Here’s your morning market update, where just about everyone is affected.
– A wild night on currency markets last night is the highlight with the US dollar getting hit hard across the board. The Aussie is above 0.9350, USDJPY is below 102, the euro is back near 1.38, the pound surged to 1.6750 and the Singapore, Kiwi and Canadian dollars all rose sharply.
– Some say this was not a US move but a yen move after the BoJ at yesterday’s meeting declined to add further stimulus, even as concerns over the impact of increased taxes in Japan grows. Certainly euroyen fell heavily as well but the broad-based nature of the US dollar means there is an undercurrent traders will be worried about today. Most probably though it is a combination of individual strengths against a weaker USD adding to a cumulatively large US dollar fall.
– On stocks, it was a somewhat messy day in the US with the Dow opening higher, falling into the red, back into the black, then red again before the three big US indices closed higher on the day. The S&P 500 rose 8 points to 1,852 for a gain of 0.43%, the Nasdaq closed up 0.84% to 4,113 while the Dow ended the day at 16,256, up just 0.11%.
– Locally, the impact was a rise of 24 points on the June SPI 200 contract overnight to 5428 bid.
– An interesting day ahead in Asia with the lack of stimulus from the BoJ and the big yen move dragging the Nikkei sharply lower yesterday and then again in overnight trade. Japanese stocks are likely to open sharply lower. Yesterday in Shanghai, stocks rose 1.90% and are likely to retain some sort of bid tone even if the Nikkei sells off but the Straits Times index in Singapore could come under pressure from the move in USDSGD to just above 1.25 – the strongest the Singapore dollar has been since December 2013.
– In Europe, UK industrial production bested expectations, printing 2.7% against 2.2% which was expected. That helps explain the pound surge but the FTSE didn’t like it, falling 0.48% to 6,591. The DAX lost 0.21% to 9,491 while the CAC lost 0.25% to 4,425. Milan and Madrid came under heavy selling, losing 1.46% and 1.18% respectively.
– On Commodity markets, the falling US dollar was also a big driver with Nymex Crude up 1.91% to $102.36, Gold up 0.79% or $10 oz to $1,308.30 while Dr Copper rose another 2 cents to $3.08 lb. On the Ags, there was also strong moves with Corn up 1.45% and Soybeans up 1.25% but Wheat lagged, up just 0.70%.
On the data front today, the release of the Westpac – MI Consumer Sentiment index will be watched closely as will the home loans data. Tonight German trade is going to be important for this euro rally as will UK trade be for the pound. Tonight in the US, the Fed minutes will dominate but mortgage applications are also important.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
The chart of this mining and engineering products group has been showing interesting signs of forming a basing pattern for a while.
As things currently stand, recent activity looks like a possible double bottom style pattern. Buyers made a start at pushing the stock past resistance on Monday but got cold feet with price retreating back into the body of the pattern at the close.
The situation remains in play though. From here a close well above resistance could be a sign of strength. Even if this takes a while to happen, this pattern leaves Bradken as an interesting stock for the trader’ watch list.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC