– The US was out last night on the Labor Day holiday so markets were fairly quiet. Perhaps that is what emboldened Russian troops to help Ukrainian rebels oust the Ukrainian government para-troopers from the airport near the city of Luhansk. The Ukrainian President Petro Poreshenko has accused the Russians of “direct and undisguised aggression” and it does feel like we are sliding into a potential conflagration. Yet markets don’t care, with Gold still below $1,300 at $1,288 this morning.
– Can a black swan hide in plain sight? Seems we might have two in Fed monetary policy and Ukraine.
– But that’s for another day. With no lead from the US, or expectation of what the US might do, markets were fairly quite even though the data across the globe from the Markit and HSBC PMIs released in Asia and Europe were on the weak side of the ledger.
– Italy (49.8), Germany (51.4) and the EU (50.7) manufacturing PMI all missed expectations, with Italy slipping back below 50 and into the contraction zone. France was slightly better than the market expected but still the weakest of the big European economies at 46.9.
– At the close, the FTSE 100 was up 0.08% to 6,825, the DAX rose 0.09% to 9,479 and the CAC slipped a miniscule 0.02% to 4,380.
– On the local market, the ASX SPI 200 futures fell 5 points to 5,601 overnight which suggests a flat start to trade today and then we’ll see where Asia takes us. Something to watch are the technicals for the SPI 200 which don’t look too hot and a pullback could be in the offing if that 5,580 level gives way.
– In Asia yesterday, the Nikkei rose 0.34% to 15,477 but the solid news was the performance of the Shanghai exchange which rallied 19 points and away from the important 2,200 zone to close up 0.85% at 2,236.
– On Currency markets, there wasn’t a lot of action either. Sterling has climbed back above 1.66 to 1.6606 this morning, USDJPY sits at 104.33 and the euro finished largely unchanged at 1.3326. The Aussie is at 0.9333, going nowhere fast.
– Commodities could have had a big night with the escalation in Ukrainian tension but Gold remains unable to react – it’s the story of markets at the moment. What exactly is dampening gold volatility? Free money most likely. September Iron Ore rose 42 cents a tonne to $87.88 and Newcastle Coal fell $1.00 a tonne to $67.70 and is just 40 cents off the low for the past 12 months.
On the data front today, we have the RBA at 2.30pm as the highlight. Watch the language around the economic growth story and perhaps a change in rhetoric around the Aussie dollar – or not as may be the case. Also out in Australia are building approvals and the Q2 current account balance. PPI is out in Germany and then in the US tonight we get Markit and ISM PMI data.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
The market likes signs that NAB is becoming more serious about getting rid of its offshore businesses. News of the need to increase provisions in the UK looks to have been forgiven after NAB unveiled plans for an IPO of part of its US subsidiary, Great Western bank.
Just how much of a rerate is on the cards might now be tested with the NAB chart arriving at an interesting resistance level. While a clear break through this would be positive, rejection would have chartists thinking in terms of a potential return to triangle support.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC