There is a really interesting thing that occurs to me after a couple of weeks trade in 2014. That thing is that as we ended 2013 the strength of the US and global economy coming into 2014 was enough to sweep stock markets to new highs. Just last week we had more new highs in the US and Europe but the market just doesn’t feel that ebullient or in a mood to sustain such lofty levels.
We’ll see but as we enter the meaty part of Q4 earnings season over the next couple of weeks the fate of stocks and no doubt the Aussie dollar will be sealed. So far earnings haven’t been that flash but we are only about 10% or a little more through. But watch this space.
Anyway it was an interesting night on Friday with the Dow up but the Nasdaq and S&P 500 lower on the back of some ordinary earnings from Intel, UPS and General Electric. The data was as expected with housing starts, industrial production and capacity utilisation all around what the pundits had predicted although University of Michigan Consumer Confidence undershot falling to 80.4 against expectations of 83.5.
Last week’s candle on the S&P 500 might just be a warning that a bit of a pullback is in the offing. If it trades below 1800 i’ll be looking for a 50 point fall to support.
In Europe it was a universally positive performance reflecting the fact that US stocks fell late in the day. The FTSE rose 0.2% as did the CAC in Paris while the DAX rose 0.26%. On the periphery in Milan the FTSE MIB was 0.47% higher while in Madrid stocks rose a more subdued 0.10%. One thing of note is that Ireland was upgraded to investment grade by Moody’s on Friday.
On the ASX the SPI 200 contract on Friday night lost just 2 points to 5262 bid.
FX were a bit of fun with the US dollar getting its mojo back driving Euro lower to finish the week at 1.3539. I’m targeting 1.32 and change which is the blue line on the chart below and the low from November 2013.
USDJPY was largely unchanged at 104.29 while Sterling was higher with GBPUSD finishing the week at 1.6422 after some super strong retail sales in December which were 2.6% up on the previous month. The Swiss Franc hardly moved closing at 0.9100 while the Aussie was under pressure for the 4th day in a row ending the week at 0.8775 – its lowest level since July 2010. The employment report has really hit Aussie dollar sentiment hard.
While the bottom of the big down channel is now close at 0.8713 the medium term target is now 0.8170.
Gold was the standout on Commodity markets up $11.70 oz to $1252 for a rise of 0.94%. Crude was 0.44% higher while copper ended the week at $3.38 lb. On the Ags Corn lost 0.93%, Wheat fell 1.62% but soybeans were 0.11% higher. Bitcoin has really lost its volatility and sits at $923 this morning.
On the data front today we get the TD inflation data in Australia and Chinese GDP which will be huge for sentiment about the worlds second biggest economy. In Europe it’s fairly quiet with German Producer Prices and Italian Industrial data the main releases. In the US it is Martin Luther King day so markets will be closed.
You can find a list of the key data to be released this week on our economic Calendar here.