It’s Friday, and we’re in love… with this overnight update on all that matters:
– The data didn’t exactly play ball with traders hoping for another all-time high on the S&P overnight with jobless claims higher than expected and the service sector of the economy printing weaker than expected. Which means the ASX is a little lower in overnight trade with the SPI 200 June futures off 3 points to 5406 bid. It is likely to be a fairly quiet day in the run-up to the on-farm payrolls in the US which will be released at 11.30pm AEDT.
– At the close, the Dow is flat at 16,573, the NASDAQ fell out of bed, losing 0.90% to 4,238 and the S&P 500 lost just 2 points to 1,889 for a 0.10% loss.
– It’s all academic really, as non-farm payrolls is arguably the most important data point in the world each month and the market is waiting for guidance tonight on whether the weather has knocked the economy or whether the economy is back trending toward health. Expectations are for a 196,000 rise – 20,000 either side would move the market.
– In Europe, Mario Draghi showed what a bind the ECB is in in trying to combat the move toward deflation. Westpac London’s James Shugg this morning told the ABC overnight that 20% of the EU is already experiencing deflation, with a further 20% close to deflation. He also said that while Draghi noted the ECB talked about QE, they don’t yet have the tools.
– So at the close, the FTSE was lower down 0.15% to 6,649 after the UK services PMI printed lower than expected. On the continent however, stocks ignored the EU, German and Italian Services PMI weakness with Milan and Madrid up a robust 1.38% and 1.42% respectively The Dax rose a smidgen to 9,629 and the CAC was 0.41% to 4,449 – an almost 6-year high.
– In Asia yesterday, the news of the Chinese mini-stimulus left traders in Shanghai cold as the exchange dropped 0.73% to 2,044. The Nikkei on the other hand took succour from news of the government action, but it’s more about the yen’s weakness (USDJPY rally) and the Nikkei closed at 15,072, slipping around 30 points in overnight trade. Like the Australian market, Asia will be waiting on non-farms tonight.
– Currency markets are where Draghi’s comments found the most resonance, with euro down off a high of 1.3805 yesterday to sit at 1.3715 this morning and very close to trendline support. Sterling was also lower, back below 1.66 at 1.6594 this morning while USDJPy was largely unchanged at 103.90. The Aussie held in well as it looked under pressure at the end of the Asian trade and it sits at 0.9224 this morning.
– On commodity markets, Gold has slipped a little again to $1,287, Copper sits at $3.05 lb and Nymex Crude is back above $100 Bbl just at $100.34. On the Ags, Corn rose 0.86%, Wheat rose 1.01% and Soybeans rose 0.89%.
On the data front, there is nothing material out in Asia before we get German factory orders and then non-farm payrolls in the US.
Here is today’s stock to watch from CMC Markets’ chief market analyst Ric Spooner
The UGL chart has been exhibiting signs of basing behaviour since the middle of last year. Sellers have proved reluctant below about $6.50.
Buyers are now thinking about pushing the stock above its 200 day moving average for the first time since February 2013. Back then; this was a false start with the rally failing at resistance just above. This time around there looks to be a fair bit of clear air above the average. The slow stochastic (box below the chart) is also on the rise from just above 50% while the stock is trading around 10 times estimated F2015 earnings. In Feb 2013 things were different. The stochastic was beginning to fall from the overbought zone and UGL was priced at 11 times forward earnings.
Interesting times for those who see happier times for engineers now we have an “Infrastructure Prime Minister”