Happy Friday. Stay safe, Queensland.
– An ugly night for markets with big selloffs in US stocks has left the ASX under pressure overnight with the the June SPI 200 contract losing 58 points overnight to 5418 bid.
– This move is all the more scary and troubling to traders because there is no obvious catalyst which is often historically the start of something much bigger. BI US chief Henry Blodget writes this morning not to be surprised if there is a crash coming.
– It doesn’t appear as though it was the data that knocked stocks, with jobless claims down to 300,000 last week (a 7-year low) but stocks fell nonetheless. At the close, the the Dow fell 1.63% to 16,170, the S&P 500 lost 39 points or 2.09% to 1,833 – right on the level that many traders are watching as a sign of a technical break lower. But the Nasdaq is where the real selling is, with recent darlings of the market getting hammered. The Nasdaq fell 130 points, 3.10% to 16,170.
– In Europe, stocks have some catching up to do when they open this afternoon as the FTSE actually finished in the black – up 0.1% to 6,642, while on the continent stocks in Paris and Frankfurt were only down 0.54% and 0.67% respectively. In Milan and Madrid though, stocks were off a more significant amount, dropping 1.33% and 1,42% respectively.
– All that suggests that Asia is going to have a bad day today. Yesterday, the Nikkei was flat even though the data was disappointing, with machinery orders down 8.8%. Key of course is USDJPY which is sitting at 101.55 this morning and any further weakness – which would be expected if risk continues to go off – will doubly hurt the Nikkei. In Shanghai, stocks are likely to struggle after yesterday’s big 1.37% but traders will be watching the CPI and PPI data very closely. New Loans are also out.
– On Currency markets, the Aussie’s strength yesterday after the employment numbers was built on in early London trade but the risk-off element of overnight trade has dragged it off its highs at 0.9461 to be sitting at 0.9413. The euro is also higher at 1.3884 almost 200 points off the lows of this week while the pound is largely unchanged. USDJPY is down 0.43% to 101.52.
– On Commodity markets, Gold is roughly 1% higher at $1,318 oz, Copper is at $3.06 and Nymex Crude sits at $103.38. On the Ags, Corn fell 0.35% but Wheat lost 1.01% and Soybeans fell 1.02%
On the data front, Chinese and German inflation data is very important for markets over the next 24 hours.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
Alcoa shareholders may have suffered the indignity of seeing their stock dropped from the Dow Jones after 44 years but the stock’s performance might have helped offset any loss of face. It’s rallied 73% since July last year.
The news flow was again positive this week with Alcoa’s profit result beating expectations and the company predicting a supply deficit in aluminium this year after a depressing 9 year stretch of surpluses. It seems industry production cuts and rising motor vehicle demand are having an impact.
Is all this cheer already factored into the stock price? The chart is suggesting that investors are a t least beginning to have doubts. Wednesday’ high looks like it could turn into a double top. This would be completed if the dashed support between the peaks at around $12.36 is breached.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC
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