Once more, there were 2 major data/news/comments that potentially moved markets last night, instead of being crutches for financial journalists to hang noise on. First, a very disappointing UK GDP print, which has the Mother Country teetering on recession, and actually “stagflating” for the last year and a half. Next, although durable goods orders in the US improved, it missed the ebullient expectations of the experts. Combined with a rumour that US/UK/French authorities want to release more of their respective oil reserves, crude and energy related stocks in the US were sold off.
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.
On the GDP print, the UK FTSE was off 1% to 5808, the German DAX following, falling 1% to be just under the important 7000 level. I did warn earlier this week about the important localised data for both bourses to react to: German CPI also fell to 2.3% annualised, although a very good Italian debt auction was a highlight. (very low yields)
The Euro (EUR/USD) was steady at 1.331 against the USD, again, whilst the AUD continued to fall, down 0.6% to 1.0381 against the USD where it has pipped above 1.04 this morning at the start of Asian trading. As Deus Forex Machina noted this morning, the AUD seems set to fall back to parity, if that red channel on the chart below is anything to go by – is this good news for stocks however?
As a result, the USD Index remained basically flat at 79.12 still above its support level at 78 points but one to watch in the coming week:
On the other side of the Atlantic, the US bourses were sold off with the S&P500 losing 0.5% to 1405 points alongside the Dow Jones Industrial Average also down 0.5% to 13126 points.
On to the important debt markets, where US 10 year T-Notes, were actually sold off slightly – but only by 1 pip – to 2.2% yield on a very weak 5-year auction result. German bunds and Aussies (Kangaroo) however, were bid up very strongly on the risk-off move with yields falling. The biggest mover again, by pips, was in Aussie’s falling to 4.06% yield, whilst bunds fell to 1.83% yield.
To commodities – first, copper was hammered, down over 2%, which along with weaker soft commodities and other base metals has raised warning bells for the CRB Index. A bearish head and shoulders pattern is emerging, with the neckline at 311 under pressure – for context, the CRB is in a dominant downtrend, so this move has a higher probability of occurring:
In energies, the rumours of strategic oil reserve releases and possibly weaker US economy probably (could still be noise!) sent crude futures down – Brent was off 1% to $124.3USD a barrel with WTI down 1.7% to $105.50 USD per barrel. Heres Brent, in spot prices – no major move yet, as commodity traders are still very bullish:
Gold (in USD) had another turbulent night, starting at $1680 out of Hong Kong and into London, then fell over $20USD an ounce during NYMEX session, down to $1663 where it remains at the start of session here in Asia.
On these poor leads the S&P/ASX200 index futures have slipped before the open, down 20 points to 4310 points, but still above the 4300 breakout level. the New Zealand NXZ50 opened flat, not providing much of a lead for how the Asian session will go. There is substantial data today, locally population figures and job vacancies should excite the property bugs, whilst Japanese retail sales comes out very shortly.
My Trading Day post will cover the Asian market session and the “ASX8” stocks after the close in the afternoon.
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