Good morning. Here’s what’s happened so far:
– Data in the US was on the weaker side again overnight. This continues the recent run of downside misses which has taken the US data pulse (Citibank economic surprise index) to its lowest level in years. What that tells us is that economists have been more positive on the US growth profile and data releases than what the actual data has revealed about the US economy. That is one reason why Janet Yellen’s testimony tonight – and any hints she gives as to the timing of the first Fed hike – are so important to markets. Notwithstanding the solid jobs reports recently, there is a growing chance that the Fed will delay. Whether or not Yellen hints at this will have traders on tenterhooks when she walks up Capitol Hill tonight.
– Looking at the data specifically, existing home sales dropped 4.9% to a 4.82 million annual rate. That’s well below the fall of 0.8% and an annual rate of 4.97 million that was expected. Likewise, the Dallas Fed manufacturing index dropped from 4.4 in January to 11.2 this month. Data out in Germany was a little weaker than expected as well, with IFO expectations at 102.5 (103 expected). Business Climate printed 106.8 (107.7 expected) while the Current Assessment came in at 111.3, down from 111.7 and against 112.7 expected.
– Turning to Greece, news of a delay in the presentation of the Greek plan to the Eurogroup till tonight has bred concerns that “what might have been circulated privately yesterday was unacceptable to Germany or some others Eurozone officials,” according to Ray Attrill, the NAB’s co-head of Currency Strategy. No surprises then that euro is lower at 1.1330ish this morning.
– At the close, the scoreboard in the US reads:
- Dow Jones down 0.13%, 23 points to 18,117
- Nasdaq up 0.1% to 4,961
- S&P flat at 2,110
– European markets at the close:
- London(FTSE 100) down 0.05% to 6,912
- Frankfurt (DAX) up 0.73%, 80 points to 11,131
- Paris (CAC) up 0.64%, 31 points to 4,862
- Milan (FTSEMIB) up 0.56%, 121 points to 21,964
- Madrid (IBEX) up 1.02%, 111 points to 10,990
– On the ASX, SPI 200 futures traders overnight have the March contract up 7 points to 5,868. This follows a 0.4% rise yesterday as the banks led the market higher. Whatever happens today in trade – be it good or bad – is going to be completely overshadowed tonight with a full list of speeches and important data in the US and Europe.
– In Asia yesterday, Japan made another 15-year high, up 0.73% to 18,467. BoJ minutes yesterday highlighted the bank still thinks it is going to get inflation back to 2% this year. That’s positive for stocks because of what it implies about the strength of the economy. Whether or not you agree, there is no denying the bullishness of the Nikkei at the moment. Shanghai was out again for CNY but Hong Kong came back and did nothing, closing up 0.02% at 24,837.
– On rates markets, the weaker than expected US data helped the market a little with 10-year Treasuries closing down 6 points to 2.06%. German 10s finished at 0.33% while in the UK, 10s finished at 1.80%.
– In Forex land, the chance for a euro rally seems to be fading fast. It should have, could have, would have rallied if it had any decent internal momentum with the weak US data and the apparent resolution to the Greek issue Friday. It didn’t, which suggests now that it won’t. Euro is this morning back in the 1.1330s. GBP on the other hand looks a lot better – particularly against euro. In US dollar terms, GBP this morning sits at 1.5458. USDJPY is at 118.83 and the Aussie has slipped a little but is still clinging around the 78 cent region at 7800 as I write.
– On commodity markets, Nymex crude is down again, losing 3.13% to $49.22. There was a call from the Nigerian Oil Minister at one point in the past few hours that OPEC may have an emergency meeting but OPEC itself has denied that. Gold is lower at $1201 and Copper is at $2.5925. Not a lot of action on the bulks with March iron ore unchanged at $62.75 and March Newcastle Coal at $67.70.
On the data front today we get the weekly ANZ consumer confidence index, but tonight is huge. Both ECB president Draghi and Fed chair Yellen are talking. German GDP for Q4 is out as is EU CPI and of course, the Eurogroup meeting about Greece. Consumer confidence in the US is big and the Case Shiller house price index is worth watching also.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
Shareholders in AMP have had a great run recently. A solid profit result helped but many traders have it firmly on the list of potential takeover targets given its status as a major independent player in the Australian financial markets and the impact of the weaker $A. This has made its price much more attractive to potential offshore predators.
Even so, it will trade without its 13.5c dividend on March 3 and is approaching its first major hurdle in terms of chart resistance. This comes in the form of the October 2009 highs at $6.97n and a large AB=CD pattern level just above this at $7.06.
The very steep recent trend is vulnerable to a correction even before it hits these levels. However really impulsive moves like this often mean there’s a bit further to go even if there’s a correction or sideways movement first (see the arrows on the right for examples)
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC