Boom – that was a big night overnight after the solid lead in from Asia and reduction in tensions saw buyers take the upper hand in European and US stock markets.
The US dollar was also stronger and gold fell after data in the US showed a benign inflation outcome (0.3% mom and 2.1% yoy), solid rise in existing home sales (2.6%) and a relatively impressive print of 7 for the Richmond fed manufacturing index.
The Euro is the primary point of pressure from the improved US dollar at the moment but realistically it looks more like Euro specific weakness for the first time in ages. Certainly the US data was okay but now that EURUSD is at the low point for the year the outlook is darkening and the sell off is more like to drift and accelerate than reverse.
I’m short and looking for a move under 1.33.
Anyway back to stocks – at the close the Dow was up 0.37% to 17,114, the Nasdaq was 0.71% higher while the S&P 500 is closing back in on 2000 was 10 points higher at 1,984 up 0.53%.
In Europe the co-operation between Ukraine and Russia along with strong earnings kicked stocks higher with even a 0.99% rise from the FTSE to 6,795 lagging behind other European markets. The DAX was up 1.27% to 9,734 and the CAC leapt 1.52% to 4,370. Stocks in Madrid were up 1.59% while stocks in Milan were 2.17% higher.
The impact on the local futures traders overnight has been to drive the SPI 200 September 16 points higher to 5,510.
A break or reverse off overhead resistance would be an important signal for the SPI 200.
In many ways last night’s moves started in Asia as the UN resolution success emboldened traders. Certainly the Chinese leading index of 1.3 was good news as was the coincident index in Japan even though the leading index was a bit disappointing. In the end the Nikkei was up 0.84% to 15,343, the Hang Seng was 1.69% higher to 23,782 while stocks in shanghai climbed 1% to 2,075.
On currency markets it was a bad night for Euro bulls as highlighted above with the single currency hitting its lowest levels of the Year at 1.3465 this morning. Sterling is also lower with GBPUSD a touch lower as well at 1.7063. USDJPY is at 101.42 while the Aussie was higher at 0.9421 at one stage last night before pulling back to 0.9392. But a bit of volatility is back with a 63 point range – just a bit of vol tho.
It is an interesting set up for the Aussie with CPI out today and expected to be on the high side.The balance of probabilities based on the charts look like a test higher to the range top is in the offing and then we’ll see how it goes.
On commodity markets iron ore slipped again with September 62% Fe swap futures down 17 cents to $94.33. Newcastle September coal rose 80 cents to $68.45 tonne.
Nymex July crude was down 17 cents to $103.89, gold settled at $1,313 and silver is at $20.99 oz. Copper closed at $2.19 up 1 cent lb and the Ags couldn’t help themselves with both wheat and corn fell 1% each. Soybeans rose 0.74% however.
On the data front today it is a big day locally with the release of the second quarter CPI with the market expecting 0.5% headline and 0.6% core increases. this should, subject to revisions, take the inflation rate to the top of the RBA’s 2-3% band.
Tonight sees the release of the BoE minutes and a speech by Governor Carney along with US mortgage application data.