IF, TG. Here’s your pre-weekend update of all that mattered overnight.
– Central Banks were the focus and in particular, Mario Draghi’s rebuttal of any threat of deflation in the Eurozone, which had the most impact. It drove the euro sharply higher to 1.3856 which also took EuroYen all the way to 142.79. The key here was that Draghi was sanguine on both growth and inflation saying: “Both upside and downside risks to the outlook for price developments are seen as limited and are considered to be broadly balanced over the medium term”, which means no QE as many had thought might be coming.
– The other central bank out overnight was the Bank of England, which toed the line expected by the market, leaving sterling up on the day at 1.6743 but lagging euro by a long way.
– And of course the Crimean decision to call a succession vote in the next few weeks has served to escalate tensions a little, with US President Obama saying this is outside international law. It is also very problematic for governments around the world of all kinds of stripes, who themselves have autonomous regions or those that would like to break away.
– Turning back to the economics, in the lead-up to non-farm payrolls tonight, jobless claims dropped to 323,000 from 338,000 last week but non-farm productivity undershot expectations, decelerating 50% from last time to 1.8%. Factory orders fell 0.7%. In contrast, German factory orders rose 8.4% yoy from 7.5% expected.
– In the end though, at the close the Dow is up 0.3%, the Nasdaq largely unchanged and the S&P 500 at another new closing high, up 3.6 points or 0.1% to 1877.4.
– In Europe, stocks were also higher with the FTSE up 0.19% and the DAX unchanged. The CAC rose 0.59% after the French unemployment rate fell to 10.2% from 10.9%, while stocks in Milan and Madrid rose 0.39% and 0.87% respectively.
– Locally, the ASX is set to open up 12 points with the March SPI 200 at 5453 this morning.
– On global FX markets, the Aussie shot higher after more good data yesterday, rising 1.2% to 0.9092 from a low of 0.8970 yesterday. RBA Governor Stevens talks to Parliment this morning on the economy and he is likely to address the Aussie recent strength, which Annette Beacher thinks is easy to explain. The euro shot higher as discussed earlier and clearly the EURJPY move has dragged the USDJPY up to 103.02 this morning.
– On commodity markets, Gold is up again and sits back above $1350 at $1351.60 for a gain on 411.50 or 0.86%. Crude rose 0.48% to $101.94 while Copper rose back to $3.27 lb. The Ags had a big night again with Corn ripping 2.21% higher, Wheat rising 0.67% and Soybeans 1.23% higher.
Datawise, the key events are the RBA Governor’s address to the Parliamentary economic committee this morning. Markets will be in tenterhooks for his comments on the Aussie and the recent strong economic data. Tonight in the US, non-farm payrolls are released which should be huge for traders, but in the meantime we see the AiG performance of construction index in Australia, Japanese leading indicators and German wholesale prices and industrial production tonight.
You can follow me on Twitter @gregorymckenna
Now, here is Ric Spooner’s Stock to Watch for Today
JB Hi Fi
The December quarter GDP figures contained news that the Australian Household saving ratio fell below 10% for the first time since 2010. A falling savings rate can provide a turbo boost to spending in the early stages of a recovery, helping spending growth to outpace income growth. Yesterday’s 1.2% increase in January retail sales followed a string of solid gains in recent months and suggests this process might be underway in Australia.
All this put retail stocks in focus yesterday.
Technical traders will be keeping an eye on JB Hi Fi which had a good rally but encountered selling when it reached its 200 day moving average. This price zone looks like a litmus test for sentiment with the resistance of the previous peak also just above the 200 day average.
Ric Spooner, Chief Market Analyst CMC Markets
You can follow Ric on Twitter @ricspooner_CMC