I was all prepared for a pretty boring night but the Dow instead delivered its biggest fall in weeks. US stocks fell from the get go and unlike the previous night they were unable to drag themselves off the canvas. It seems one of the catalysts, perhaps the primary one, was the big drop in the World Bank’s forecast for growth in 2014 from 3.2% to 2.8%.
On the data front in the US, the calendar was bare with mortgage applications the only major point of interest with a 10.3% bounce in the last week. Also out was the US budgetary balance which narrowed to $130 billion.
So at the close then the Dow was down over 100 points to 16,844 for a fall of 0.60%, the Nasdaq was down 0.14% to 4,332 and the S&P 500 fell 7 points or 0.35% to 1,944. On stock specific moves Boeing was under pressure after a big order was cancelled.
The target for the S&P 500, in a future’s sense, is 1,909-1,925 and only a break of the bottom would signal a deeper move.
But it just might be coming – Minsky. Time will tell
In Europe it was a sea of red with Lufthansa the big mover dropping 14.2% after issuing a profit warning. The FTSE was down half a percent at 6,839, the DAX fell 0.79% back under 10,000 closing at 9,950 while the CAC dropped 0.87% to 4,555. In Milan stocks slid 1.24% to 22,224 while the IBEX in Spain dropped 0.7%.
Locally even though Australian miners were up in London the market closed lower in Futures trade overnight with the June SPI 200 falling 17 points to 5,442 bid. Australian 3 year bond futures rallied 3.5 points to 97.145 ( 2.855%) while the 10′s 3 points to 96.185 (3.715%).
It’s a big day for the local market – a big week you might say – as the SPI 200 is once again testing the bottom of the recent uptrend channel it has been trading in.
5420 is the key downside support.
On global currency markets the Euro has recovered from overnight weakness and sits at 1.3531 while the Aussie has pulled back from an aborted foray to 94 cents sitting at 0.9387. The labour force data at 11.30 today will set the near term direction for the Aussie and the market is looking for a rise of 10,000.
The two day reversal off 94 cents suggests the good news might be baked into the cake for the Aussie dollar but it really is down to employment today to drive price action.
Elsewhere in currency land the Yen benefitted from the global growth downgrade and is back below 102 at 101.97 while Sterling is 1.6789 after some very solid employment data (which may have been effected by when Easter ocurred).
On commodities Nymex crude didn’t really gain from the troubles in Iraq closing at $104.49 – almost unchanged. Copper lost one cent to $3.04 lb while gold sits at $1260 oz this morning with silver still holding $19 oz closing at $19.05. On the Ags corn fell 1% on a big crop forecast while wheat slid 2% and soybeans dropped 1.16%.
On the data front today all local eyes on the labour data at 11.30 am. Tonight in Europe we see the release of the german wholesale price index, French CPI and the ECB monthly report and IP numbers. In the US retail sales will be important as will business inventories and jobless claims.