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

Getty/ Spencer Platt

Good morning. Here’s the score so far.

– US existing home sales surged last night, up 6.1% against the 3% expected. The big jump saw traders across a number of asset classes focus a little harder on the chances of the Fed rate hike sometime in 2015. Of course, Fed vice chair Stanley Fischer told the market just last week that unless the US economy dips further from where it is, the Fed is likely to start its tightening cycle at some point this year.

– The impact of the big lift in housing was to depress the price of gold which had a big fall to $1,187. Ten-year Treasuries in the US rose 7 points back to 1.98% and stocks in the US were a little higher as traders focused on earnings and had a little bit of “glass half-full”, Michael Sansoterra, portfolio manager of the RidgeWorth Large Cap Growth Fund in Atlanta, told Reuters.

– In the UK, the Bank of England minutes were released. The upbeat tone, in so far as the MPC is worried about inflation, suggests that chief economist Andrew Haldane’s idea that a cut is as likely as a rate hike is not a view shared by the MPC. That was good for sterling, which is back above 1.50 against the US dollar. With rates so low, markets are intensely focused on when both the Fed and BoE are going to start tightening. The impact on asset markets could be huge when this happens.

Elsewhere, the parity party with the Kiwi has been postponed with the Aussie dollar up 0.65% to 0.7757 while the Kiwi is down marginally for a loss of 0.07% at 0.7667. That leaves the AUDNZD at 1.0116. It’s been close over the past 24 hours – but no cigar just yet.

Here’s the overnight scoreboard (7am AEST):

  • Dow Jones up 0.49% to 18,038
  • Nasdaq up 0.42% to 5,035
  • S&P 500 up 0.57% to 2,107
  • London (FTSE 100) down 0.49% (BoE worries) to 7,028
  • Frankfurt (DAX) down 0.6% to 11,867
  • Paris (CAC) up 0.36% to 5,211
  • Tokyo (Nikkei) 20,113 up 1.13%.
  • Shanghai (composite)up 2.47% to 4,399
  • Hong Kong (Hang Seng) up 0.3% to 27,933
  • ASX Futures (SPI June) +14 at 5,837
  • AUDUSD: 0.7750
  • EURUSD: 1.0723
  • USDJPY: 119.85
  • GBPUSD: 1.5037
  • USDCAD: 1.2232
  • Crude: $56.18
  • Gold: $1,187

– The big news really over the past 24 hours continues to be the remarkable rally in Asian stocks. Of course, the Shanghai exchange remains buoyant but yesterday’s 15-year milestone of the Nikkei above 20,000 for the first time in this period serves to highlight that it is possible for a disconnect between the economy and markets to persist far beyond what would appear to be a natural period of time. I say that because in a world where doomsayers keep trying to call the top in Shanghai, or other markets, Japan proves what feels irrational can keep on keeping on. It doesn’t mean it won’t end badly but traders who short it do so at their peril.

– Looking at the local market over the past couple of days and there has been a lot of volatility in both directions. This is suggestive of trader indecision and competing currents. For the moment however, the technical outlook remains biased lower.

– On forex markets, the most important battle at the moment is the EURUSD. Euro has failed in the 1.1050/90 region a few times since the lows earlier this year but over the past week has been testing the downtrend line which stretches back to when the big falls started for the euro in December. It hasn’t and can’t break that trendline yet. Unless or until it does, then the Aussie dollar and other currencies will struggle to rally too hard against the US dollar. With Greece still simmering, the US dollar would be expected to reign supreme for a little longer.

– On commodity markets, no inflation means gold is hardly useful as a hedge. Add in the continuance of US and global stock markets to point higher and the reason to hold gold is further eroded. Techincally though, gold is trading a $1,183-$1,210 range. Unless it breaks it will just keep bouncing around. Elsewhere in commodities, Nymex crude is drifting back to test the uptrend line from the lows and it sits at $56.23 for May delivery. Iron ore is doing well with Dalian overnight back above 400 at 403. That’s a long way from 370 back when Joe Hockey marked the low by saying iron ore “has no bottom”.

– On the data front today, the quarterly NAB Business Survey is due out. This survey is similar to the monthly survey but the list of respondents is much larger. It will be interesting to see if there is any difference between the monthly and quarterly surveys. Elsewhere it’s ‘flash’ PMI day for China and around the world. That’s important. Tonight we have a jobless claims in the US and UK retail sales.

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


It’s been a tough year for Suncorp in terms of natural disasters.

This week’s storms follow Brisbane’s hail storms in November and Cyclone Marcia in February. Shareholders now face a wait as the damage bill from this week is totted up. Given the cost of the last two events, claims for this year will exceed Suncorp’s provisions so the impact on the bottom line is going to depend on the extent to which it has hedged its bets with re insurance.

Looking at Suncorp’s price chart, the major support levels look to be the bottom of the well-established trend channel around $13 and below that the 38.2% Fibonacci retracement of the last major uptrend at around $11.80.

Ric Spooner, chief market analyst, CMC Markets.

You can follow Ric on Twitter @ricspooner_CMC

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