Welcome to your week. Here’s the update you need to hit the ground running.
– Markets are strange animals – or a strange combination of animal spirits – as Friday night’s trade in the US showed. Non-farm payrolls only missed expectations by a tiny margin, yet stocks in the US came under heavy selling pressure which then saw the ASX sell off heavily as well. The SPI 200 June contract was down 41 points when it closed Saturday morning at 5,382 bid. Strangely, the Aussie dollar is higher, which we’ll discuss below.
– In the US, the non-farms printed 192,000 against expectations of 200,000. Sure, the unemployment rate didn’t fall to 6.6% as the market expected, holding firm at 6.7%, and hourly earnings were flat but the reaction in stocks was aggressively negative.
– At the close, the Dow fell 0.96% or 160 points to 16,413. The S&P 500 lost 24 points or 1.26% in a very bad day’s trade technically, with a higher high and a lower low than the day before. The S&P closed at 1,865. But it was the Nasdaq where the real damage was done, losing 2.59% to close at 4,128.
– In Europe though, traders were far more ebullient, with stocks up across the board. The FTSE 100 in London rose 0.7% to 6,696, the CAC was up 0.8% to 4,485 while in Frankfurt, the DAX rose 0.7% to 9,696. In Madrid and Milan, stocks were 0.83% and 0.88% higher respectively.
– In Asia, the Nikkei on Friday ended fairly flat at 15,064 but in futures trade the front contract has lost 1.3% in response to the US move and a big reversal of USDJPY off 104. Shanghai rose 0.75% in the run-up to the Weekend’s Ching Ming Festival and holiday today.
– On Currency markets, the Dollar Bloc (Aussie, Kiwi and Canadian dollars) is back in vogue once again and the Aussie benefited on Friday rallying back toward 93 cents, sitting up at 0.9384 to make bears very nervous.
– Elsewhere, the euro is under pressure, supported by some technical levels but slipping just below 1.37 at 1.3698 this morning in Asia. Sterling sits at 1.65723 and the yen has gained on the US dollar with a big sell-off in USDJPY leaving it vulnerable to further selling. Marc Chandler wrote on the weekend that “it does look as if the move above JPY104 completed some technical phase”, identifying 102.60 as a target level.
– On Commodity markets, Gold has regained $1300 sitting at $1,302 this morning for a gain of 1.46%. Crude rallied as well up 0.85% to $101.06 while Copper closed at $3.04 lb. On the Ags, it was positively quiet with Corn up 0.35%, Wheat down 0.92% and Soybeans losing 0.1%.
On the data front, today sees the release of the ANZ job ads which will be an important lead before Thursday’s jobs data in Australia. In Germany, industrial production will be mildly interesting as will the Sentix investor confidence numbers. Nothing in the US.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
Bluescope Steel finished last week with buyers contemplating the wisdom of taking prices through a resistance line just below $6.40.
This kind of situation might see Bluescope on traders’ watch lists for a variety of reasons. Buyers and breakout traders will be interested in a push well clear of the resistance as an indication that investors are prepared to continue re rating of this stock, with the uptrend resuming.
However, at around $5.90, the support line that defines the bottom of this range is 8% below the resistance. This might also be of interest to short sellers if the market looks as though it’s going to reject the resistance for a 3rd time.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC