Welcome to Thursday. Here’s what’s happened so far.
– Another positive start to the day beckons for Australian stocks, which have been buoyed in overnight futures trade by the solid gains in ADP employment data in the US economic data. The June contract of the SPI 200 rose 18 points to 5416, giving a positive lead for the day. The Aussie was fairly quiet though, even as the ANZ suggests that it’s time for a pullback.
– Looking at the ADP data directly, it ever-so-slightly undershot expectations of a rise of 195,000, printing 191,000, but that is still a solid lead in the run-up to tomorrow night’s non-farm payrolls. Equally, the big jump in US factory orders of 1.6% in February is against expectations of a rise of 1.2% – and from -1% last – so it’s a very solid result.
– At the close, US stocks recovered from a midday swoon, with the Dow up 0.24% to 16,573. The Nasdaq rose 0.19% to 4,276 while the S&P 500 was 5 points higher for a gain of 0.29% to 1,891 for a new closing high again.
– In Europe, trade was volatile with EU GDP printing 0.5% in Q4 2013 from -0.3%. Given it’s the ECB meeting tonight, it’s worth noting that EU producer prices fell 0.2% in February with a slight acceleration in the rate of deflation in producer prices to -1.7%. At the close, the FTSE rose 0.10% to 6,659, the DAX was 0.20% higher to 9,623 while the CAC rose 0.10% to 4,431. In Milan and Madrid, stocks fell 1.02% and 0.26% respectively.
– After a solid day yesterday Asian stock markets are likely to continue their positive mood again today following overnight gains in Europe and the United States. The Nikkei hit a 3-week high on the back of the yen’s weakness, while stocks in Shanghai were more positive but still range-bound. Data to watch today are the Services PMIs in Japan and China which will be important drivers of sentiment.
– On currency markets, the day-on-day change is not too great but that belies US dollar weakness against the euro, which at one stage drove the EUR to 1.3819 before pulling back to sit at 1.3763 this morning. Sterling likewise is roughly unchanged at 1.6623 but well off its highs while USDJPY is still pushing up and sits at 103.81 this morning. The Aussie has recovered off its lows of 0.9220 to sit at 0.9244 this morning.
– On commodity markets, Gold has recovered $10 to $1,289 oz, Nymex Crude is largely unchanged at $99.42 Bbl. It is remarkable that Nymex stayed under $100 given the big draw in stocks last week against an expected build. Copper is up 1 cents to $3.06 lb while on the Ags there were once again some huge moves with Corn down 2.27%, Wheat off 2.33% and Soybeans down 1.62%.
On the data front, retail sales in Australia will be important both for stocks and the Aussie dollar. Services PMIs around the region will follow that and then again in Europe and the US tonight. Trade data locally will also be interesting as will the Challenger jobs data in the US along with trade and ISM non-manufacturing.
Here is CMC Markets’ Stock to Watch from Ric Spooner
International pathology and radiology services provider, Sonic, confirmed a shallow support line with yesterday’s rally.
With SHL trading around 16.5 times estimated earnings for F15 and with governments (including our own) under pressure to bear down on health costs, this support line might now form a useful line in the sand. A clear breach might indicate changing market sentiment and the potential for reversion towards longer term trend levels around the 200 day moving average.