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

Getty/Milos Bicanski

Good morning.

– Janet Yellen and US inflation both signaled that the Fed will be tightening rates this year. The CPI print of 1.8% year on year and 0.3% for the month of April was 0.1% higher than expected on both counts. This suggested to some that price pressures are starting to build. But it was Yellen’s speech indicating that she believes the Fed is still on track to tighten interest rates this year which was the big news. Not new news, but certainly the big news.

– Yellen’s comments only knocked stocks back a little in the US, with small falls. Rather, it was in currency markets where the biggest reverberations were felt, with the euro falling back to close the week just above 1.10. That knocked the Aussie dollar around a cent lower at one stage to a low of 0.7811 while sterling is back at 1.5470 and the Canadian dollar has weakened back to 1.2285 in USDCAD terms.

– Adding to the euro’s woes in early Asia this morning were comments from ECB president Mario Draghi, who said that structural imbalances threatened the fabric and existence of the monetary union. As if on cue, Greece’s interior minister said Greece won’t be able to make the June repayments to the IMF. “The four installments for the IMF in June are 1.6 billion euros ($US1.8 billion), this money will not be given and is not there to be given,” he said on Greek television.

– It makes for an interesting short week in the US and UK, which are both off today. What’s going to be interesting in this context is whether or not Asian and Australian traders will have the stomach to push the envelope without any chance of confirmation from the two biggest trading markets until Tuesday afternoon, Australian time.

Here’s the overnight scoreboard (8am AEST):

  • Dow Jones down 0.29% to 18,232
  • Nasdaq flat at 5,089
  • S&P 500 down 0.22% to 2,126
  • London (FTSE 100) up 0.26% to 7,031
  • Frankfurt (DAX) down 0.42% to 11,815
  • Paris (CAC) down 0.07% to 5,142
  • Tokyo (Nikkei) up 0.3% to 20,264
  • Shanghai (composite) up another amazing 2.83% to 4,657
  • Hong Kong (Hang Seng) up 1.7% to 27,992
  • ASX Futures Overnight (SPI June) -9 to 5,674
  • US 10 Year Bond -0.04% to 2.29%
  • Australian 10 year bond 2.91%
  • AUDUSD: 0.7817
  • EURUSD: 1.1002
  • USDJPY: 121.47
  • GBPUSD: 1.5471
  • USDCAD: 1.2285
  • Crude: $59.72
  • Gold: $1,206
  • Dalian Iron Ore (September): 421.5

– On the local market today, it’s likely to be quiet given no big leads from offshore, no material data and no material move in futures trade over the weekend. Of course, the banks and the miners remain somewhat in a state of flux.

investing.com Shanghai Composite 25052015

– In Shanghai, it is just more of the same with another solid rally on Friday. This took the Shanghai Composite index to a new seven-year high. Amazing that I thought I was making a big call last year saying the market was headed toward 3,000. One thing worth noting though is that while there are notions of this market being a bit of a bubble, I’m not exactly sure the market is fragile. Frothy certainly, but the fact that we’ve had a couple of billionaires lose vast swathes of their fortunes last week without recourse to the entire market suggests some internal strength – at the moment anyway.

– In Japan Friday, the BoJ upgraded its assessment of both the economy and private consumption. It also revised up its expectations for housing investment but believes that inflation is going to hover around zero for a while yet. That helped the Nikkei which is also benefiting from USDJPY in the mid-121 region.

– On commodity markets, it was quiet for a change with crude trying but failing to break back above the recent uptrend line. Dalian iron ore was stable as was gold. Copper at $2.81 a pound was the only decent percentage move.

– On the data front today, the calendar is bare in Australia and most of the globe with holidays in the US, UK, France, Switzerland and Germany. In Japan, trade is out.

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

Carsales.com

I featured Carsales.com as a stock to watch a few weeks ago as it entered a support range.

As it turns out, shareholders have had a great couple of weeks with the stock bouncing off the bottom of this range and rallying around 12%. The Federal Budget’s accelerated depreciation offer for small business may have helped here, with prospects for increased turnover of vehicles below $20,000.

However Carsales hit chart resistance on Thursday. Now trading at a more reasonable 21 times forecast earnings for F16, the stock may see some profit taking from short term traders.

Ric Spooner, chief market analyst, CMC Markets

You can follow Ric on Twitter @ricspooner_CMC

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