Here it is – the only overnight update that matters.
– Another night and another marginal new high for the S&P 500 which finished up 3 points or 0.2% to 1,927.88. It was a solid move off the low of the day however, at 1,919, as traders found nothing in the data to worry them. Indeed, the data is actually not too bad in the US at the moment, with the ISM services index up to 65.3 while Markit’s version of the same index came in at 58.1. According to our colleagues in the US, that’s a 26-month high.
– Also out was the Beige Book which, true to its name, showed growth in the US to be on the bland side across the 12 Fed districts – neither hot nor cold. The ADP employment report showed 179,000 jobs were created in the US last month. On the negative front – and something US dollar bulls won’t like – the trade deficit hit a two-year wide of $46.2 billion.
– At the close on other US markets, the Dow was up 0.09% at 16,738 while the Nasdaq rose 0.42%. If you are interested in the long run outlook for stocks then you’ll find a link here to the latest 10-year outlook from Soc Gen.
– In Europe, for the second day in a row markets recovered from early lows but in the run-up to the ECB decision tonight, the moves are fairly small. The FTSE was down 0.25% at 6,819, the DAX eked out a 0.07% gain to finish at 9,927 while the CAC fell a tiny 0.06% to 4,501. In Milan and Madrid, stocks fell 0.16% and 0.19% respectively. Datawise, EU GDP printed as expected with 0.2% qoq and 0.9% yoy for the first quarter of 2014. Services PMIs were a little on the weaker side than expected across the region, except the UK.
– Turning to rates, while US 10s were flat at 2.60%, rates in Germany rose 2 points to 1.43% while in the UK there was a five-point sell-off with rates risng to 2.7% on continued economic strength. On the ASX bond boards, the 3-year bond contract lost 1 point to 97.14 (2.86%) while the 10s also fell one point to 96.21 (3.79%).
– Looking at the overnight trade, in the SPI 200 June futures we see a nine-point rally to 5452 bid. Iron ore ripped higher last night, so we might see further gains today.
– Turning to Asia, and besides the Nikkei, which is buoyed by the fall in the yen and the rise in USDJPY back toward the highest levels since March, the other markets across the region were lower. Even the Nikkei’s rally of just 0.22% could be viewed as anaemic and it finished at 15,068. Key to some of the disquiet was the miss by the Chinese HSBC PMI the day before and a lack of fresh catalyst yesterday. In the end, the Hang Seng was down 0.60% at 23,152 while stocks in Shanghai fell 0.65% to 2,025 as property developers came under pressure. Today in the region, the HSBC China Services PMI and Hong Kong’s Markit PMI will be the key attractions along with BoJ member Sato’s speech.
– On Currency markets, the boring trade continues with Aussie, euro and GBP running on the spot. This morning the Aussie is at 0.9275, euro at 1.3599 waiting for the ECB to do something or nothing – but there is no guarantee the Euro will do anything. The pound is at 1.6738. The only story of note is USDJPY back near three-month highs at 102,72 and even I can’t get excited about that.
– On Commodities, June Nymex Crude rallied strongly through 4103 Bbl but someone or something spooked the market and it is back at $102.39, more than a buck off the highs. The amazing thing about this is that the big draw in crude stockpiles supported the rally but clearly there are sellers lurking.
– Elsewhere, Gold is becalmed at $1243 oz with Silver sitting at 418.76. Copper got absolutely poleaxed, falling 5 cents or 1.65% back to $3.10 lb. On the Ags, it was a similar story with Corn off 1.61%, Wheat down 1.29% and Soybeans down 1.32%.
On the data front today, the excitement continues locally and there will be more than a passing interest in the April trade balance at 11.30am given the strength in net exports in the Q1 GDP yesterday. Then of course the Chinese Services PMI and Factory Orders in Germany, EU-wide retail sales and then the bell-ringers for the night in the BoE and ECB interest rate decisions.
In the US we have jobless claims.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
Potential profit takers and CFD sellers may be interested in this situation:
Santos is showing early technical signs that it’s shaping up to correct the rally from $13.11. These signs are:
• A move below the recent peak after a 5 wave advance
• Divergence with the Relative Strength Index (RSI)
These signs might be confirmed by a move below the 20- and 200-day moving averages where the share price is now parked.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC