Risk is back! Or is it? Markets seemed to have liked the good news and shook off the bad news from the data flow last night (like most financial economists who report the former with glee and discard the latter). In the European session, markets were buoyed by a round of PMI manufacturing data and unemployment figures – low in Germany, which is all that seems to matter these days. In the US, the data flow was more positive, but shows signs of slowing growth – at least its growth! (which again, seems to be all that matters…sigh)
Here’s what happened in detail, and with an eye to the end of the week, a few weekly charts:
The UK FTSE gained over 1% to 5931, taking back the previous sessions losses, with the German DAX also breaking the 1% barrier, up 1.25% to 6941 points seemingly unstoppable on its way to 7000 points and beyond. Maybe.
The Euro (EUR/USD) was basically unchanged, remaining just above 1.331 where it is currently trading this morning, as only the Swiss Franc really weakened against the USD, the USD Index nudged slightly higher to 78.8 points, looking weak short term, but intermediate trend still evident:
click for full size
The resilient AUD was basically unchanged overnight, but has rallied somewhat this morning above 1.08 against the USD and is steady for now. Keep on adjusting Australia!
On the other side of the Atlantic, the US bourses were not as ebullient, but were all bid up firmly, with the S&P500 closing up 8.8 points or 0.6% and the Dow Jones Industrial Average rising, but not above the elusive 13000 point barrier, up 28 points or 0.2% to 12980 points. The tech-heavy NASDAQ Composite outperformed again, up almost 0.7%, to 2988 points.
A closer look at its close relation the NASDAQ 100 shows the strength of its biggest constituent – Apple:
On to the arguably more important debt markets, where US 10 year T-Notes have pipped above 2% yield at 2.03%, as the “dangerous” asset is looking like breaking out (or down depending on your viewpoint):
German bonds (bunds) are at 1.86% yield and for reference, Aussie 10 year yields are slipping too, now at 4.1% – getting closer to the cash rate, but the yield curve is still inverted, with short term yields nearly the same as longer maturities.
To commodities, where energies outperformed, worryingly, with WTI crude up $1.50 per barrel to be above $108 again, Brent crude moving higher, up more than $3 to be above $126USD on the 3 month futures. Keep an eye on this, particular Brent which is near record highs priced in Euro.
Gold after being slaughtered in the previous session, has recovered somewhat but basically where it ended in the Asian session yesterday at $1718USD an ounce. The longer term chart puts the recent fall into perspective, as a bullish flag is shaping on the weekly:
The S&P/ASX200 index futures are pointing to a slightly higher open, around 20 points or 0.5% to around the 4280 points level.
My Trading Day post will cover the Asian market session and the “ASX8” stocks after the close in the afternoon.