Let’s get straight into it.
– A weak night for US stocks from the get-go and unlike the previous night they were unable to drag themselves off the canvas. It seems one of the catalysts, perhaps the primary one, was the big drop in the World Bank’s forecast for growth in 2014 from 3.2% to 2.8%.
– On the data front in the US, the calender was bare with mortgage applications the only major point of interest with a 10.3% bounce in the last week. Also out was the US budgetary balance which narrowed to $130 billion.
– So at the close then, the Dow was down over 100 points to 16,844 for a fall of 0.60%, the Nasdaq was down 0.14% to 4,332 and the S&P 500 fell 7 points or 0.35% to 1,944. On stock-specific moves, Boeing was under pressure after a big order was cancelled.
– In Europe, it was a sea of red with Lufthansa the big mover, dropping 14.2% after issuing a profit warning. The FTSE was down half a per cent at 6,839, the DAX fell 0.79% back under 10,000, closing at 9,950 while the CAC dropped 0.87% to 4,555. In Milan, stocks slid 1.24% to 22,224 while the IBEX in Spain dropped 0.7%.
– On rates markets, the Kiwis have hiked rates this morning by 25 basis points to 3.25% but there was little action in global 10-year markets with the US 10-Year Treasury fairly static at 2.64%. Bunds settled at 1.40% and Gilts closed at 2.72%.
– Locally, even though Australian miners were up in London, the market closed lower in Futures trade overnight with the June SPI 200 falling 17 points to 5,442 bid. Australian 3-year bond futures rallied 3.5 points to 97.145 (2.855%) while the 10s rose 3 points to 96.185 (3.715%).
– In Asia yesterday, the world bank forecast – and the fact it called out emerging markets specifically as laggards – didn’t seem to worry traders overly with the Nikkei up 0.49% to 15,069 and shares in Shanghai up 0.12%. The Hang Seng fell 0.25% to 23,257. In other news, US Treasury Secretary Jack Lew “suggested” to the Chinese that they need to let the market set the yuan exchange rate. Today on the data front we get Japanese foreign investment and machinery orders while in China the market will be watching the new loan data.
– On global Currency markets, the euro has recovered from overnight weakness and sits at 1.3531 while the Aussie has pulled back from an aborted foray to 94 cents sitting at 0.9387. The labour force data at 11.30am will set the near-term direction for the Aussie and the market is looking for a rise of 10,000. Elsewhere in Currency Land, the yen benefited from the global growth downgrade and is back below 102 at 101.97 while sterling is 1.6789 after some very solid employment data (which may have been affected by when Easter occurred).
– On Commodities, Iron Ore fell a little with the September 62% FE swap down 17 cents to $92.83. September Newcastle Coal was unchanged at $72.55 tonne while June Nymex Crude didn’t really gain from the troubles in Iraq, closing at $104.49 – almost unchanged. Copper lost one cent to $3.04 lb while Gold sits at $1260 oz this morning with Silver still holding $19 oz closing at $19.05. On the Ags, Corn fell 1% on a big crop forecast while Wheat slid 2% and Soybeans dropped 1.16%.
On the data front today, all local eyes will be on the labour data at 11.30am. Tonight in Europe we see the release of the German wholesale price index, French CPI and the ECB monthly report and IP numbers. In the US, retail sales will be important as will business inventories and jobless claims.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
BHP’s share price has arrived at a potential inflection point. It’s been pushed back to trend line support for the 4th time since October.
It might pay to allow a bit of tolerance about precisely where the support lies. However, chartists will be watching what happens here over the next few days. A clear break below support might be significant, not only for BHP but as an overall indicator of market sentiment towards resource stocks.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC
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