– The Nasdaq is the big story overnight hitting an all-time closing record of 5056. That’s the highest closing high since March 2000. It’s been a long wait for those who bought that day to get back in the black — but they have, and Walter Price, senior portfolio manager and managing director of the Allianz GI Global Technology fund in San Francisco, told Reuters the market could go higher. In 2000, “a lot of the high-growth companies were selling at 200 or 300 times next year’s earnings. This is nothing like that. This is a whole different world versus 2000,” he said. The Dow and S&P were also higher but stock markets in Europe, with the exception of the FTSE and the IBEX in Madrid, were all lower. The DAX was down 1.21%.
– Key to the move on the DAX was the miss on the “flash” manufacturing PMI released overnight. It feels like it is months since German data, especially the PMI, printed on the downside of expectations so the dip to 54.4 from 55.4 last and against the 55.5 expected was a bit of a disappointment. Likewise, the EU-wide manufacturing PMI also dipped to 51.9 from 52.6. Looking at the “flash” PMI’s around the world, besides the misses in China and Japan yesterday, pretty much every print was on the low side of expectations. That’s interesting because it suggests the sweet spot for global growth is behind us. Of course it means more QE in Europe and Japan, more easing in China and perhaps a delay in the Fed. All of which almost guarantees stocks stay high.
– One interesting data point overnight was the print for new home sales, which printed a fall of 11.4% in March to 481,000 units. That’s a lot lower than both the expected outcome of 513,000 and last months 543,000 print. I raise that because one of the high points from trade the day before was US existing home sales which surged 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. Last night’s miss, along with jobless claims and weaker than expected “flash” PMI in the States, hurt the US dollar, suggesting the debate over the Fed continues.
– The other big news overnight was the jump in Nymex crude which rose 2.35% to $57.48 on the back of concerns about the Middle East. That’s the excuse anyway after Saudi Arabia, having announced the end to the first phase of bombings in Yemen, continued to then bomb Yemen. The reality for the moment is that the technical picture has changed and the outlook is for further rallies over the medium term.
Here’s the overnight scoreboard (7am AEST):
- Dow Jones up 0.11% to 18,058
- Nasdaq up 0.41% to 5,056
- S&P 500 up 0.24% to 2,112
- London (FTSE 100) up 0.36% to 7,053
- Frankfurt (DAX) down 1.21% to 11,723
- Paris (CAC) down 0.62% to 5,178
- Tokyo (Nikkei) up to 20,187
- Shanghai (composite) up 0.37% to 4,414
- Hong Kong (Hang Seng) down 0.38% to 27,827
- ASX Futures (SPI June) up 31 to 5,861
- AUDUSD: 0.7779
- EURUSD: 1.0821
- USDJPY: 119.55
- GBPUSD: 1.5057
- USDCAD: 1.2146
- Crude: $57.48
- Gold: $1,193
– Asian markets were fairly quiet yesterday, all things considered. Shanghai didn’t rip higher on the hopes of more monetary stimulus. Perhaps it’s starting to dawn on traders that the economy appears to be slowing fast. Perhaps not. While further stimulus is anticipated, stocks are likely to be buoyed. In Tokyo the persistence above 15-year highs at 20,000 is another sign that markets are driven by free money. It is what it is and traders can only trade the market in front of them. Rhetoric generally has no place in making money – not in a macro sense anyway. Shorting individual companies is different.
– On currency markets forex traders took note of the weaker data in the US, above other jurisdictions, and sold a few dollars. That left the US dollar index down 0.64% this morning to 97.305. The Euro is back above 1.08 and the dollar bloc of Aussie, Kiwi and CAD are all stronger. This is just a US dollar move. The key here is that Euro is breaking up out and through the downtrend from last December.
– On commodity markets, as discussed, crude is up. Gold improved — bouncing from the range lows — and sits at $1,193. Copper is at $2.69 and Dalian iron ore, which was under 400 in trade yesterday, is sitting at 414.5 on my terminal this morning. That is huge!
– On the data front today there is nothing big in Australia and Asia but in Germany IFO is out while in the US dureable goods will be huge.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day:
Whether you are a seller looking for better prices or a trader looking for short term buying opportunities, the CBA chart has now arrived at an interesting place.
Bank stocks have been out of favour recently. One aspect of this may be some rotation out of banks into the big resource stocks as investors chase relative value after the mini bounce in iron ore and a round of solid production reports.
However, CBA has now arrived at a zone of possible support. The obvious level is the dashed line across the February and March lows. Just above that though, is a less obvious “abcd” pattern where the cd leg is 127% times the length of the ab leg. This cuts in at $90.57 and the market stopped around that price yesterday. This will be of no relevance if price keeps falling today. But if CBA rejects this by leaving yesterday’s candle as a trend low and moving back past yesterday’s high, then we could be in for a decent corrective rally in CBA. 127% by the way, is not just a number I’ve plucked out of thin air, it’s a commonly used Fibonacci ratio.
Ric Spooner, chief market analyst, CMC Markets.
You can follow Ric on Twitter @ricspooner_CMC