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

Quick Recap: Stocks were lower around North America and Europe last night along with another fall in commodity markets which took the CRB index to another fresh 12-year low. That helped interest rates rally around the world.

On forex markets, the Aussie dollar is still faltering a little after yesterday’s unemployment print (even though the jobs news is still positive) while the rest of currency land was range-bound with maybe only sterling under anything like pressure.

Crude is under $45 a barrel on Nymex which also helps bonds because of the deflationary pulse it is sending through the global economy.

The overnight scoreboard (7.29am AEST):

  • Dow Jones -0.69% to 17,419
  • Nasdaq -1.62% to 5,056
  • S&P 500 -0.78% to 2,083
  • London (FTSE 100) -0.08% to 6,747
  • Frankfurt (DAX) -0.44% to 11,585
  • Tokyo (Nikkei) +0.2% to 20,664
  • Shanghai (composite) -0.88% to 3,661
  • Hong Kong (Hang Seng) -0.57% to 24,375
  • ASX Futures overnight (SPI September) -36 to 5,491
  • AUDUSD: 0.7343
  • EURUSD: 1.0922
  • USDJPY: 124.70
  • GBPUSD: 1.5510
  • USDCAD: 1.3107
  • Crude: $44.84
  • Gold: $1,089
  • Dalian Iron Ore (September): 425.5

Now the news. The big story for me is the continued fall of crude oil. Akin Oyedele from BI US says that “Crude oil extended declines to four-month lows. West Texas Intermediate crude futures fell to as low as $US44.20 per barrel in New York. Oil collapsed into a bear market last month on oversupply concerns, weakening demand from China, and forthcoming exports from Iran after sanctions are lifted.”

That’s important for so many markets. Commodities, because crude is a leader. Interest rates, because lower crude will continue to push a deflationary pulse through the global economy, and stock markets and the US dollar, because even if this fall doesn’t stop the Fed from tightening this year, it will possibly truncate the extent of the rise in rates. That will put less upward pressure on the US dollar and potentially less downward pressure on stocks. Hopefully though, for the economy, lower crude equates to a tax cut for consumers and they spend the money elsewhere.

Here’s the chart and the big support crude is sitting on:

US OIl – (Go Markets, MT4)

– On stocks, media companies dragged the market lower after Viacom reported weaker than expected earnings. Craig James reports this morning that Viacom fell as much as 23% to four-year lows after reporting lower-than-expected quarterly revenue due to weakness in its cable TV business. The result resonated with the weakness highlighted by Time Warner (down 0.8%), Walt Disney (down 2.9%) and 21st Century Fox (down 6.6%). In Europe it was weaker oil and corporate earnings weighing on continental stocks, according to James.

– On the data front, last night in the US, initial jobless claims rose to 270,000 last week, up marginally from the 267,000 print previously. That was still better than expectations for 272,000 however. More importantly, the four-week moving average fell to 268,250 from 274,750 in a sign of continuing strength in the labour market. That sets up tonight’s massive non-farm payrolls report at 10.30. (Here’s a complete preview.)

– For local stock traders, it looks like another bad day according to futures players overnight. After the major banks were hammered lower in the wake of the ANZ’s announcement that it was raising $3 billion of fresh capital. CBA finished down 3.23%, the NAB was 2.18% lower and Westpac’s shares fell 3.04%. It is CBA that most of the focus seems to be on at the moment to raise capital, so it may be under more pressure again today which could depress prices further.

As I highlighted in my Go Markets report yesterday, the ASX is looking very interesting from a technical perspective at the moment.

It’s all a reaction to APRA’s new capital rules and it dragged the ASX 200 down by 1.13% to 5,610. It also highlights, as if investors need reminding, that the returns on banks is going to be lower going forward. That’s a handbrake on the ASX 200 index going forward. So, while there is no definitive sell signal we might be seeing a bit of an ugly head and shoulders pattern forming.

AUS200Weekly (day and night trade combined, MT4, Go Markets)

– In Asia yesterday, it was more of the same with Shanghai still lower even though authorities are still finding ways to stop selling. Overall market tone remains weak and now that short sellers are essentially banned on any time frame, it is just people trying to get out of positions driving prices. But who would buy now, given it’s so hard to sell?

– The UK was the centre of the forex universe last night with the release of the BoE MPC vote cut (8-1 v the 7-2 expected), the inflation report (threw cold water on those expecting a rate hike soon) and a speech from BoE governor Mark Carney which also hurt expectations that there would be a move in rates anytime soon. That, the NAB said this morning, meant “sterling under-performed in a night when large currency moves were noticeably absent, losing some grip in the wake if the BOE announcement on ‘Super Thursday’, the Bank releasing the voting, the Minutes and the Inflation report.”

– On bond markets, there was an across-the-board rally in rates. Westpac’s New Zealand based strategist Imre Speizer said that “US 2yr treasury yields fell from 0.73% to 0.69%, while the 10yr fell from 2.28% to 2.22%, depressed by the negative sentiment towards equities and commodities.ustralian 3yr government bond (futures) yields fell from 2.00% to 1.96%, while the 10yr yield fell from 2.89% to 2.83%.” UK and German 10-year rates fell 5 points as well to 1.94% and 0.67%.

– On the data front today there is huge excitement in economic circles about the release of the RBA’s quarterly statement on monetary policy this morning at 11.30 AEST. Before that though, we get the AiGroup performance of construction index. Home loan data is also out at 11.30am and the BoJ has a monetary policy announcement and BoJ governor Kuroda is giving a speech. Tonight it’s German trade data (watch for impact of China’s slowdown), as well as trade for the UK and then the big one – US non-farm payrolls. Expectations are for +222,000.

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

Rio Tinto

Rio’s CEO, Sam Walshe, built on his reputation as one of the market’s consistent achievers by delivering a profit result that beat expectations yesterday. Rio is doing what it can in a difficult environment, cutting costs and capital expenditure to keep debt levels conservative while at the same time maintaining growth potential.

In terms of what the charts have to say about how far the now traditional Sam Walshe post results rally might take Rio, a couple of levels are on the horizon.

For Fibonacci traders the $55.10/$55.60 looks a real possibility. At $55.10 there is an exact coincidence of the 61.8% retracement and an AB=CD pattern which is straight out of the text book. Just above that is the potential resistance formed by the last major low.

If price sails straight through that resistance the 200 day moving average up around $57.20 looks another possibility.

Ric Spooner, chief market analyst, CMC Markets

You can follow Ric on Twitter @ricspooner_CMC

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