Good morning. Let’s get this started.
– Remembrance/Veterans Day in the US and Europe saw fairly quiet trade overnight with stocks in the US trade either side of square throughout the day as the S&P 500 moved through a tiny 6 point range.
– That doesn’t mean that nothing happened because Charles Plosser, president of the Philadelphia Fed, told CNBC that even though inflation is low, “many indicators that tell us rates are too low”. He added: “We are really behaving in a way that is outside historical norms and that should make us nervous.”
– Perhaps it’s Plosser’s looming retirement but markets essentially ignored his very strong comments with the Dow sitting at 17,613, down 0.01% with 10 minutes of trade left before the close. The Nasdaq is up 0.20% to 4,660 and the S&P is flat at 2,039.
– Perhaps instead markets have assimilated the Fed’s move and are now focused on Europe where ECB board member Yves Mersch said that sovereign bond buying, as soon as next week, is a “theoretical option”.
– So stocks in Europe were mostly in the black with the exception of Italy, where they dipped a smidge off 0.02%. In Madrid, stocks rose 0.64%, in Paris the CAC was up 0.5% to 4,244, the DAX was up 0.18% to 9,369 while in London the FTSE rose 16 points or 0.24% to 6,627.
– Locally, on the ASX Futures market the SPI 200 has barely budged after yesterday’s small fall, with the December SPI 200 contract dipping 2 points to 5,526 bid.
– In Asia yesterday, it was a very interesting day. Rumours of an early election and the postponement of the sales tax increase drove the Nikkei and USDJPY higher. The Nikkei rallied 2.05% to 17,124. In Shanghai, stocks dipped 4 points as the resistance we highlighted yesterday weighed on sentiment a little. But, Bloomberg reports that turnover of US$53.9 billion is the most since they started compiling such data in 2005, so there is still plenty of interest in the index just a week before the tie up with the Hang Seng exchange and the expected flood of foreign cash into the mainland exchange.
– On Bond markets, US 10s are at 2.36%, German 10s at 0.79% and UK 10-year Gilts at 2.24%.
– In Forex land, the Aussie is higher. But so is the euro and pound amidst a generalised US dollar dip. The Aussie, at 87 cents even, is up 0.92% on the day. Our cross-Tasman cousin the Kiwi is also up close to 1%, sitting at 78 cents. The Antipodeans have outperformed the euro which is up 0.45% to 1.2476 while GBP is up 0.49% to 1.5918. The yen went the other way, as noted above, and is at a 7-year low against the US dollar at 115.39 while AUDJPY is at 100.38 – its highest level in 18 months.
– On Commodity markets, there is a little whisper that OPEC might have a production cut round the corner but it had little impact on Nymex crude which was up 31 cents a barrel to $77.71. Gold rallied with the US dollar’s fall and is at $1,167. Copper is up 0.55% to $3.037 while on Australia’s bulks, iron ore for December delivery dipped 29 cents to $75.25 while Newcastle coal for the same month was up 45 cents a tonne to $63.55. On the Ags, soybean meal continues its recent phenomenal volatility, rising 5.28% overnight. Wheat was up 1.35% and corn 1.29%.
– On the data front today, we have the Westpac consumer confidence release this morning at 10.30 AEDT and markets will be waiting to see if it confirms the ANZ weekly confidence survey and yesterday’s monster rise in the NAB business survey. We are still waiting on Chinese new loans data and then tonight the BoE will release its quarterly inflation report.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
What a difference a month makes. CBA shares have rallied more than 12% from their mid-October lows. This puts them within about 1% of their high and back to a solid PE multiple of around 15 times next year’s earnings.
As CBA heads into its annual general meeting today and the Murray Report on financial markets later this month, it’s also back into a zone of chart resistance. Rejection of any of the three levels on the chart might signal at least a pullback.
The chart is right at the first of these resistance levels in the form of the old trend line support. Above that is the previous high of $83.92. If that is broken then a third level of interest could be the line across recent major peaks. This last alternative would actually be quite an optimistic scenario, possibly intersecting around $87.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC
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