– FOMC chair Janet Yellen reinforced, via her comments that in the US “a high degree of monetary accommodation remains warranted”, that global markets are simply held up by free cash and low interest rates with the Dow and S&P rallying 0.72% and 0.55% respectively. The Dow closed at 16,519, up 118 and the S&P closing at 1,878, up 10. At the same time, the US 10-year yield closed at 2.59%, close to this year’s low.
– In the US however, tech shares lagged again and there are some fears that a head and shoulders pattern is forming in the market, as Sam Ro from Business Insider US showed in his piece earlier this morning. Such a pattern will be watched closely by traders and could see the Nasdaq head toward 3600 from the 4068 level it closed at this morning.
– In Europe, it was a volatile session but the diplomacy from Russian President Putin – who said that he had pulled back troops from the Russian border – and the solid moves in the S&P and Dow helped the DAX close up 0.56% to 6,796, even though factory orders tanked 2.8% in March. The CAC rose 0.4% and the FTSE was essentially unchanged. In Milan, stocks fell 1.3% while in Madrid they were 0.64% lower.
– Tying it all together, we see that after a weak day on the ASX yesterday where it closed down 45.6 points the futures market is more ebullient overnight with the SPI 200 June contract up 31 points to 5451. Last week, overnight futures trade proved ephemeral in our trading day so we’ll see how it goes today.
– In Asia yesterday, it was terribly ugly with the Nikkei down 2.94% in a delayed reaction to USDJPY weakness, but the performance of stocks overnight and the slight move higher in the USDJPY should help today. Elsewhere, stocks in Asia were also weak with the Hang Seng weighed down by weak Services PMI and Shanghai hit with similarly disappointing mainland data, posting a fall of 0.89%. In Thailand, stocks came under pressure after the PM was sacked by the Constitutional Court. Chinese trade data is out today, so Asia is going to be on tenterhooks awaiting what has been a volatile data release recently. The market is expecting around a 2% fall in both exports and imports.
– On Currency markets, the US dollar did a little better overnight as traders figured out, after German factory orders, that maybe the euro near 1.40 is over the odds. It sits this morning at 1.3911. The pound is down a little as well but still very strong at 1.6952 while USDJPY is at 101.89. For the Aussie dollar, some selling has come in from the highs of yesterday but it was very strong in light of the weaker-than-expected retail sales data. It sits at 0.9332 awaiting labour force data today.
– On Commodity markets, Nymex crude bounced 1.23% to $100.72 Bbl, Gold lost 1.5% to $1,289 and Copper lost 2 cents a pound to $3.05. Corn fell 0.49%, Wheat dropped 0.27% and Soybeans lost 0.89%.
On the data front, it is going to be a huge day for markets in Asia with the release of Australian employment data (mkt Exp +9,500) along with the Chinese trade data before we head to Europe for German industrial production and the Bank of England policy decision. That will be followed soon after by the ECB decision. In the US, jobless claims is the key data release.
Here is CMC Market’s Stock to Watch for today by chief market analyst Ric Spooner
The NAB heads into this morning’s profit report and its ex-dividend season with the chart giving traders reason to be nervous.
Here are some technical factors that say the NAB price could be vulnerable if its profit report is at all underwhelming
- It’s blipped under the 40 week moving average again. This average has done a good job of defining the last major uptrend that got underway in mid-2012 (a couple of minor false starts excepted)
- The slow stochastic indicator shown in the box under the chart has just dropped below 80% and is trending down. This provides plenty of scope for ongoing downward momentum.
- The rally from $21.95 to last November’s peak at $37.07 looks to have taken the classic Elliot 5 wave structure. This suggests a deeper correction of this whole rally is a possibility
Of course if the NAB team pulls a rabbit out the hat this morning, this may prove to be just another false blip under the 40 week average.
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