Here's your 20-second guide to what Aussie traders will be talking about this morning

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– It is a sea of red across global stock markets this morning as markets increasingly fret about the dropping of the word “patience” from next week’s FOMC statement and the impending start of the Fed’s tightening cycle. This little black swan has been hiding in plain sight for ages now, so markets can hardly worry that they haven’t been warned. But another strong non-farms last Friday and comments from Fed Governors reinforcing that the wording might change, but certainly that rates will rise, in 2015 has awoken some bears from their slumber.

– So the Dow fell 333 points last night for a loss of 1.85%, the S&P 500 is down 1.7% while across the Atlantic, stocks in London were smashed with the FTSE falling 2.52%. European bourses were weaker as well and Asian stocks were down yesterday, and down further in futures trade overnight. Speaking of which, it is going to be a bad day on the ASX. Not only have June SPI 200 futures fallen 47 points but the market has broken lower in recent days and then again overnight. Here’s the chart from my Go Markets Asian Trading Wrap yesterday.

AUS200 Daily Chart (Go markets, MT4)

– It was equally bearish on currency markets, with the euro getting hit hard as the ECB confirmed it spent EUR 3.2 billion on the first day of its QE program on Monday. Euro dipped from a high of 1.0855 to a low of 1.0691 this morning. It’s back at 1.0701 now. Sterling is lower as well at 1.5066 and the yen hit its weakest level since 2007 overnight at 122.02, but the stock market turmoil has seen it rally back such that USDJPY is at 121.11 this morning. The Aussie is lower as well, down 1.1% on the day at 0.7616 off a low of 0.7706. It looks like the Aussie is going lower still.

– Here’s the overnight global stock market scoreboard:

  • Dow Jones down 333 points, 1.85% to 17,633
  • Nasdaq down 82 points to 4,860
  • S&P down 35 points 1.70% to 2,044
  • London(FTSE 100) down 2.52%, 173 points to 6,703
  • Frankfurt (DAX) down 0.71% to 11,500
  • Paris (CAC) down 1.12% to 4,882
  • Tokyo (Nikkei) down 0.67% to 18,665
  • Shanghai (Composite) down 16 points to 3,286
  • Hong Kong (Hang Seng) down 0.94% to 23,897
  • ASX Futures (SPI June) down 47 points to 5760

– One good thing about a decent stock market sell-off is that it takes the pressure of US 10-year treasuries which have been rising toward important resistance. Indeed the US 10 fell 7 points to finish at a much more benign 2.12%. German Bunds rallied again to 0.19% – you have to be kidding! UK Gilts also rallied, dropping to 1.83% – a 13-point gain even though BoE governor Mark Carney said no to more stimulus.

– On currencies, it is worth noting the calls for parity are growing and Deutsche Bank joined Credit Suisse yesterday in downgrading its outlook for the euro to a cycle low of 85 cents. That’s important for the Aussie dollar as well because the US dollar is the other side of the AUDUSD exchange rate. So if the USD is stronger then, all things equal, the Aussie will fall – and then some. So expect to see the Aussie in the 60’s in 2015/16.

– On commodity markets, it was a sea of red as the US dollar gained ground. Nymex crude fell 2.82% to $48.59, gold is at $1,161 and copper lost 1.91% to $2.6195. On the bulks, iron ore for June delivery made a new cycle low of $56.36 after dipping another $1.07 a tonne. On the Newcastle coal futures market, June coal fell 45 cents to $57.85.

On the data front today, Westpac consumer confidence is super important given the weakness in business confidence evidenced yesterday in the NAB’s report. Home loan data is also out along with the break-up in investment lending. China is expected to issue details of new loans, retail sales and industrial production. Tonight is a bit of a data drought with the UK IP the only major release. Tomorrow morning the RBNZ announces its interest rate decision.

And now from CMC Markets’ Ric Spooner is today’s Stock of the Day

Sigma Pharmaceuticals

Pharmaceutical distributor, Sigma is due to report its results on Thursday week and goes into this event with its chart interestingly placed.

Current negotiations between the government and the Pharmacy Guild for a new 5-year agreement on public payments to pharmacists for distributing drugs represent a strategic threat to Sigma. The Pharmacy Guild is a powerful political lobby and has done a great job protecting its members from competition. However, the government is looking to save money and is understandably concerned about a recent audit report showing significant shortcomings in the administration of the current agreement.

Sigma also goes into next week’s report on a PE multiple of 16 times F16 earnings. This leaves scope for a pullback unless its report comes in around the top end of expectations. From a chart point of view, Sigma has recently performed exactly to the Fibonacci play book. Its low on Monday bounced neatly off the 38.2% retracement of the rally from 77 to 98c. Yesterday’s high then proceeded to bounce neatly away from the 78.6% retracement of the latest minor decline.

If this keeps playing out, the short term bearish scenario would now see a swing lower, potentially to the 50 or 61.8% retracement levels around 85 to 88c.

As usual though, it pays to be aware of when the chart would be saying your scenario is wrong. If Sigma holds above Monday’s low and goes on to move past yesterday’s high that will be a potentially bullish development. It would suggest that the downward correction was limited to a shallow 38.2%, creating potential for a strong move up beyond 98c.

Ric Spooner, chief market analyst, CMC Markets

You can follow Ric on Twitter @ricspooner_CMC

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