Here’s your morning market update.
– Markets were falling everywhere, except for Gold which has lifted on the back of the increased risk aversion that we saw overnight.
– What is driving this is clearly sourced in the catalysing event that was the weak export data from China over the weekend, but equally as an article from our US colleagues showed yesterday, investors are starting to mistrust the recent rallies in stocks. As a behavioural finance guy, this for me is key to why things have turned.
– Data in the US supports some thoughts that the economy is slowing, with wholesale sales in January falling 1.9% – the biggest drop in 5 years – while inventories grew. Both these data point to slowing growth. So at the close, the Dow was 0.41% lower, the Nasdaq dropped 0.63% and the S&P 500 lost 9 points to close down 0.49% to 1,868.
– In Europe it was more mixed, with the FTSE down 0.05% but the DAX up 0.46% after trade data showed both stronger exports and imports. The CAC fell by almost the same amount, down 0.48% while stocks in Milan and Madrid were mixed up 0.39% and down 0.31% respectively.
– Locally in overnight trade on the ASX, the March SPI 200 contract is 25 points lower to 5390 bid.
– On global FX markets, the Aussie dollar sentiment appears to have turned this week, which will please Governor Stevens and his colleagues. The Aussie is back below 90 cents again this morning, off 0.58% to 0.8963. Euro is off a little, down 0.11% to 1.3859, GBP is down 0.17% to 1.6616 while USDJPY is also down, losing 0.28% as a little bit of risk aversion takes it back below 103.
– On commodities, the falls in both Copper (-2.64% to $3.03 lb) and Nymex crude (-1.51% to $99.59 Bbl) speak volumes for the changed sentiment toward growth. Gold is at $1347.60. On the Ags, Wheat is up 2.83%, Corn rose 1.27% and Soybeans fell 0.39%.
On the data front today, we get the Westpac Consumer Sentiment release along with lending data and then Korean trade, Japan large manufacturing index and the BOJ monthly economic survey. European IP will be interesting tonight.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
Recent selling has seen the big iron ore trio, BHP; RIO and Fortescue return to their 200-day moving averages.
Looking at the BHP chart, this support area might could prove a useful gauge of how serious market concerns about China and the iron ore price are.
BHP broke conclusively above its 200-day moving average back in July. It has only drifted in a gently sloping channel since then but the 200-day moving average and the bottom of the channel have combined to form a useful support. The two breaks below both proved to be minor false starts.
A powerful break well below this support could now spell danger at least for the short term. On the other hand, a bounce off this level (or not far below) might suggest the weight of money still sees value around these levels, especially as many analyst valuations have a significant decline in the iron ore price already factored in.
You can follow Ric on Twitter @ricspooner_CMC