Good morning and welcome to your working week.
– For all the geopolitical events happening around the world at the moment it was stock specific details which knocked US shares lower on Friday night with a triple digit loss for the Dow. Key to the decline appears to have been disappointing earnings news from VISA and a big drop in Amazon.
– At the close, the Dow was down 123 points at 16,961 for a low of 0.72%, the Nasdaq fell 0.49% to 4,450 while the the S&P 500 lost 0.50% or 10 points to 1,978.
– Across the Atlantic – except for Spain, where stocks rose 0.25% – the major markets were all lower. German IFO was not healthy and that hit continental shares hard but in the UK the FTSE fell 0.43% while the German DAX dropped 1.53%. The CAC was 1.81% lower and the FTSE MIB in Milan was down 0.91%. News over the weekend out of Germany (from vice chancellor Gabriel) that heavier sanctions on Russia should be instituted won’t help sentiment when trade opens this afternoon Asian time.
– On the ASX, the September SPI 200 contract is 8 points lower at 5521 which will continue to keep the physical ASX 200 constrained below the important 5600 level for the moment.
– Keep an eye on bonds and bonds traders, who seem to be much more worried about the global economy and markets than many stock traders. US 10-year Treasuries finished the week below 2.50% at 2.47%. German Bunds were 3 points lower at 1.15% while UK Gilts fell 4 points to 2.57%.
– Asia had a great day Friday with the Nikkei up 1.14% to 15,548 while the Shanghai index rose 1.04%. The Hang Seng was fairly quiet, up 0.31%. Nothing of note is out today so expect cautious to negative trade in Asia today.
– On Currencies markets, like bonds, traders are sniffing the winds of change and the US dollar was stronger across the board. This morning the Aussie sits at 0.9395 while the Euro’s drift continues at 1.3428 this morning. Sterling looks like it could be in for a big fall and is at 1.6975 while USDJPY is at 101.79.
– On Commodity markets, Iron Ore is nothing if not volatile at the moment, bouncing $1.14 tonne to $94 while Newcastle September Coal was 45 cents higher at $68.85 tonne. Elsewhere, August Nymex Crude sits at $101.89, Gold is at $1,307.30, Silver $20.75 and Copper $3.23 lb. On the Ags, Wheat was up 1,75%, Corn rose 0.41% and Soybeans was 0.39% higher.
On the data front, there is nothing to get the week moving until the release of market services PMI and pending home sales in the US this evening.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
Origin won’t be reporting until August 21 but it’s worked into the oversold zone on the weekly slow stochastic indicator courtesy of a 10% decline from its $15.50 peak in late May.
Last week’s lows tested potential trend line support. This coincides with a 38.2% Fibonacci retracement of the last rally off this trend line. However it has yet to reject this by forming a trend low around here.
If buyers don’t see enough value to reject this support, the next possibility might be around $13.60 which is the 50% retracement level.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC