– Local stock markets should get a lift this morning after a combination of strong US economic data lifted US stocks firmly into the green at the close Friday. On the ASX Futures market, the SPI 200 June contract is up 12 points to 5367 bid.
– The phone conversation over the weekend between Putin and Obama (Putin called) to say Russia has no plans for invading Ukraine even though they have 50,000 troops on the border might also help markets today.
– US personal income was slightly higher than expected, up 0.3% in February, helping personal consumption print as expected – up 0.3%. Rounding out the triumvirate of consumer data, Uni of Michigan consumer sentiment printed 80 which was a smidge lower than expected but still pretty good, according to reports.
– So at the close, the Dow was 0.36%, up 59 points to 16,323. The Nasdaq continued to underperform into the week’s end, rising just 0.11%, while the S&P 500 rose 9 points in its recent sawtooth pattern within a tight range, closing at 1,858 for a gain of 0.48%. On stocks, and US stocks in particular, it is worth reading Henry Blodget’s piece on the market from the weekend – you can find it here.
– In Europe, it was a sea of green with UK GDP printing as expected, up 0.7% in Q4 for a 2.4% rate through the year. In the EU, economic sentiment printed a little stronger than expected at 102.4. But perhaps the big catalyst for the move higher in continental stocks was German import prices, which fell 0.1% in February to take the 12-month fall to 2.7% and thus increasing the chance that the ECB moves toward QE at this week’s announcement.
– In the end, the FTSE was 0.42% higher, the DAX bounced 1.44% and the CAC rose 0.73%, while in Milan and Madrid stocks rose 1.53% and 1.27% respectively.
– On global bond markets, understandably the US bond market didn’t like the data but the 7-point rise to 2.72% might have caught a few people by surprise. German bonds rallied a point, however, to 1.55% on the back of the deflation in import prices. UK Gilts found sympathy with US rates, up 7 points also to 2.72% on the GDP data. Locally on the SFE, 3-year bonds fell 3 points to 96.94 (3.06%) with 10s also 3 points lower to 95.85 (4.15%).
– On FX markets, the Aussie pulled back a little from Friday’s high just below 0.9300, losing around half a cent to sit at 0.9241 this morning. The euro recovered from early weakness on Friday, which is strange given the moves in Bunds and stocks on the back of increased expectation of ECB QE which should undermine the euro. But it sits this morning at 1.3750ish. Sterling’s recovery continued and it sits at 1.6657 this morning while the USDJPY is closing in on 103 at 102.92.
– On commodity markets, Gold’s sell-off stalled for a day at $1294. Nymex Crude rose a little to $101.67 Bbl, Dr Copper fairly soared to $3.06 lb while Corn, Wheat and Soybeans all dropped, losing 0.41%, 2.11% and 0.10% respectively.
Datawise today, we get HIA new home sales and private sector credit which will give a lead on RBA monetary policy traction. Retail sales in Germany should be huge tonight, as will the EU-wide CPI – watch that one if you trade Forex – tonight.The Chicago PMI is also out in the US.
Here is today’s Stock to Watch from CMC market’s Michael Mccarthy:
An excellent first half report from TPG Telecom (code: TPM) on Tuesday showed profit growth of 15% on pcp and a 25% EBITDA increase once one-off items are excluded. Free cash flow of $103 million and the highest ever dividend of 4.5 cents per share had investors scrambling to get on board.
The completion of the acquisition of AAPT in late February should further bolster earnings, and already there is market talk that TPG may consider further acquisitions. The share price rise since Tuesday saw TPG overhaul Telecom NZ as the second highest valued telco listed on the Australian market.
While the prospects for TPG are very good, the explosive share price action looks potentially unstable. The chart below shows TPG well outside the Bollinger bands, and there is a gap between 5.75 and 6.10 that may be filled before it can run higher. This action likely has existing shareholders watching closely considering taking profits ahead of a volatility soothing, gap-filling potential pullback.