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

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– Another day, another series of new all-time highs across global stock markets with the Nasdaq again leading the charge in the US with a rise of 0.71%. The Dow and S&P were less ebullient but still in the black while European stocks were also all higher with the only exception of the major markets we follow being the SMI in Switzerland.

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– It’s difficult to know whether Durable goods, which printed 4% against expectations of a rise of 0.6%, helped stocks because they were so strong or because when you eliminate aircraft and defence equipment orders actually fell more than expected, down 0.5%. More evidence of the confusing picture that is the US economy at the moment. It makes this week’s first print of GDP for Q1 and the FOMC meeting all the more important to stocks as they break north again. Key however is that the Fed seems to be signalling they want to begin normalising rates this year. Perhaps it is as much to stop any chance of the current ebullience in US stocks turning into a mania the way it appears to have in Shanghai.
This tweet from Peter Morgan sums up the situation from a long term investors perspective quite nicely. The US FactSet reports “more than half (53%) of S&P 500 companies have reported sales below estimates to date.” Earnings might be doing better with 73% beats but sales suggest the economy is slowing and corporate America is feeling the pain — at least in Q1.

– In Europe, Greece is still top of mind with Friday’s Eurogroup meeting coming and going without any concrete agreement on Greece. It seems Grrece’s rock star Finance Minister is on the outer with the FT reporting over the weekend that “A fraught eurozone meeting in Riga at the weekend has left Yanis Varoufakis, the Greek finance minister, increasingly isolated both in Brussels and in Athens as officials seek to bypass him in an effort to jump-start bailout talks.” That’s a good sign for Greece and the EU in terms of a resolution but equally it could backfire.

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

  • Dow Jones up 0.12% to 18,080
  • Nasdaq up 0.71% to 5,092
  • S&P 500 up 0.23% to 2,117
  • London (FTSE 100) up 0.24% to 7,070
  • Frankfurt (DAX) up 0.74% to 11,810
  • Paris (CAC) up 0.44% to 5,201
  • Tokyo (Nikkei) down 0.83% to 20,020
  • Shanghai (composite) down 0.46% to 4,394
  • Hong Kong (Hang Seng)up 0.84% to 28,060
  • ASX Futures (SPI June) up 24 to 5,960
  • AUDUSD: 0.7817
  • EURUSD: 1.0863
  • USDJPY: 118.88
  • GBPUSD: 1.5156
  • USDCAD: 1.2186
  • Crude: $57.42
  • Gold: $1,179

– On the local market the ASX looks like it has its best chance to finally break 6,000. I’ve had a good look at what might help it higher in my Australian Diary this week.

– In Asia on Friday the competing themes of the promise of more economic stimulus and a crackdown on traders using non-public information on which to trade saw the Shanghai market finish mildly weaker. The outlook for Chinese stocks still appears to be to the topside given the comments from Li Yangzhe, head of the economic operation office at the National Development and Reform Commission (NDRC), on Friday that “there will be a greater effort to adjust economic policies. There will be a bigger effort to stabilise growth.” But clearly it’s a more confusing picture given policy makers are trying to open up and liberalise trade, while at the same time are trying to ameliorate speculative excess. Elsewhere the Hang Seng was higher, while in Japan the Nikkei fell 0.83% but held above 20,000 for its best weekly close in 15 years.

– On forex markets there is a sign that the US dollar is turning. More correctly, the Euro is driving higher turning sentiment toward the dollar. That has big implications in a global macro perspective because it can do things like stop the Aussie dollar from falling when the RBA would like it to and when the economy probably needs it to. Some will say that a stronger Aussie will be a trigger for an RBA cut – it will certainly figure in their debate next week – but if it’s below 80 cents its unlikely to be a trigger on its own.

– On bond markets US 10’s dipped 5 basis points to 1.91%. This, along with the move in the US dollar Friday, suggests traders focused on the weaker core Durable Goods orders. German 10’s closed at 0.16% while UK 10 year Gilts finished at 1.67%.

– On commodity markets it’s clear that what we saw earlier this month in iron ore and perhaps what we’ve seen in the oil market was exactly the type of pessimistic crescendo — when all the bulls are either cleared out or give up — we need to see for a bottom. Since then we’ve seen some solid rallies for crude, both the Nymex and Brent varieties, and news over the weekend that the Saudi’s are still bombing Yemen could further stimulate the oil price. This is particularly the case with Reuters reporting the capital Sanaa has been bombed for the first time. This can have profound impacts on the global inflation outlook which will then feed into central bank actions. Watch this space.

– In terms of the price action on commodities the big move was the fall in gold to $1,178 which is now below the recent range bottom. Elsewhere, iron ore rose sharply with September Dalian closing the week at 435 up 22.5 on the day. That equated to a June futures price on Nymex for 62% Fe CFR China of $56.25 up $4.37 a tonne. That’s not a typo and Joe Hockey may have inadvertently called the low in iron ore.

– On the data front it is a quiet day in Asia today with nothing material in Australia, New Zealand has a day off for Anzac Day. Tonight we get German import price data, CBI Industrial trends in the UK and Markit services and composite PMI in the US.

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


Resmed fell heavily on Friday, after release of its quarterly results. The results represented only a slight miss but of course that’s all it takes when stocks are trading at very high valuations. Resmed went into the result trading on a multiple of around 30 times expected earnings for FY16.

Resmed has 2 core segments in its sleep disorder products. The first is flow generators making up about 57% of revenue and the second is masks and accessories making up 43%. The disappointment came in the masks business where increased competition has led to pressure on margins. While Resmed’s sales growth was in line with expectations, its profit margin was 59.5% compared to guidance of 60-62%.

I featured Resmed as a stock to watch a few weeks ago, noting that divergence between price and the MACD indicator was pointing to a market that looked trigger happy if the profit result disappointed.

Resmed came to rest at minor support on Friday represented by past peaks and shown by the dashed line. However, the severity of the selling on Friday suggests this support could easily be broken before long. The 38.2% Fibonacci retracement around $8.08 represents another possible support below that. I f things were to get really ugly, the 200 day moving average and 61.8% retracement around $7 look possible. It was only back in December that the stock was trading at that price but a rebound in the Aussie Dollar might be needed to get a look at this level.

Ric Spooner, chief market analyst, CMC Markets.

You can follow Ric on Twitter @ricspooner_CMC

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