The best way to kick off your countdown to Friday knock-off drinks.
– The US dollar is the big mover for mine over the past few days and week. Sure the hoopla around the new all time highs in the S&P gets the headlines but it has been the quiet drift to 2014 lows for the euro and reversal of the pound, with sterling back below 1.70, which is the big emerging story.
– The reason this needs to be on traders’ radar is that currency traders are clearly sniffing something in the wind about the health of the US economy vis-a vis-other economies. Something to watch.
– Overnight stocks in the US were a bit boring with the Dow down just 3 points to 17,084, the Nasdaq drifting 2 points lower to 4,472 while the S&P 500 gained 1 point to 1,988.
– On the data front, jobless claims were super low at 284,000 versus 308,000 expected but the Markit PMI was 56.3 versus 57.5 expected and 57.3 last. New home sales were also lower, dipping 8.1% but the Kansas City Fed manufacturing index bounce strongly to 11.
– In Europe, it was a better night with stocks up across the board. The FTSE 100 in London was up 0.34% to 6,821, the DAX was 0.41% higher to 9,794 and the CAC was up 0.79% to 4,411.
– Locally the impact was that SPI 200 futures are up 8 points to 5,540 and Craig James from CommSec says that BHP was 0.8% higher in London. Rio Tinto leapt 1.5% so it could be the day that the physical ASX takes out 5600.
– On Bond markets, traders voted that on balance the employment and Richmond Fed data in the US trumped the weaker prints with 10-year Treasuries up 4 basis points to 2.51%. 10-year German Bunds were up 3 points to 1.18% while Gilts rose 5 points to 2.61% even though retail sales undershot, printing 0.1% in June against the 0.3% rise expected.
– In Asia yesterday, Shanghai shares were on a tear and it feels like technically they are breaking out. The catalyst of course was the solid print of 52 for the July Flash PMI. Shares in Hong Kong were also higher with the Hang Seng up 0.71%. In Japan though, stocks fell 0.29% to 15,284.
– On Currency markets, the US dollar swept all before it. Euro finished at 1.3463, sterling 1.6985 and USDJPY lifted to 101.81. The Aussie is back at 0.9413 which is a confirmation that the range top remains the range top for the moment. The rally after the Chinese data evaporated and the battler is a little lower. Not weak, but lower nonetheless, as traders eye the RBNZ’s warning of intervention and the possible strategy the RBA might take.
– On Commodities, Iron Ore dipped a little with September 62% Fe swap futures off 20 cents to $92.88 tonne. Newcastle September Coal was unchanged at $68.40. Nymex August Crude is down $1.05 to $102 Bbl, Gold is back below $1,300 at $1,293 after testing the 200-day moving average last night. Silver slipped back to to $20.48 while Copper climbed a massive 6 cents lb to $3.25. The Ags were relatively quiet with Corn down 0.28%, Wheat dipping 0.38% and Soybeans rising 0.54%.
Datawise, today sees Japanese CPI which will be huge for the Nikkei and yen and then in Germany tonight we see the release of the Gfk consumer confidence and IFO business surveys. UK GDP is going to be huge for BoE expectations, Gilts and sterling. Durable goods in the US is out along with pending home sales and Dallas Fed manufacturing index.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
I suppose shareholders in gold miner Beadell had a better day than their counterparts in Newcrest who had to deal with news that they are looking down the barrel of a $1.5 – $2.5bn impairment charge on Lihir and other mines.
Even so, it wasn’t a great day for Beadell whose production report disappointed after heavy rain in Brazil. This saw the price clinging nervously to chart support.
What happens from here will obviously have a fair bit to do with the gold price. Gold bears might get interested in a break below this support. Bulls on the other hand would be encouraged by a rejection of this support line and potential for a return to the resistance line or beyond.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC