The best way to get the best day of the working week off to a flyer.
– Graeme Jarvis, Westpac’s director of GCM Strategy, summed up the current market situation best this morning when he wrote “Last night was a calm night that saw tight trading in credit… a hint of exhaustion in US 10yr yields, an AUD breaking out of its rangey funk and an equity market that just has not seen a high it does not want to better.”
– And so it is that the Dow is up again, rising 66 points or 0.4% to 16,699, the Nasdaq rose 0.54% and the S&P 500 just keeps keeping on, rising 10 points for a 0.54% gain to 1,920.
– What’s so right about the Jarvis comment above in the context of stocks is that the new highs came even though data in the US was disappointing, with the second read of Q1 GDP printing at -1% from the minimalist expansion of 0.01% that had been reported previously. Clearly this has been dismissed as entirely weather-related. Also out was jobless claims which fell to 300,000 last week and April’s pending home sales which rose 0.4% against 1% expected.
– In US bonds markets, traders will be watching the bounce of a 2.4% low as a sign that the worm has turned on the bond rally. US 10-year Treasuries finished at 2.47% for a loss of 1.03% in capital value.
– In Europe, with the Ascension Day holiday across a fair chunk of the continent there was only light trade. The FTSE 100 rose 0.29% to 6,871, the DAX rested at 9,939 and the CAC likewise at 4,531. In Milan, stocks fell 0.35% and in Madrid, 0.21%.
– On the ASX overnight, the June SPI 200 contract rose 10 points to 5,541 bid on fairly light volume. On the bond boards, the 3s fell 3 points to 97.21 (2.79%) with the 10s down the same amount, finishing at 96.335 (3.665%).
– In Asia yesterday, the Nikkei was up a smidgen, rising less than 0.1% to close at 14,682, but shares in Shanghai and Hong Kong fell 0.45% and 0.30% respectively. There is still no decent data out in China today but Korea releases its industrial and service sector output. In Japan, the very important CPI data will be released along with unemployment.
– On Currency markets, the Aussie dollar is the big winner over the past 24 hours with a rally igniting after the stronger than expected rise in the second estimate of 2014-15 Capex and the upgrade to Q1 GDP expectations due next Wednesday. This morning the Aussie is at 0.9304, up 80 points on the lows of yesterday.
– Elsewhere, euro is up a tiny bit at 1.3602 and the pound is likewise mostly unchanged at 1.6715. USDJPY sits at 101.75.
– On Commodity markets, Gold remains pressured at $1,255 this morning. The outlook for Gold is, in the short term, somewhat bleak as we discussed yesterday. Nymex June Crude is up 0.84% to $103.51 (note change of contract) while Copper is off a few cents to $3.15 lb. Silver is down in sympathy with Gold at $19.00 oz. On the Ags, Soybeans were largely unchanged but Wheat fell around 1% and Corn was down 0.65%.
On the data front today, private sector credit is due out in Australia along with the Japanese data. Tonight, German retail sales are out along with Italian CPI and PPI, Canadian GDP and in the US, personal consumption and spending data along with the Chicago PMI and speeches from Fed and FOMC members Laker, Williams and Plosser.
Here is Ric Spooner, CMC Markets’ chief market analyst, with his Chart of the Day:
Okay, so it’s not a stock but here’s a hunch about what may be playing out in the gold chart which may interest shareholders in gold miners.
The long term gold chart is starting to form up into a triangle pattern. If this view of life is correct, it might take quite a long time to play out.
If gold keeps falling from here, another bounce off the triangle support or a bit above would not surprise. However it plays out though, a break below the $1180 low would be a bearish development.
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