Axi | Mar 19, 2018 10:09
Originally published by AxiTrader h2 Market Summary (Monday 19 March 2018)/h2
An up day to end a down week for the S&P and Dow Friday with the two indexes finishing 0.17% and 0.29% higher respectively on the day. The Nasdaq dipped 0.16% Friday. That meant that the big three US indexes were all lower for the week with falls of 1.04%, 1.57%, and 1.27% for the S&P 500, Dow, and Nasdaq.
Stocks were able to shake off the week’s slide by a little bit of end of week position squaring – something I did myself – together with some relatively strong data in the US. Industrial production surged 1.1% in February while the JOLTS surged an incredible 645,000 taking the number of job openings in the US to 6.3 million (sa) which is the highest number since the survey was started in 2000.
Also out was University of Michigan consumer sentiment which showed US consumers don’t seem to be affected by the constant turmoil in the White House and messiness of US politics not to mention the Mueller investigation. Data for March, released Friday, showed consumer sentiment hit a 14 year of 102.
But there seems to be a disconnect between sentiment and Q1 GDP growth which was again downgraded by the Atlanta Fed’s GDPNow model to a guesstimate for Q1 of just 1.8%. One of the reasons given for Friday’s revision was “downward revisions to the nowcasts of the contributions of real consumer spending…” the Atlanta Fed said.
More importantly is the disconnect between market price action and the surge of cash back into stocks. Via BAML Reuters reported a record $43.3 billion into stocks last week including $22 billion into US large caps.
Mmmmmm folks, something to ponder – please see below. I’ll also highlight movements in the Mueller probe over the weekend.
Anyway, back to markets and Europe had an okay day with the DAX up 0.36%, the CAC was 0.29% higher, while in Milan the FTSE MIB was again the outperformer with a 0.63% gain. In London stocks were also firmer with the FTSE up 0.34%.
And all that means the ASX is pointing higher. After Friday’s 0.48% gain and close at 5,949 SPI traders have punted on another 16 point gain when trade kicks off today. Asia has some catch up to do today, so maybe.
On currency markets, the Aussie dollar was belted lower along with the kiwi and to a lesser extent the Canadian dollar. The Aussie has opened this week at 0.7720 – 195 points below the high last Wednesday night at 0.7915 and still looking wobbly as the sellers finally gain the upper hand. Likewise, the kiwi at 0.7219 is at risk of a big break lower if 0.7180 gives way. Of the other majors, the US dollar gave up the gians it made after the data Friday and the yen is stronger and continues to find a bid and is 105.84 this morning while the euro is at 1.2288. That the euro is still holding in despite inflation data of 1.1% yoy for the EU coming in weaker than expected is a testament to how much so many money managers and traders dislike the US dollar at the moment. The pound is currently trading at 1.3944.
On commodity markets the fact that gold is in the doldrums at $1313, and US 10’s are back at 1.85% tells you the yen bid is not yet about a funky risk-off feel to markets. Indeed gold is starting to look rather sketchy here and has to hold recent lows to avoid a precipitous fall. Oil was higher, however, rallying back to range tops Friday despite the Baker Hughes rig count hitting 800 for the first time since April 2015. Copper was lower, however.
Looking ahead and it is a quiet day today with Japanese trade data the highlight. And it’s a reasonably quiet week save for three big central bank meetings in what looks like a super Thursday in my timezone. The Fed will announce its decision – and the dot plot at 5.30am, to be then followed by the RBNZ at 7am and then the BoE at 11pm Thursday night. And of course Australian employment is out Thursday as well. It really is going to be a big day.
Clearly the FOMC is the key event for global markets. But President Trump’s tirade over the weekend about the Mueller inquiry will keep plenty of focus on Washington and the White House.
h2 Here's What I Picked Up (with a little more detail and a few charts)/h2 h2 International/h2
Have a great day's trading.
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