– The key driver of markets last night was the on, maybe not on, cease fire between Russia and Ukraine which was proposed by Vladimir Putin. While the Ukrainian President said who would want such a deal, the Russian Prime Minister was far less conciliatory.
– But in the end it was European stocks exposed to Russia which did best overnight. The DAX was 1.25% higher to 9,626. DAX futures are fighting overhead technical resistance and so far losing but an ECB move and a real cessation in hostilities might be the catalyst it needs.
– Elsewhere on the continent the trade was equally ebullient with the CAC up 1% to 4,422, the FTSE MIB ripped 1.89% higher and the IBEX 35 rose 1.23%. In the UK the FTSE was fairly quiet by comparison up just 0.66% to 6,874.
– Datawise in Europe you’d have to think that the universally weaker Markit services PMI’s in Europe put more pressure on the ECB to move tonight but you never know with Europes factured central bank – we’ll know at 10.15 pm this evening.
– In the US the S&P 500 made a new all-time high at 2009 but finished at the low of the day of 2001, down 1 point. The Dow was up marginally rising 0.06% to 17,078 while the NASDAQ was dragged lower by the 4% fall in Apple from recent all-time highs. The tech heavy index finished down 0.55% at 4,573.
– On the data front the Fed’s Beige Book showed all 12 districts are now growing.
– Locally it has left the market off the highs from the past 24 hours but the September SPI 200 futures are unchanged this morning at 5,646. Iron ore tanked again overnight with September futures falling $1.43 a tonne to $85.27.
– Asian stocks had a good day yesterday with the Hang Seng playing catch up to the recent moves up 2.3% to 25,318. Shanghais recovery continued apace rising 1.01% to 2,289. The Nikkei was more subdued rising just 0.38% to 15, 728. With USDJPY back below 105 it might be a poorer performance for the Japanese market today.
– Bonds in Germany rose another 3 points which highlights the moves was about Ukraine. 10 year Bunds closed at 0.96% up 3 points. In the UK rates were up the same amount to 2.35% while in the US rates dipped about 2 points with 10 year treasuries closing at 2.40%.
– On currency markets the Ukrainian peace talk and the clear signal from RBA Governor Stevens that he is not going to cut rates anytime soon combined to drive the Aussie dollar higher and it sits at 0.9341 this morning up 70 pips from yesterday’s lows.
– On commodities as noted above iron ore looks terrible and friendless. September Newcastle cola fell 30 cents a tonne to $67.05 while Nymex crude rose 2.37% to $95.08. Gold is largely unchanged at $1,270 and copper is resting at $3.13 a pound. On the Ags wheat fell 3.35%, corn dropped 3.08% and soybeans fell 0.44%.
On the data front we have a huge day ahead of us: retail sales for July are out in Australia and the market is looking for a 0.4% rise. Trade is also out in Australia.
But it is the monetary policy statements and decisions which are the big releases today with the BoJ, BoE and particularly the ECB which will have traders focussed. The ECB is expected to begin QE so whether it does and what it says is likely to move FX, bond and stock markets. It is a huge call for them.
In the US we get non-manufacturing PMI from the ISM and Challenger job cuts as a lead to the non-farms tomorrow.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
If you bought Whitehaven Coal 3 months ago, you’d be pretty happy. It’s up 36% from its June low.
For short term traders the chart now demands a bit of attention. There look to be a couple of possibilities here:
- The negative outcome would be a break below support and the 20 day moving average around $1.875. This would give the chart the look of a double top and could see a deeper correction. Perhaps a chance to sell or (for value buyers) the opportunity to get set at lower prices
- A positive outcome would be the completion of a minor triangle or pennant formation. A break through pennant resistance could indicate another upside pop. The pennant support is not yet formed. This would require a 2nd trend low, at or not far under yesterday’s low. Short term buyers may consider buying off that support if it firms up.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC