Axi | Jun 21, 2018 09:31
Originally published by AxiTrader h2 Market Summary (7.44 am Thursday, June 21)/h2
After recent weakness, global stocks were higher overnight driven by another rally in tech, a lack of fresh trade tension headiness, some M&A news in the US, and the reality that traders have trained themselves to buy the dip because for so long now it’s worked.
So this morning after 3 or 4 down days the S&P 500 is up 0.17% this morning at 2,767. The Dow dipped 0.17% but the Nasdaq 100 fairly soared rising 0.85%.
I understand the lack of fear. We simply haven’t seen more aggressive headlines in the past day and traders and investors are clearly betting this is a negotiating tactic from the White House. But a Symantec (NASDAQ:SYMC) report suggesting China is pursuing aggressive trade and technology espionage suggests the US will not back off anytime soon. Equally, we heard from a number of central bankers last night in a candid appraisal of the risks and changing outlook for the US and global economy which may be resulting from the trade tensions.
So a sanguine outlook may end up a little to Panglossian and not cautious enough. To wit, Bridgewater’s Ray Dalio Tweeted overnight that the US is playing chicken with China right now.
Anyway, as Amos Tversky said, better to be an optimist than a pessimist. But the performance of the Aussie dollar might be a warning. Just saying.
Across the Atlantic stocks in Europe were tentatively higher with the FTSE up 0.3%, the DAX 0.14%, but the CAC dipped 0.34%.
Here at home the gangbuster rally on the ASX continued with an amazing close of 6,172 as the banks lifted materially. The 70 point rally was stunning, as was this decade high close. Overnight the futures traders are betting we have another good day with the September SPI up 9 points. My technical self says hang on and enjoy the ride. My rhetorical self says run away fast.
On forex markets, the commodity bloc is under pressure once again. The Australian dollar is down 0.19% to 0.7367. If you heard some of what RBA Governor Lowe said last night in Sintra you’d be forgiven for thinking it should be substantially lower. The kiwi too is down at 0.6861 having fallen 0.55% - good luck to the NZ PM who’s on leave now for the birth of her first child, good stuff. The Canadian dollar is also a little lower with USD/CAD up 0.2% to 1.3312.
Euro is a little lower as well, but only slightly, even though Ewald Nowotny seemed to cheerlead the euro’s recent fall against the dollar. EUR/USD is at 1.1572. USD/JPY did better though gaining 0.3% to 100.36 while Sterling was quiet waiting for the BoE tonight – it’s at 1.3174.
The two big oil benchmarks I watch – Brent and WTI – continue to dance to different tunes. A big draw in crude inventories in the US helped WTI gain 0.68% to $65.34 while Brent was lower as it appears even Iran can be persuaded there should be – or will be at least – an increase in production out of this week’s OPEC and non-OPEC meeting. Brent is down 1.1% to $74.26 as a result.
Copper hasn’t moved, it’s at $3.05 while gold continues to be pressured losing another $6 to $1268. Bitcoin rallied 0.8% to $6,740 - $7,100 looks important.
On bond markets US rates are rising again with the 10-year Treasuries back at 2.94% and the 2-year at 2.57%.
The BoE dominates the data calendar on the day ahead. Traders will be interested in the outlook and what Mark Carney and his colleagues have to say about where the economy is right now. This will be important for the pound, which looks biased back below 1.30 against the Greenback. Other than that it’s fairly quiet save for Kiwi GDP, which is out very soon.
Have a great day, enjoy the solstice.
h2 Here's What I Picked Up (with a little more detail and a few charts)/h2 h2 International/h2“ uncovered, according to a summary in today’s Politico, a vast Chinese espionage campaign against US defense contractors and telecommunications companies – stealing US intellectual property – that has expanded into a "malware" network that not only spies on the US but seeks to disrupt American companies. The controversial ZTE (HK:0763) may be involved.
WE'VE TALKED WITH NUMEROUS US BUSINESS OFFICIALS in the past year who have described to us the new products they have developed that have turned up as counterfeits in China within weeks of introduction on the US market. This goes way beyond bootlegged copies of "Game of Thrones"; it reflects a lawlessness that Washington is determined to confront.
THE WIDESPREAD CHINESE THEFT of intellectual property from the US and other countries has aroused strong bipartisan outrage in Congress. That's why the Trump Administration has support in the China dispute, despite growing anxiety in the US farm belt over soybean exports, and a general concern that Chinese products like cell phones will cost more as tariffs rise.
h2 Forex/h2
h2 Commodities/h2
Have a great day's trading.
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