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

– Stock markets around the globe have taken succor from the big rebound in Chinese stocks yesterday which saw the Shanghai Composite log its largest one-day rise since 2009 with a 5.79% gain to 3,710. That took pressure off the rest of Asia and the positive sentiment washed through European and US stock markets. Elsewhere the slide in risk appetite was arrested with bond rates rising sharply in the US and Germany. That helped crude oil rise strongly, copper bounce and the recovery in iron ore continued.

Twitter – Screenshot

– Greece looks like it’s trying its best to get a deal done. A new bailout plan has been handed to creditors. Reuters reports the Greek government is going to have the Parliament vote on Friday to endorse reform commitments it will be offering in the new proposal to Brussels. It’s very welcome news on the Greek front but overnight the German Finance minister conceded that some sort of debt restructure deal is needed as part of any new agreement. As is often the case in this battle there are two sides to Schaeuble’s comments that “debt sustainability is not feasible without a haircut and I think the IMF is correct in saying that.” However, he also noted, “there cannot be a haircut because it would infringe the system of the European Union.” There’s more than one way to get a haircut. So this is a positive move.

– China has now effectively banned any decent selling and is chasing “malicious” short sellers. Its draconian, it sets back the path of Chinese financial liberalisation by years but clearly the leadership in Beijing believed they had to intervene to protect the economy and social stability. Many western observers are dismayed at what has happened but it did work yesterday and it’s clear the rules will be tightened again if the market doesn’t stabilise. Very interesting times.

– On the data front Akin Oyedele reports that:

“Initial jobless claims rose to 297,000 last week — versus 275,000 expected — the highest since the week of February 28. The prior period’s tally was revised up by 1,000. Economists say the increase is seasonal. In a note to client after the release, Barclays wrote: “Between the holiday week and the seasonal retooling shutdowns at auto factories that are typical this time of year, we are inclined to look through the volatility in this morning’s report.”

– It all added up to a positive but volatile day in the US with a high for the day at the open before prices drifted lower. Key for traders, as we end the week, is the selloff has left the S&P 500 back under the 200-day moving average. That’s a bearish signal with many traders believing “nothing good happens” below the 200-day moving average. What’s interesting is that if, and its still a big if, the S&P 500 closes the week below this technical indicator it will be the first weekly close under the moving average for nine months. That would be a bearish signal for trade next week in the US, and by extension the ASX. A weak close to the week will have traders in the US targeting 1,992.

S&P 500 Weekly (Go Markets, MT4)

It’s very different in Europe with a strong relief rally as traders hope that a Greek deal can be nutted out over the weekend.

Here’s the overnight scoreboard (6.31am AEST):

  • Dow Jones up 0.19% to 17,548
  • Nasdaq up 0.26% to 4,922
  • S&P 500 up 0.23% to 2,051
  • London (FTSE 100) up 1.4% to 6,581
  • Frankfurt (DAX) up 2.32% to 10,992
  • Tokyo (Nikkei) up 0.6% to 19,855
  • Shanghai (composite) up 5.79% to 3,710
  • Hong Kong (Hang Seng) dup 3.73% to 24,392
  • ASX Futures overnight (SPI September) -22 points to 5,386
  • US 10 Year Bonds +12 to 2.31%%
  • German 10 Year Bonds +5 to 0.72%
  • Australian 10 Year Bonds -7 2.88%
  • AUDUSD: 0.7453
  • EURUSD: 1.1035
  • USDJPY: 121.29
  • GBPUSD: 1.5381
  • USDCAD: 1.2701
  • Crude: $52.74
  • Gold: $1,160
  • Dalian Iron Ore (September): 368.5

– The local market was buoyed by the rally in China yesterday. That helped lift it off early lows but it still closed flat on the day. Overnight September futures have dipped 22 points. Whether that is a good lead or not really depends on what happens in China today and what the news flow is from Europe around the new Greek deal that has been proposed. From a trading perspective the price action and selling this week took the ASX200 close to the bottom of the trend channel it has been in since 2012. This is the same trend channel that prices rejected up at 6,000. So, even if you don’t believe in technicals we at least know that traders are watching these levels and this channel.

– On bonds the Australian 10-year government bond traded down to 2.71% at one stage yesterday morning before the big selloff, post-employment and post-China stock rally, which has left it at 2.88%. That 2.71% level was the May low and is a significant level to watch if it breaks. No one will want it to because it will mean something has gone wrong, either in global markets or the Australian economy.

– On currency markets the overall change in sentiment has had less impact than might have been expected. Of course the Aussie is off its six year lows, USDJPY is higher as a little Yen selling hit the market. But Euro is lower than this time yesterday. Clearly traders are still in a state of flux.

– Turning to commodity markets and the big turn in sentiment — which could yet prove ephemeral — saw Nymex crude up 2%, copper also up 2% to $2.55 a pound and Dalian iron ore has climbed off the mat and is back at 368.5. The rally has been replicated in US futures with the September 62% Fe iron ore swap future in New York up a massive $3.37 a tonne. The curve out past January 2016 was up at least $2.50 per contract. Gold is doing as gold increasingly does now — nothing.

– On the data front today home loan data will be released in Australia along with new loans data from China. Tonight German wholesale prices and Canadian employment are out.

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

Caltex

Yesterday Caltex unveiled an unaudited increase in profit of 45% for the half year. The feature of this result was a big improvement in profit margin on fuel it refines in Australia. This improved to $US15.71 per barrel from $US9.20. The margin improvement was partly offset by a 4% decline in the total amount of fuel it sold. Temporary factors may have been a factor in the sales decline.

The loss of a large contract will be replaced by another contract in the current half year. Overall, Caltex has transformed its business following the closure of its Kurnell refinery. Debt has been reduced and dividends increased with the possibility of further capital management initiatives to come.

The Caltex chart shows it flirting with the neck line resistance of a bullish head and shoulder pattern. A clear break above this resistance could set up for a potential rally towards $36 or $37.

Ric Spooner, chief market analyst, CMC Markets

You can follow Ric on Twitter @ricspooner_CMC

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