Good morning. Here’s your heartstarter.
– A new high for stocks overnight as earnings season saw more positive reports from US companies. Martin Lakos from Macquarie Equities told the ABC this morning that a stellar 78% of earnings so far have beaten expectations. That is a very solid performance and well above average.
– In the end it helped propel the S&P 500 to a new all-time closing high of 1,987.09, up 3 for a gain of 0.17%. The Dow was down 0.16% however, at 17,087, and the Nasdaq rose 0.4% to 4,474.
– It seems you can’t kill this market with a stick but as former US Treasury Secretary Tim Geithner highlighted, the complacency in markets is unsettling.
– In Europe, things were more positive as well with the DAX up 0.2% to 9,754, the CAC up 0.15% to 4,376 and the FTSE up ever-so-slightly with a rise of 0.04% to 6,798. That’s not a bad performance given BoE governor Mark Carney warned of higher rates sooner rather than later overnight.
– Locally, on the ASX Futures market the SPI 200 was up sharply at 5542 for a gain of 19 points on the September contract. Yesterday the physical ASX200 rejected a very important trendline when it had a run at 5600 and a break of this level would be a huge move if it can happen.
– In Asia yesterday, the Nikkei dipped just 0.09% to 15,329, the exchange in Shanghai was up 3 points or 0.12% to 2,078 but Hong Kong stocks were higher with the Hang Seng rising 0.8%. Today is a big day for the region with the release of Japanese trade data along with the HSBC Flash Chinese manufacturing PMI and its Japanese counterpart the Nomura/JMMA PMI.
– Bonds were interesting overnight – more so in Europe than the US where the 10s rallied a little in Germany (close at 1.15%), the UK (2.56%), Italy (2.64%) and Spain (2.55%). In the US, 10s rose just one point to 2.47%.
– New highs on the S&P 500 and bonds near recent lows? That’s interesting.
– On Currency markets, the Aussie’s bounce gained further traction, topping out at 0.9461 before the RBNZ increased interest rates, but its governor warned that the Kiwi’s strength was “unjustified”. The Aussie’s currently is sitting at 0.9440. Euro’s weaker drift continued and it sits at 1.3460 while sterling strangely fell also, even with Carney’s warning – it sits at 1.7041. USDJPY is becalmed at 101.47.
– On Commodities, Iron Ore tanked and has now given up 50% of its gains. It closed down $1.25 to $93.08 tonne. Newcastle Coal for September was down a marginal 5 cents tonne at $68.40.
– Nymex Crude for August was up 73 cents Bbl to $103.79. Gold has drifted lower, dropping $10 oz to $1,303 and Copper is unchanged at $3.19 lb. Corn rose 0.62%, Wheat is up 1.19% and Soybeans rallied 1.44%.
On the data front, the Chinese and Japanese data are the key releases today in Asia then we head to Europe for the flash PMIs and UK retail sales. In the US, Markit also releases a Flash PMI along with new home sales, jobless claims and the Kansas City Fed manufacturing index.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
The near term fate of the big mining stocks might be the key to whether the Australian index continues to forge into post GFC highs or chops around current levels.
Production reports have been good, the next question is whether the decline in spot iron ore prices over recent days is part a minor correction or the beginning of a move to new lows.
The Fortescue chart might be an interesting canary in the coal mine. A move above last week’s high at $4.80 would see the chart establishing a pattern of higher lows and higher highs. It would also start to get FMG encouragingly clear of the trend line resistance. A break below Monday’s low at $4.54 would mean lower lows and lower highs and look like the trend line is going to hold again after a couple of false breaks.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC