– Without the catalysts of central bank speak or much in the way of data, stocks in the US went nowhere and the US dollar gave up some of the recent ground it has gained. Rates, on the other hand, continued their rally, lower across the board and around the world.
– At the close, the Dow was up 0.09% to 17,122, the Nasdaq fell 1 point to 4,570 and the S&P 500 was unchanged, closing at 2000.
– Europe provided the only decent piece of economic data overnight with the release of the Gfk consumer confidence data, which printed 8.6 versus 9 expected. Also out was the import price index which fell a much bigger than expected 0.4% in July, taking the year-on-year import price deflation to 1.7% for German imports.
– It fueled a rally in German bonds which has taken the two-year rate back into negative territory and driven the 10-year German Bund to 0.909% – a new record low, according to Bloomberg. Rates in Italy fell 3 points to 2.39% while Spanish 10s fell 4 points to 2.14%. Rates in the UK also rallied strongly, falling 7 points to 2.26% while rates in the US were lower as well with 10-year Treasuries dropping 4 points to 2.36%.
– Back to stocks in Europe, and at the close it was a little mixed with the DAX down 0.19% to 9,570, the FTSE up 0.12% to 6,831 and the CAC virtually unchanged, just 0.04% higher at 4,395. Stocks in Milan were 0.57% higher while those in Madrid rose just 0.09%.
– But small moves in the US haven’t stopped the ASX futures from falling 19 points to 5,610. Today is going to be an interesting day for some of the smaller iron ore miners, with a big fall in ore prices overnight to $87.92 a tonne – a drop of $1.62 and a break of this year’s low. In terms of SPI levels to watch today, 5580 will see traders getting nervous if it gives way.
– In Asia yesterday, the Nikkei was up just 0.09% to 15,535, the Shanghai composite rose the same amount to 2,209 while the Hang Seng fell 0.62% to 24,919.
– On Currency markets, with no real catalysts and a few pairs oversold there were reversals overnight. The euro rallied back to a high of 1.3210 which is a good rally from the 1.3150 low yesterday – it sits at 1.3194 this morning. Sterling is at 1.6568 and USDJPY fell a little, with the yen stronger to 103.86. The Aussie continued to defy gravity, rallying up to 0.9351 overnight and it sits at 0.9337 this morning.
– On Commodity markets, as noted, Iron Ore crashed again with Newcastle Coal futures also lower, dropping 70 cents a tonne to $69.30. Nymex Crude is $93.75 a barrel, Gold – yawn – is at $1,279 with Silver at $19.41. Copper is still around $3.20 a pound. On the Ags though, it’s never quiet – hardly ever, anyway. Corn rose 0.9%, Wheat was 1.06% higher while Soybeans ripped 2.62% higher.
On the data front today, we get the release of the Private New Capital Expenditure data in Australia which will be watched closely as economists, traders and investors try to take the pulse of the economy via investment intentions. HIA new home sales are also out. This evening we see Spanish GDP but German unemployment is more important. Later we get EU consumer and business confidence and then the big one – German CPI.
In the US, the release of the second read of Q2 GDP is going to be huge.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
IAG, which owns the iconic NRMA insurance brand and its shares, have risen 132% since August 2011. In the big picture though, upward momentum was lost in May 2013. The stock has risen only 7% since then. 4% of that gain has come since their profit result last week. This pleased the market with a solid improvement in margins based on lower claims.
From a charting point of view, IAG has arrived at crunch time and is now testing trend line resistance. If investors push it clear of this resistance line, they may be signalling a new era of more sustained upward momentum.
However, IAG is yet to go ex its 26c dividend and the slow stochastic is up in the overbought zone. If this trend line is rejected again by a trend peak, traders will be thinking of selling.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC
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