by Chris Becker
Macro Wrap
No dire news or plunges in risk markets overnight as the lack of Tier 1 dataflow and a “wait and see” attitude prevailed, with European markets up 0.5% (according to the Eurostoxx 50), but the DAX was down 1% (London markets were closed for the “non”-Jubilee), and US markets finished exactly flat.
The two data releases last night still pointed to an inevitable slowdown in global manufacturing, as presaged by the PMI’s of last week. EMU producer price index numbers for April came in at exactly flat- i.e zero inflation, with the yearly change slowing down from 3.5% to 2.6%.
In the US, factory orders for April disappointed, continuing their decelerating growth, falling -0.6% for the month (on expectations of 0.1% rise) and last month’s revised down to -2.1% “growth”. Although the yearly growth remains positive, the downward trend is obvious:
Today and the Week Ahead
Well its the big Tuesday we all dread – the RBA meets to decide how much profit Megabank should make for the coming quarter….more or less.
I’m not in front of my Bloomie at the moment, but last time I checked almost all market economists surveyed expected a 0.25% cut, with a growing minority wanting the full double barrel 0.5% cut. Either way it doesn’t matter, the easing cycle will continue for the remainder of the year IMO.
Other local data today – remember its “Aussie Week” for data – is the current account balance for the first quarter, which is expected the subtract around 0.6% from GDP (out tomorrow), plus the AIG PSI for the services sector – that will be interesting to say the least.
The SPI Futures are up 22 points, or around 0.5% to 4020 points for the inevitable bounce.
Here’s a quick summary of last night’s move in markets. For a longer term view, check out my Trading Week article here.
Bonds:
- US 10 year Treasuries yields rose slightly to 1.52% with German 10 year bunds basically steady at 1.75%
Currencies:
- The US Dollar weakened slightly, with the Dollar Index (DXY) falling 0.4% to 82.5 points
- The Euro was flat and closed at 1.2504 but has seen a big spike in early morning trade
- The Australian dollar followed the Euro and remains above 97 cents against the USD, with most expecting falls later this afternoon as the RBA cuts rates by some amount (expect a big jump if it doesn’t!)
Equities:
- The Eurostoxx 50 finished higher, up 0.5% mainly due to peripheral markets
- The biggest mover was the German DAX, falling again by 1.2% almost erasing its gains for the year (still up 2%) The FTSE 100 was closed.
- US markets were all flat, with the Dow down 0.14%%, S&P500 flat and the NASDAQ up 0.46%. The factory order data did not help, and Failbook (FB) again fell, losing 3%, down 29% since the IPO.
Commodities:
- WTI Crude stopped dropping and had a little bounce – up 0.2% to just above $84USD per barrel, whilst ICE Brent did the same up slightly to $98.85
- Gold (USD) had a relatively quiet night, closing at $1618 USD an ounce and remains there this morning
- Dr Copper took the night off as LME was closed due to Jubilee celebrations
- Iron ore spot prices were unchanged at$135USD per metric tonne
Click here for our economic calendar.
Disclaimer: The content on this blog should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation, no matter how much it seems to make sense, to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The author has no position in any company or advertiser reference unless explicitly specified. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult someone who claims to have a qualification before making any investment decisions.