Thanks to all the gods it’s Friday. Finish the week on a high, starting with this update on all that matters.
– So the FOMC looks like it is right – consumer spending is coming back, with last night’s data showing personal spending jumped by 0.9% in March, stronger than the 0.6% expected. However, personal incomes only rose by 0.5% which suggests the 0.9% spending is not viable longer term, supported by a fall in the savings rate to 3.2%. Elsewhere the ISM manufacturing data climbed to 54.9 in April from 53.7 last. Jobless claims jumped to 344,000 against 319,000 expected. Construction spending was weaker than expected, up just 0.2% against expectations of a 0.5% rise.
– So there is something for the bulls and something for the bears, all of which meant that the competing forces left US stocks largely unchanged. The Dow fell 0.1% to 16,558, the Nasdaq rose 0.3% to 4,147 while the S&P 500 barely budged, finishing at 1,883.6.
– Locally the SPI 200 June contract is up 11 points to 5445 bid at 7am. We’ll see how the market goes today after the last 3 weak days where futures indicated a positive open. It’s Friday and it’s non-farm payrolls day in the US, so it could be a quieter day.
– In Europe, May Day kept most of the markets out but Markit still released a raft of European PMI data with the standout the strong rise in UK, which jumped to 57.3.
– In Asia yesterday, the Nikkei shot higher up 1.3% as company reports suggest there is some good buying in Tokyo. China, Hong Kong and Taiwan were out for Labour Day holidays. Today will also be quiet as markets await the non-farm payrolls in the US tonight but in Japan, household spending, unemployment and foreign investment data is to be released.
– On Currency markets, Forex traders were emboldened by the strong UK PMI which drove the pound to a high of 1.6918, but it has since slipped back a little to 1.6891. Euro rests just below 1.39 at 1.3865 and USDJPY is becalmed around the 102.20/40 region. The Aussie dollar found a bit of a bid yesterday after the really solid, and surprising, move in the export/import prices. It rallied to 0.9312 but found the air too thin and is back at 0.9270 and testing the 2013 uptrend line. Non-farms the key macro theme for Forex traders tonight.
– On Commodities, Gold continues to slide down another 1% to $1,285 oz. Nymex crude was also lower, losing about half a per cent to $99.23 while Copper closed at $3.04. On the Ags, it was another volatile night with Corn and Wheat down 2% while Soybeans fell.
On the data front, in Australia today we see the release of the HIA new home sales and PPI prices. But the key – and really the only thing that matters in the next 24 hours is the US non-farm payrolls with the market looking for a number of around 210,000 for April.
Here is CMC Markets’ Stock to Watch today from senior market analyst Ric Spooner:
As the Henry Tax Review demonstrated, there’s a long way twixt a government report and a politically difficult decision. However, yesterday’s news that the National Commission of Audit recommended means testing Medicare will no doubt be of interest to shareholders of private health insurer NIB Holdings.
If some form of the Commission’s recommendation to exclude higher income earners from Medicare and to expand private health insurance becomes reality, NIB may be well placed as an existing operator in this space.
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