Here’s your morning update on a very positive night.
– The positive tone on Wall Street will likely resonate locally with Australian stocks expected to open strongly. Overnight, the June SPI 200 futures contract on the ASX is up 27 points to 5409 while the Aussie dollar is a little lower at 0.9245 which will likely help at the margin as well.
– Key to the positivity was the data from the US which showed a big lift in automobile sales to an annualised 16.33 million units. On the other side of the ledger, the ISM manufacturing was higher than last month at 53.7 but undershot expectations of 54. The Markit PMI for the US was also a little weaker than last month but still solid at 55.5. Matt Boesler from BI US has a great chart of where all the world’s PMIs sit which you can see here.
– So at the close, the Dow is up 0.46% to 16,533, the Nasdaq leapt 1.64% and the S&P finished at 1886 up 14 points to post a gain of 0.73% for a new high close.
– European Markit PMIs were roughly in line with expectations and German unemployment a little lower, so there was no reason for UK and continental stocks not to follow the US market higher. At the close the FTSE 100 was up 0.83%, the DAX rose 0.5% and the CAC was up 0.81%. Stocks were a little more ebullient in Milan and Madrid, rising 1.03% and 1.18% respectively.
– On rates markets the US 10-year yield rose 3 basis points to 2.76% while 10s in Germany and the UK finished at 1.58% and 2.74% respectively. Local the 3-year futures contract lost a point to 96.91 (3.09%) with the 10s off a similar amount to 95.845 (4.155%).
– On currency markets, the RBA’s too-subtle attempt to weaken the Aussie dollar with the governor’s statement yesterday had some marginal impact with the Aussie underperforming against the euro, and Canadian dollar, sitting at 0.9244 this morning, down 0.21% but off the high of 0.9297. Euro itself is back near 1.38 this morning while the pound is down 0.16% at 1.6632. USDJPY continues to rally, up 0.47% to 103.68.
– On commodity markets, Gold’s fall continues and while it sits below $1285, the technicians are saying it looks weak. Speaking of weak, Nymex Crude was down 2% to $99.55 Bbl but Copper was unchanged at $3.05 lb. On the Ags, prices were mixed with Wheat down 1.61%, Corn 1% higher and Soybeans rallying 1.4%.
On the data front today, building permits are out before EU-wide GDP tonight and the ADP employment change in the US in the run-up to non-farm payrolls on Friday.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
Flight Centre’s chart has worked into a triangle pattern in a classic sign of investor indecision. For technical traders, the direction that price breaks out of a triangle can set up the next trend move.
However, with FLT trading at a solid 17.4 times forecast F2015 earnings and needing a healthy dose of consumer and business confidence to feed travel spending , a break to the downside might be the more interesting short term alternative .
Either way, the stock probably needs to break clearly out of the pattern in the next 2 or 3 days. Working well into the corner of the pattern before dribbling through the apex is not usually looked on as a “break out”.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC