– Boing, nice bounce on US and global stocks in the past 24 hours showing that the love affair with free money isn’t over yet. What’s most remarkable in overnight trade, at least in the case of the US, is that the Fed vice chair Stanley Fischer intimated that the Fed is nearing the time to end the “considerable time” verbiage from their interest rate guidance. “You saw in the minutes of last meeting there was some discussion of that, and it’s clear we are closer to getting rid of that than we were a few months ago,” he said. But he added this will be data dependent. But in the end whether it is speculation of more monetary accommodation in China or Europe, after producers prices fell 0.4% last month, stocks are higher as the free money goose stock trade continues.
– As much as I want to channel my inner Peter Finch about this whole Central Bank strategy of ripping off savers with super low rates and money drops and transferring the cash to equity punters, the market is the market and it’s rational to follow the trend until it ends.
– So, to the scoreboards:
US markets were out of the gates like a greyhound and just rallied all day. Craig James from Commsec reports this morning that the data was on balance positive with, “chain store sales fell by 0.6% in the latest week but the annual growth rate of sales rose from 4.2% to 4.8%. Construction spending rose 1.1% in October, ahead of expectations for a 0.6% gain. And the ISM New York index rose from 657.2 to 663.4 in November.”
- Dow Jones up 114 points or 0.64% to 17,891.
- Nasdaq up 0.70% to 4,760 with a solid recovery from yesterday’s weakness.
- S&P 500 up 15 points for a solid 0.72% rally to 2068.
European Markets up on energy shares and expectations, hope at least, that the ECB will get busy with QE tomorrow night. But the Dax reversed off 10,000 again after a brief foray above the level. EU-wide PPI dipped 0.4% suggesting trouble ahead for business and the economy.
- London(FTSE 100) up 1.29% to 6,742 on the back of energy shares mostly.
- Frankfurt (DAX) down 0.3% to 9,934, overhead technical resistance is strong.
- Paris (CAC) up 0.24% to 4,388 in an up, down,up, down up day.
- Milan (FTSEMIB) up 0.48% to 19,781, up, down up but weaker into th close.
- Madrid (IBEX) up 0.71%to 10,749 stronger into the close.
– The impact locally has been a 6-point gain in overnight SPI 200 futures trade to 5,295 bid after a better day yesterday on the physical market. Iron ore didn’t do much, so there shouldn’t be any headwinds there but coal fell again in the front months losing as much as $1 for January and crude was 2.5% lower again.
– In Asia yesterday it was another ripper for the Shanghai exchange as the move toward 3,000 continues. More expectation of easing is pushing the market higher once again with banks and brokers the big winners yesterday. This ebullient mood helped Hong Kong while the weaker yen assisted the Nikkei.
Here’s the Asian Scoreboard:
- Tokyo (Nikkei Average) up 0.41% to 17,663
- Hong Kong (Hang Seng Index) up 1.23% to 23,654 in a reversal of the previous days move.
- Shanghai (Shanghai Composite Index) a huge move of 3.13% to 2,764 taking the Shanghai gain to 13.71%. Kinda funny how I’m on board with this move but the US and European surge leaves me cold. Strange.
– On bond markets, corporates are rushing to issue near year’s end which is adding a little upward pressure on longer rates and sovereign bonds leaving US 10s up 4 points to 2.28%. UK Gilts were 7 points higher at 1.97% and Bunds finished at 0.7%.
– On currency markets, the US dollar surged, knocking the euro substantially lower down 0.73% to 1.2378 – roughly a cent lower than the day’s high. Sterling too is off a cent at 1.5636 while the USD is buying another yen and is at 119.22. The Aussie is lower at 0.8446 after the RBA signalled that it is still too high, even at 85 cents. Today’s GDP will be huge.
– On commodity markets, Newcastle coal for December dipped 85 cents to $62.85 a tonne while iron ore rose just 11 cents to $69.86 a tonne. Elsewhere crude fell 2.55% to $67.24. Gold is at $1199, copper has dropped 2 cents to $2.90 a pound. On the Ags, corn and soybeans fell 2% but wheat dipped 0.25%.
– On the data front today, all eyes on the Q3 GDP which most pundits think is going to print 0.7%. Elsewhere, non-manufacturing PMI will be out in China, Japan, Australia and the globe. Tonight we get EU retail sales, BoCanada interest rate decision and ADP employment as a pre-cursor to non-farms on Friday night.
And here’s Ric Spooner from CMC Markets with the Stock to Watch
It was a relief to see a better than expected bounce in monthly building approvals for October announced yesterday. This is a very volatile data series and the October increase of 11.4% was all about the uber volatile apartment and townhouse sector. Even so, the October number followed a string of weak results and gives more confidence that residential building activity still remains on track for pretty healthy levels in 2015.
That makes building products supplier, CSR interesting. The share price has drifted lower since it unveiled a healthy profit result in early November. This sees CSR trading at what seems a relatively undemanding 13 times forecast F15 earnings. Traders hoping they might get a chance to buy a bit lower still might be watching the 61.8% and 78.6% Fibonacci retracement levels around $3.34 and $3.26
Ric’s on Twitter: @ricspooner_CMC