy if the stock drifts down to the triangle base but bounces off it for a 3rd time.
If you’re a stock market bear and reckon the market will be cactus once the Fed provides a dose of reality and lifts interest rates, then highly valued market darlings like Seek will rank high on your short selling watch list. Here the strategy would be to sell if Seek drifts down to the triangle support but smashes straight through in a sign of looming weakness.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC