Good morning. Here’s what you need to know.
– Stocks around the globe have been under pressure in overnight trade as the combination of the weaker Chinese growth and enduring Greek Exit (Grexit) concerns have hit sentiment. For traders in our time zone that means it’s a little like Groundhog Day because these are the forces we dealt with yesterday. But it’s worth reiterating that Greece, and the aggressive approach of the Greek Prime Minister in pursuing the agenda that he was elected to implement by his constituents, is causing serious consternation in Brussels with increased uncertainty about the end result. We know that Finance Minister Yanis Varoufakis is strong when it comes to Game Theory but faced with Teutonic belligerence, the rules might be subtly different and end up more a game of chicken than theory. That could mean Grexit and that’s what’s on traders’ minds and it’s worrying them.
– No surprises then that the Athenian stock market fell 4.8% which also knocked the peripheral exchanges in Milan and Madrid (EU non-core) – both fell almost 2% but even the DAX lost 182 points for a 1.68% loss. The UK did better given it has its own currency and is a bit more remote from the mess should it eventuate. The FTSE is also more remote from the Ukranian situation, which looks like it could escalate to a full East-West confrontation at short notice.
– Wherever you look in 2015 there are grey swans happily swimming along. Lurking.
– At the close, the scoreboard in the US reads
- Dow Jones down 0.53%, 95 points to 17,729
- Nasdaq down 0.39%, 18 points to 4,726
- S&P down 8 points, 0.41% to 2,047
– European markets finished lower.
At the close:
- London(FTSE 100) down 0.24%, 16 points 6,837
- Frankfurt (DAX) down 1.68%, 182 points 10,664
- Paris (CAC) down 0.85%, 40 points to 4,651
- Milan (FTSEMIB) down 1.9%, 394 points to 20,397
- Madrid (IBEX) down 1.97%, 208 points to 10,365
– Locally the impact has been limited on the ASX March futures overnight, with a fall of just 8 points to 5748 following yesterday’s 5-point fall. BHP and Rio were both sharply higher in London trade which has insulated the ASX from the sharp fall into the close being experienced in the US this morning.
– In Asia yesterday, Shanghai recouped some of its losses Friday and showed the downside break of the 3,095 level wasn’t the technical trigger for massive selling it could have been. The Shanghai composite rallied back 19 points to close at 3,095. In Hong Kong, stocks dipped 0.64% after seeing the trade data, while in Tokyo the Nikkei was up 0.36%.
– On bond markets, it was relatively quiet in the US after Friday’s huge sell-off. US 10s closed at 1.95%, German Bunds finished at 0.33% while in the UK, 10s finished at 1.62%, down 4 points. Italy and Spain came under a little, only a little, pressure with both 10-year rates selling off 8 points to 1.63% and 1.57% respectively.
– On currency markets, the kneejerk US dollar buying we saw in early Asia yesterday proved, once again, to have been an over-reaction. It highlights (once again) that Asia and Australian traders, or at least others who access this time zone during their Sunday, make the wrong initial call to news and events offshore. Not always – but often. Anyway, euro is at 1.1331 off a low of 1.1269. GBP is at 1.5222 and the yen has reversed off important resistance and is at 118.46. The Aussie is back above 78 cents at 0.7807 from yesterday’s lows of 0.7745.
– On commodity markets, Newcastle coal is up $1.75 a tonne to $66.70. Iron ore fell 67 cents to $61.56. Crude is at $52.78, well off the $53.99 overnight high after OPEC raised its estimate of world oil demand for 2015. Copper is at $2.5810 and gold is at $1,241.
– On the data front today, we get the release of the NAB’s monthly business confidence and conditions survey. It’s the most important economic release each month in my book and we’ll have a deep dive this morning when it is out. House prices in Australia are also out but the Chinese CPI is likely to be the big Asian data point. Offshore data is somewhat second tier but UK manufacturing and IP bear watching, as does the NFIB business index and IBD/TIPP economic optimism index in the US. The JOLTS (job openings and losses) data tonight will be interesting as well.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
Westfield looks like one for the chart followers. Last Wednesday produced very strong gaps higher at the open followed by an equally powerful sell off that saw the stock close down on the day. This produced the large red candle which has been the most obvious feature on this chart’s landscape for some months.
Yesterday saw Wednesday’s selling momentum continue and the chart has arrived at potentially significant support in the form of the January peak shown by the dashed line. A break below this would be a further sign of weakness suggesting that Westfield has now completed an Elliot 5 wave advance and that a deeper downward correction is in prospect.
In these days of low interest rates and trigger happy yield hunters, the Fibonacci 38.2% retracement level around $9.38 might pull things up.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC