Welcome to your week.
– Traders can either be positive or negative this morning depending on their bent, given that non-farm payrolls (+175,000 v +149,000 expected) in the US on Friday night were good but Chinese trade data on Saturday was just “horrible”, as the NAB FX Strategy team put it this morning.
– The Chinese data showed a trade deficit of US$22.99bn against expectations of a US$14bn surplus. The key here was that imports were up strongly but exports tanked as the officials in Beijing have cracked down on speculative flows via the recent moves in the RMB rate. It seems clear that the data was recently distorted by capital flows mixed up with trade flows recently which has overstated growth. That has many worried about the state of Chinese growth.
– So this morning’s trade in Asia is going to be a bit more cautious than would otherwise have been the case, given that the S&P 500 in the US made a new intraday high of 1.884 before closing up one point at 1,878. The Dow rose 0.19% to 16,453, the Nasdaq fell 0.37%.
– In Europe, stocks had a bad end to trade even though the non-farms had originally seen them higher. At issue was the warning from Russian gas giant Gazprom that it could cut off the flow to Europe. The result was that the FTSE fell 1.11%, the DAX dropped 2.01% and the CAC was 1.16% lower. Stocks in Madrid and Milan fell 1.36% and 0.98% respectively.
– Locally on the ASX, the futures market is signalling a lower open with the March SPI 200 contract down 16 points to 5454 bid.
– On global FX markets, the Aussie is lower this morning and almost a full cent off the pre-non-farm payrolls’ high, sitting at 0.9033 this morning. The euro hit an important Fibonacci level at 1.3915 before reversing a little to sit at 1.3867 this morning. GBP has had a similar reversal off the highs of Friday and sits at 1.6731 this morning while USDJPY sits at 102.91.
– On commodity markets, Crude leapt 1% to $102.69 Bbl, Gold fell by 1% to $1337.70 oz while Copper fairly tanked, dropping to $3.15 lb for a massive 3.63%. On the Ags, Soybeans rose 1.39%, Wheat rose 0.74% but Corn fell 0.98%.
On the data front, Japanese GDP is going to be huge today while new loans will be released in China. Tonight we get a raft of individual European industrial output and production data.
You can follow me on Twitter @gregorymckenna
And now here is Ric Spooner from CMC Markets Stock to Watch
Facebook – The market is currently valuing Facebook at about 56 times average earnings forecasts for 2014. With valuations like this there is plenty of scope for a sharp correction if anything happens to change sentiment for either the stock itself or the broader market.
With this in mind, the fact that Facebook is also showing signs of technical divergence puts it on my list of stocks to watch. While last week’s peak was an all-time high, the RSI is beginning to make lower highs. Any weakness from here that led to a break below the 20 day moving average and support below that would complete a double top formation.
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