– In the absence of any data and with some positive feelings toward Greece there were some strong gains on global stock markets overnight with the Nasdaq closing at a new all-time high and the Dow up more than 100 points. In Europe the FTSE, DAX and CAC all rose more than 1%. That’s helped local futures rally 12 points overnight. Not enough to unwind yesterday’s fall but it sets up a better day on the local exchange.
– The better sentiment meant that the early European US dollar strength, which took Euro down to 1.0820 and the Aussie below 77 cents, was reversed on the back of a better tone in markets. The Yen touched 1.24 before reversing a little to 123.62 — that’s still the highest close in eight years. But overall forex traders are taking a break from the recent run on US dollar buying.
– On Greece the tone is a little better but Westpac’s New Zealand-based strategist Imre Speizer reckons confusion still reigns. “The latest iteration saw the Greek PM proclaim a deal with creditors was close, but creditors said it wasn’t,” he wrote this morning. It seems nothing has changed since January.
Here’s the overnight scoreboard (6.58am AEST):
- Dow Jones up 0.67% to 18,162
- Nasdaq up 1.47% to 5,106
- S&P 500 up 0.92% to 2,123
- London (FTSE 100) up 1.21% to 7,033
- Frankfurt (DAX) up 1.26% to 11,771
- Paris (CAC) up 1.95% to 5,182
- Tokyo (Nikkei) up 0.17% to 20,472
- Shanghai (composite) up 0.63% to 4,941
- Hong Kong (Hang Seng) down 0.6% to 28,081
- ASX Futures Overnight (SPI June) +10 to 5,749
- US 10 Year Bond down 2.13%
- Australian 10 year bond 2.83%
- AUDUSD: 0.7720
- EURUSD: 1.0904
- USDJPY: 123.63
- GBPUSD: 1.5355
- USDCAD: 1.2453
- Crude: $57.66
- Gold: $1,187
- Dalian Iron Ore (September): 432.5
– Yesterday saw falls on the ASX 200, with the banks and the miners under pressure. That left the index down 0.8% after a 48 point loss. With the lead from the US it should be a better day locally. But the futures performance overnight suggests that this 5745/70 resistance zone is still being eyed by local traders. However, the technical pattern — a great big W — does argue for a continued rally.
– In Asia yesterday Shanghai was higher again as the afterglow of infrastructure spending continued. The Nikkei rose marginally as Yen weakness persisted and the rest of the region was mostly down. Of interest in Asia, China specifically, is that Wall Street’s China bulls are worried. HSBC chief economist for Greater China Qu Hongbin yesterday wrote, “we now forecast a softer rebound in Q2 2015, with a year-on-year growth slipping below policy maker’s comfort level during the quarter, prompting more aggressive easing.” Most forecasters are expecting this easing and stimulus to lift growth. But there’s a real risk that the Chinese economy is suffering diminishing returns from government efforts to prop it up.
– On commodity markets crude fell back below $58 a barrel, copper lost 1.3% but gold steadied at $1,187. It’s really just trading in a tight but volatile range at the moment. Iron ore is still strong but Citibank has another chilling forecast. Chilling insofar as it will really hurt the federal budget’s revenue projections.
– On the data front today we get the very important Private New Capital Expenditure report for Q1. The headline number is actually less relevant than the projections for the next financial year and David Scutt has a great preview on what you need to know about this morning’s release. He’s also going to have full coverage from 11.30am this morning.
– Offshore we get retail trade in Japan, import prices in Germany and house prices in the UK. UK GDP is also out, as is the ECB’s financial stability review and EU consumer, business and services confidence. In the US we get jobless claims.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
Blood plasma group and market darling, CSL stands to gain if the Aussie Dollar keeps falling. However it’s approaching potential trend line resistance as shown on the chart below. If it starts to falter around this resistance, potential buyers might yet be presented with a correction to buy into.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC