Hello, traders. Here’s the best way to start your week on the run.
– Big news with the S&P 500 closing above 1900 for the first time on Friday. Sure, the close was a “just over” close with the S&P finishing at 1,900.53, but the nine-point gain was pretty solid. The Dow closed up 0.38% to 16,606 and the Nasdaq was 0.76% higher to 4,186.
– Key to the rally seems to be the recovery in housing that so worried Janet Yellen a few weeks back, with data on Friday showing that new home sales rose 6.4% to 433,000. No doubt a little position squaring before the Memorial Day holiday today might have helped as well.
– In Europe, the FTSE was largely unchanged, down 0.07% t 6,816. On the Continent however, the DAX rose 0.48% to 9,768, the CAC in Paris was up 0.33% to 4,493 while in Madrid stocks rose 0.36%. In Milan, stocks surged 1.83%.
– Europe may get a further lift tonight from the election of the Petro Poroshenko, “the Chocolate King”, as President given that he has in the past worked with both sides of the current divide. He said: “My first decisive step will be aimed at ending the war, ending chaos, and bringing peace to a united and free Ukraine… I am certain that our decisive actions will bring fairly quick results.” The world hopes so – although Oil longs may not be so sure.
– In Asia on Friday it was a great day for the Nikkei, which surged 0.87% as the recovery of the bottom of the recent range extended to three solid days. The Nikkei finished the week at 14,462 in concert with the big bounce in USDJPY from the week’s lows. In Hong Kong, the Hang Seng was largely unchanged at 22,966 while stocks in Shanghai were higher, up 0.68% to 2,035. There is no data in the region of note other than Singaporean industrial production.
– Locally the ASX Futures market was fairly quiet but the June SPI 200 contract is up 3 points to 5,513 bid.
– On Currency markets, the euro’s woes continued and it sits at 1.3623 this morning. The data in the US and the looming ECB decision on quantitative easing are the US dollar’s best friend at the moment but its strength against the euro looks set to continue. USDJPY sits at 101.96 again this morning after finding a low last week while the pound remains strong at 1.6836. The Aussie dollar is also holding in at 0.9234, which is almost exactly in between the 90-94 range that has dominated trade over the last month or two. There is nothing locally to shake it from its torpor but a note from Westpac suggests that any strength will prove ephemeral and that the Aussie should be lower by year’s end.
– On Commodity markets, June Nymex Crude is at a worryingly high level for global growth, closing at $104.39 on Friday. Gold is largely unchanged at $1,293 while Silver sits at $19.37. Copper is also higher – no doubt benefiting from the better Chinese data recently – and it sits at $3.17 this morning. On the Ags, Corn rose 0.26%, Wheat fell 1.02% and Soybeans were 0.21% lower.
On the data front, it is going to be very quiet with nothing of material import to be released other than German Gfk confidence in the next 24 hours. It is Memorial Day in the US and Bank Holiday in the UK so the two big markets will be out and trade will be light today.
Here is Ric Spooner, CMC Markets’ chief market analyst, with his Stock to Watch:
It may not be good news for air travellers but the market loved last week’s announcement that Qantas no longer plans to add to capacity on domestic routes. To the market, no more bigger planes and no more extra flights sounds like higher ticket prices and better margins.
Chart-wise, Friday’s big gains have seen Qantas landing at an interesting place. Failure to move past Friday’s highs would see a trend channel developing.
Unless the market does show clear signs of backing off though, this doesn’t look like a freight train you’d want to stand in front of yet.
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