Market Morning

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Or should that be Market Mourning? In the European session, markets were buoyed by Round 2 of the LTRO (long term refinancing operation) by the ECB (European Central Bank), but were then cut down by “good” news from the Federal Reserve Chairman Ben Bernanke stating no milkie wilkie’s (QE or Quantitative Easing – asset purchases/swaps) are forthcoming.

So with that wet blanket, a lot of markets dropped, and fast. Deus Forex Machina has beaten me to the punch this morning, so I’ll go over just a few things, as usual:

The UK FTSE dropped nearly 1% to 5871, after slightly rising initially, with the German DAX giving up all of yesterday’s gains, down half a percent to 6856 points.

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The Euro (EUR/USD) fell below 1.34 to around 1.332 where it is currently trading this morning, as the Yen and Swiss France also weakened against the USD, pushing the USD Index up to 78.8 points.

The resilient AUD is still above general resistance at 1.07 where it remains in early trade this morning , at around 1.074 against the USD.

On the other side of the Atlantic, the US bourses responded poorly, with the S&P500 closing down 6 points or 0.5% and the Dow Jones Industrial Average retreating below the elusive 13000 point barrier, down 53 points or 0.4% at 12953 points. The tech-heavy NASDAQ Composite outperformed – the wrong kind – down almost 0.7%, to 2966 points.

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Take away the punchbowl and everyone gets nervous and sober, and we see who has their clothes on or not…

US 10 year T-Notes remain below 2% yield at 1.97%, barely moving as the “dangerous” asset continuing to display strength in a risky world, alongside German bonds, at 1.82% yield For reference, Aussie 10 year yields at exactly 4% – but the yield curve is inverted, short term yields nearly the same as long:

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To commodities, where energies actually gained on the news, with WTI crude up 55c per barrel to be above $107 again, Brent crude moving higher, up $1.50 to be above $123USD on the 3 month futures. Keep an eye on this.

Gold was slaughtered, although as one regular reader put it, it was just paper contracts changing hands – but some changing!


The usual $10-15 trading range was obliterated by a $100 fall at the crossover of the London and NYMEX markets, falling below $1700USD an ounce, where it remains on the open of the Hong Kong session at $1696 – will it continue today or was this a “manic” move?

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The S&P/ASX200 index futures are pointing to a sharp drop on the open, around 60 points or 1.5% lower to around the 4250 points level. Newcrest (NCM) and other junior gold producers will likely get hit hard in early trade.

Trading Day will cover the Asian market session and the “ASX8” stocks after the close in the afternoon.

www.twitter.com/ThePrinceMB

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