– Another interesting night in European and US markets. Ostensibly reports are that concerns over Greece weighed on stocks. But that doesn’t feel credible given the size of the moves was tiny if the market really is worried about Grexit. Sure, Athens dipped 4% after rallying 8% the day before but only Spain’s IBEX (-1.29%) and Italy’s FTSE MIB (-0.77%) had a material move. But the moves tell us that the market believes Greek Finance Minister Yanis Varoufakis when he says that Greece is “absolutely not” leaving the eurozone. That’s the right approach to take to the euro group meeting but the Germans remain belligerent.
– For currency traders, probably more than most, this is a key event risk. However remote the chances of Grexit might be, it remains non-negligible. As the NAB noted this morning: “The next few days could be very volatile and with more EU leaders’ meetings over coming days too, including the EU Leaders Summit Thursday (tonight). There’s real potential for EUR pressure in coming days. Keep an eye out for headlines this morning, and of course beyond!”
– Elsewhere overnight, the rollercoaster ride in oil continued with Nymex crude slipping back below $50 with a dip of 1.5% to $49.27 a barrel. The catalyst was, once again, a bigger than expected build in inventories. The print of 4.868 million barrels was more than 1.1 million barrels bigger than expected.
– Turning to the day ahead, it is worth noting the import of Australian employment which is to be released at 11.30am. The market is currently expecting a small increase of 5,000 jobs and an increase in the unemployment rate to 6.2%. This is a volatile series – which is why I stopped punting numbers or believing forecasts 25 years ago – but it’s also a significant release in gauging the health of the economy while at the same time feeding into confidence. We’ll have full coverage at 11.30am.
– Anyway at the close, the scoreboard in the US reads
- Dow Jones down 0.04% at 17,862
- Nasdaq up 0.28%, 13 points to 4,801
- S&P flat, down recovered to finish at 2,069 unchanged
– European markets finished lower.
At the close:
- London(FTSE 100) down 0.16%, 11 points to 6,818
- Frankfurt (DAX) a bit up and down but at the close barely moved with a fall of 0.02% to 10,752
- Paris (CAC) down 0.35%, 17 points to 4,679
- Milan (FTSEMIB) down 0.77%, 160 to 20,566
- Madrid (IBEX) down 1.29%, 135 points to 10,365
– Locally, after another down day yesterday where the ASX 200 lost 32 points, SPI 200 March futures indicate a much better performance today with prices up 19 points to 5,743. Evan Lucas from IG MArkets reckons that at current levels, the ASX will soon start to feel gravity’s force.
– In Asia, Tokyo was closed which might help explain the USDJPY’s push higher as many traders were absent for the public holiday. In China however, the Shanghai market rose 0.52% to 3,158 while stocks in Hong Kong dipped 0.87%.
– Bond traders felt it was time for the US 10-year Treasury to close at 2% for the first time in a month. German 10s closed at 0.33% while UK 10-year gilts finished at 1.68%.
– On currency markets, the Aussie dollar was the weakest of the majors, down 0.77% to 0.7709 from a high of 0.7793 last night. The low was 0.7691. Last night’s moves highlight that the Aussie is likely to react to the employment data today. Elsewhere, the euro is at 1.13 after trading a 50-point range – another sign Grexit is still not worrying people too much – while sterling is at 1.5243. USDJPY was up, up and away after a technical break, trading to 120.44 – it’s at 120.29 now.
– On commodities, oil is down as discussed above, copper is at $2.542 a pound while gold has broken lower and sits at $1,219 an ounce. On the bulks, iron ore rallied a little across the curve with the March contract up 62 cents to $63.04. Newcastle coal for March finished at $68.05.
– Besides unemployment today we also get a speech from RBA assistant governor Guy Debelle at the FX Week conference in Sydney. So we’d guess he’s going to talk about Forex. German CPI is out tonight and the BoE inflation report is huge tonight, as is US retail sales.