Good morning. Here’s all you need to know so far.
– A topsy turvy day in the US stock market overnight even though the data was fairly solid, with pending homes sales up 3.4% from a fall of 0.5% last while the Dallas Fed index rose to 11.7 from 4.9. In the end, US stocks closed in the black which has driven the June SPI 200 200 contract up 21 points to 5554 bid this morning.
– The Dow traded through a 187-point range overnight but good economic news and some M&A activity before closing saw it up 87 points at 16,448 for a gain to 0.54%. The Nasdaq fell 2 points or 0.04% to 4,074 while the S&P gained 6 points or 0.3% to 1,869. Of note in share-specific news is that Bank of America fell 6.3% after cancelling a buyback.
– In Europe it was M&A also, particularly the pharmaceuticals again, which drove the market. AstraZeneca was up 14% on the Pfizer continued interest in a takeover. In the end the FTSE was 0.21% higher at 6,700, the DAX rose 0.47% to 9,446 while the CAC rose 0.39% to 4,461. In Europe, it is worth noting that the Bundesbank said it saw no chance of deflation overnight but German import prices fell 0.6% in March to an accelerated 3.3% rate.
– It was a bad day yesterday in Asia after the weaker end to Wall Street the previous week, with the Nikkei off 0.98% to 14,288 even though the retail sales data for March rose solidly, up 16.1% to an 11% year-on-year pace. In Shanghai, stocks fell 1.65% as the repo rate leapt to 4% after the weekend meeting of senior Chinese leaders which reinforced there is no big stimulus measures in the pipeline. Today is Showa Day in Japan and there is no data out in the region so it should be fairly quiet.
– On Currency markets, the US dollar regained some ground after coming under pressure in early European trade. This saw the euro head up to 1.3880 before settling back to 1.3850. No doubt Bundesbank comments helped the early gains but how long can they fight the data? A bit of euro weakness would certainly help the deflation scenario. Elsewhere, the pound is largely unmoved at 1.3805 while USDJPY is grinding higher to 102.62. The the Aussie dollar came under pressure, testing support at 0.9241 after a big rise in early Europe to 0.9316 which is a signs the bulls are in control for the moment.
– On Commodity markets, it was quiet with Copper up 1 cent to $3.13, Crude becalmed at $100.87 and Gold dipping a tiny bit to $1,299. Things were also quiet on the Ags, with Soybeans’ move of +0.53% the only material one.
On the data front, if you trade Kiwi then the trade balance and export-import data will be important but after that it is a data-free zone until the Gfk consumer confidence data in Germany tonight. UK GDP is a highlight and the market is expecting a decent quarter of 0.9% growth which will take the year-on-year rate to 3.2%. EU consumer confidence is also out before the really important German CPI, which has the chance to make or remake the outlook for the ECB and the euro. Expectations are of a fall of 0.1% in April but the year-on-year rate to rise due to low numbers dropping out to 1.4%.
In the US, it’s the Redbook, Case Shiller house prices and Consumer Confidence.
Here is CMC Markets Stock To Watch for Today from Ric Spooner Chief Market Ananlyst
Myer on the shopping list?
Yesterday’s bid for Goodman Fielder is a reminder that takeover activity is now a feature of the market landscape. Interest rates look like staying low for a while, gearing is falling and some balance sheets are starting to look lazy. Managements will be searching for growth as confidence returns.
The $2.20 support level again appears to be attracting bargain hunters in Myer. With valuations now down to around 10.8 times 2015 earnings, some may be hoping that Myer might be getting attractive to a potential bidder.
Whether this support can develop into a corrective rally rather than just a price pause might depend on whether there is enough buying impetus to push prices past the minor resistance above the recent price gap around $2.30