– US stocks turned down from around 2pm New York time with the S&P 500 off around 8 points from the high of the day at 1853 but off just 0.01% at the close. The Dow is down from the highs as well but still in the black with a gain of 0.11%. The Nasdaq is also in the black up 0.10%.
– In Europe, stocks were under pressure, although the US strength early dragged them off their lows. The FTSE fell 0.46% even though UK GDP printed as expected with a gain of 0.7% in Q4 2013, unchanged from the first read. In Frankfurt, the DAX fell 0.39%, the CAC dropped 0.4% while stocks in Milan and Madrid fell 0.37% and 0.18% respectively.
– Locally on the ASX the March SPI 200 contract lost 20 points overnight to 5417 bid.
– Worth noting in a macro sense is what is going on in China, with the Chinese regulator pouring cold water on any concerns about its recent efforts to weaken the yuan. But it clearly is trying to weaken it as it joins the currency war after many years of letting the yuan strengthen.
– Equally something to keep an eye on from a geo-political and possible market threatening sense are the drills Russian President Vladimir Putin has ordered for troops in Western Russia in the wake of the Ukrainian tensions and sacking of its President. Just a warning to the new regime hopefully and nothing more.
– On global FX markets, while NYC position at close is taking the major pairs off their lows, it has been a night of US dollar strength where the stronger than expected new home sales seem to have captured attention. The euro is off big-time after the recognition in the market and a report from BNP Paribas that the ECB is going to take the QE plunge this year. It is certainly my base case but BNP is the first major global bank to make the claim. As a result, the euro is back down under 1.37 at 1.3685.
– Elsewhere, the Aussie slipped back below 0.8950 earlier but sits at 0.8962. The pound sits at 1.6664 while USDJPY is resting mostly unchanged at 102.35. Also worth noting, the Turkish lira is under attack again but this time it seems more about a recording released on social media purporting to be of the Prime Minister instructing his son on how to hide funds rather than a specific Turkish economic problems.
– On commodity markets, Gold’s reversal was a big one. After trading just below $1345 an ounce yesterday it is back at $1325.60 for a loss of 1.1% day on day. Technically it looks like Gold may have finally made a high for this run. Nymex crude is up 0.65% to $102.49, though after the smaller than expected build in crude stocks announced by the EIA overnight. Copper has tanked though, which is a big sign of real concern about China, the Yuan weakening and the global economy falling 2% to $3.27 lb. The Ags had an interesting night with Corn down 0.82%, Wheat fell 2.44% and Soybeans rose 0.59%.
On the data front, Q4 Capex data is due out in Australia. After the weaker construction data yesterday, this will be watched closely for an indication of where the mining investment boom is now and whether there is any take-up of the slack in other parts of the economy. The market is expecting no change.
Tonight we get German employment and unemployment together with German CPI which will be huge, EU-wide confidence and business climate are also out. In the US durable goods, initial jobless claims and a speech, postponed, by Janet Yellen to the Senate.
And now here is Ric Spooner from CMC Markets stock to watch for today.
Today has the potential to become a key date in Qantas’s long history with the release of its much awaited structural review.
As so often happens in these circumstances, the share price has come to rest at a key technical level prior to the announcement. In this case, it’s the 200 day moving average and this might provide traders with a useful gauge of market sentiment towards today’s announcement.
Tradeable alternatives might include:
- A strong gap above the moving average. This can suggest continuation of the uptrend with more to come over coming days
- A gap lower which amounts to a rejection of the moving average. This can indicate exhaustion and a looming period of consolidation below the gap
- A bit of a nudge above the 200 day moving average that falters soon after. This can indicate the classic traders “head fake” as profit taking sets in and a pullback gets underway in a case of ‘’buy the rumour, sell the fact”.
Ric Spooner – Chief Market Analyst CMC Markets
You can follow Ric on Twitter with the handle @ricspooner_CMC