It was a fairly quiet night for stocks with the Dow closing essentially flat, the S&P 500 +0.1% and the NASDAQ down -0.1%. There were some signs that US consumers are feeling the pinch. Firstly, while the productivity numbers were good showing an increase of 1.6% year on year from a revised -0.5% the previous 3 months, the key was, as Bloomberg noted:
The drop in productivity at the start of 2012, pared with a slowdown in profits, may be prompting companies to focus on enhancing efficiency to curb costs, making a pickup in employment more difficult to spur.
Which means not too much hiring and as yesterday’s consumer credit data showed in the US, spending is slowing. My favourite economist Gary Shilling reiterated again to Business Insider overnight:
Retail sales fell in April, May and June – and 27 out of 29 times sales fell for three consecutive months since data started in 1947, the economy was in or within three months of a recession.
In Europe the BOE downgraded its growth expectations to effectively zero while also saying that inflation is going lower and will stay below 2% until 2015. In Germany, Fitch affirmed the triple A rating, but trade and output data showed the engine of Europe is coughing and stalling. It’s interesting because I would have thought that a faltering German economy might push Germany away from Europe but it may be the opposite is the case if German economic weakness galvanises the German population toward a Europe wide rescue with their cheque book.
At the close of play the FTSE was up 0.08%, the DAX fell 0.03% and the CAC was down 0.43%. Madrid fell a stronger 0.72%
On Commodity markets the CRB was up 0.45 points to 304.32 with crude down 0.29%, Dr Copper down 0.61% but the grains were up 1% or more.
In FX land is was a day of range trading in the majors with no big moves. Euro traded through 70 points over the past 24 hours with a high of 1.24 and a low of 1.2330 and sits at 1.2362 as I write. The Australian dollar is still hovering around the 1.0550 region and GBP likewise still in the mid 1.56 region. We might get some action at 11.30 today for the AUD with the release of the volatile employment data for Australia. The market is looking for a rise of 10,000 in employment today in Australia after last months 27,000 fall. But the number usually prints anywhere in a plus or minus 20, 000 range so its a bit of a turkey shoot and I stopped trading the data about 20 years ago.
Lets have a look at some of the markets we follow using our AVATrade trading platform charts.
EUR/USD: Just floating, not a technical term but realistically all the Euro is doing, and it drifted back to our 1.2330/50 support zone overnight.
Longer term the down trend remains intact with resistance at 1.2472, 1.2572 and 1.2740/50. Support is 1.2300/10 and then 1.2050/1.2110.
AUD/USD: The AUD has pulled back and is at the top of what is a fairly clear daily up trend from the last two months trade and continues to have a reasonably big level overhead at 1.0680/90 which is the tentative downtrend line from the 1.1080 high in 2011.
The last day’s trade was very indecisive with a downside bias probably again today. Support is 1.0530/40 again today and on the week 1.0450 which held so well last week will be solid.
DATA: Obviously the employment data in Australia is the key today and in China Industrial Production as a lead indicator of the world economy.
Here is today’s data and you can click here for the full week’s calendar. Please note that data coloured blue is important to me and that which is coloured red is important to everyone.
And here is how the markets closed at 6.00 am Saturday Morning courtesy of AVATrade
Twitter: Greg McKenna. He is the Chief Investment Officer of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. Click for a free 21 day trial.
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