Markets had a bad session last night, as European bourses reacted to a likely UK recession, although German unemployment numbers were very good, but also the EZ bailout package to be doubled, plus a worrying sign in rising Spanish and Italian bond yields. In the US, Q4 GDP numbers were confirmed, as jobless claims fell again – although previous “good” numbers were revised up.
Let’s have a look at the detail before the open of the local markets – remember to read my weekly analysis of all major macro markets in Trading Week to put this daily noise in context, which I’ll update tomorrow morning.
The UK FTSE was off again, down 1.1% to 5742, the German DAX catching up and then some, falling 1.7% to be well under the important 7000 level at 6875 points.
The Euro (EUR/USD) was steady at 1.33 against the USD, whilst the AUD also remained steady at 1.038 against the USD where it remains this morning at the start of Asian trading. As a result, the USD Index is basically flat at 79.19 still above its support level at 78 points.
On the other side of the Atlantic, the US bourses were sold off sharply, but then recovered somewhat in the afternoon with the S&P500 losing 0.1% to 1403 points whilst the Dow Jones Industrial Average actually finished in the black, up 0.1% to 13145 points.
On to the important debt markets, where US 10 year T-Notes recovered from their mild sell off yesterday, losing 4 pips to 2.16% yield whilst German bunds strengthened again, down 2 pips to 1.81% yield. Aussies were the standout again, as interest rate expectations continue to fall, the 10 year falling 11 pips (0.1%) to 3.97% yield.
To commodities and as I warned yesterday, the CRB Index is looking extremely weak, as the bearish head and shoulders pattern is confirming, with the neckline at 311 breaking last night. The CRB fell over 1.8% to be just below 306 points – not good news for Australian commodity stocks. I.e the index, but a lower AUD should give a buffer here.
In energies, the rumours of strategic oil reserve releases kept swirling, sending crude futures down again, in what is good news for motorists at least. Brent was off 1.3% to $122.50USD a barrel with WTI down 2% to $103.24 USD per barrel.
Gold (in USD) had another turbulent night, falling to $1640 an ounce during NYMEX session, before recovering back to $1660 where it remains at the start of session here in Asia.
On these mixed leads the S&P/ASX200 index futures are actually pretty steady at 4335 and still above the 4300 breakout level. The New Zealand NXZ50 opened up 0.2% providing a small lead for how the Asian session will go. There is important local data today, with private credit data from the RBA, whilst a slew of Japanese data comes out very shortly and is likely to move the Nikkei around somewhat.
My Trading Day post will cover the Asian market session and the “ASX8” stocks after the close in the afternoon.
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