The debt debate seemed to have less impact overnight even though the Republican remain bellicose and very Putin like. House Speaker John Boehner said there will be no negotiations without spending cuts which the Obama administration is unlikely to offer at the moment but regardless stocks broke their losing streak as data in the US was goldilocks like insofar as jobless claims (305,000 with 4 week moving average lowest since 2007) were strong, Q2 GDP printed at 2.5% was largely as expected and consumption data (PCE Q2 -0.1%) fell for the first time in 4 years suggesting that the economy is growing but the chances of a taper remain some time off.
In this vein Minneapolis Fed President Kocherlakota said that the Fed might need more stimulus to get unemployment down. He even used the “whatever it takes” mantra so beloved by the ECB’s Mario Draghi suggesting that the taper is not set in stone.
So at the close the Dow was up 0.36%, the Nasdaq rose 0.69% and the S&P 500 hit a high of 1704 but couldn’t sustain it closing at 1699 up 6 points or 0.37%. Don’t forget the Taper though
In Europe the weaker than expected UK Q2 GDP (1.3% v 1.5% expected and last) knocked Sterling but the FTSE rose 0.22%. The DAX was largely unchanged -0.02% while the CAC fell 0.20%. In Milan Stocks fell out of bed as renewed instability in the political scene. Stocks in Madrid rose 0.31%.
Looking at the technicals I’m not overly enamoured with the rally in the S&P in anything other than the fact that the 4 hour charts suggested and suggest it might go a little further. The dailies however while not super bearish per se still suggest that the US stock market remains under a bit of technical pressure.
Another day of positivity and a close above 1706 would negate the down side but while below this level the bias remains the 1675-79 region.
Yesterday the ASX rallied and David Scutt from Arab Bank was pretty much the only strategist out there who had the guts to be bullish yesterday and hats off to him for his call that the ASX would go higher on month end. This move yesterday reinforces the strength of this uptrend line and also reinforces the respect traders will and should pay it unless or until it breaks.
5220 holds for now so we’ll see in the next week or so how it goes. Selling a break of the trendline if it happens is something that would open a move to 5173 initially.
On Forex markets GBP is down from near 1.61 prior to the GDP miss but recovered from a low of 1.5997 to sit at 1.6037 for a fall of just 0.26%. Euro (1.3483) is off 0.31%, the Yen (USDJPY 98.91) has lost 0.48% and the Aussie dollar’s weakness continued with a low at 0.9337 before a recovery to 0.9355 now for a loss of 0.12%.
As noted above the data in the UK last night was disappointing which knocked GBP off its highs and increasingly this 1.61-62 region is looking like it is too tough for the Pound to get through against the US dollar at the moment.
Using a similar process to what we have been using lately for the S&P 500 and Aussie Dollar (see below) I’d suggest that GBPUSD is biased back toward the fast moving average which comes in at 1.5920/30 today and we’ll see how it looks there. A break opens up 1.5842 and then 1.5790.
Turning to the outlook for the Aussie which remains uncertain on a more medium term basis with a rejection of the 38.2% retracement of the big fall but support clearly in evidence around the fast moving average which comes in today at 0.9320/25.
The shorter term bias still looks lower but while above the 0.9320 region we aren’t getting too bearish.
On Commodity markets Nymex Crude rose 0.25% to $102.92, Gold is at $1338 oz and Silver is up 1.39% to $21.86. Copper is back above $3.30 a pound and on Ag markets Corn is up 0.49%, Wheat rose 1.16% and Soybeans fell 0.28%.
Closer to home the SPI200 Futures on the Sydney Futures Exchange are up 11 points at 5315 while the 3 and 10 year bond futures are largely unchanged
On the data front Japanese CPI is out this morning as is the ANZ’s Kiwi Business confidence index and the Chinese Business Sentiment Indicator. Tonight EU economic sentiment, consumer confidence, industrial confidence and services sentiment are all out along with French GDP which could be ugly. German CPI is out as is more US consumption data.
Have a great day, fabulous weekend and good hunting