Axi | Mar 16, 2018 09:16
Originally published by AxiTrader h2 Market Summary (7.37am Friday March 16 – 10 years since Bear Stearns!!!)/h2
US import and export price rises of 0.4% and 0.2% respectively have reminded traders overnight that inflation is likely rising in the US and the FOMC next is almost certain to hike rates and signal at least 3 more rate rise this year in its dot plot.
That’s hurt US stocks a little, helped US 10's drift a little higher again to 2.82% and gave the US dollar a little of its swagger back.
Indeed the US dollar's rally was with some vengeance when it comes to the commodity bloc currencies of the Aussie, kiwi and Canadian dollar, which are down 1%, 0.86% and 0.8% respectively overnight. In particular the Aussie has fallen completely out of bed and is currently trading a little below 78 cents at 0.7797.
Some of that Aussie weakness can be slated home to the more than 1% fall in copper and the 2% drop in Dalian iron ore. But for the most part this is a US dollar move. And the buck is up half a percent against the euro which is back down at 1.23, its gained 0.2% against the pound which is trading at 1.3932. The yen hasn’t moved too far from 8am yesterday morning but at 106.21 it’s up 40 points or so from the lows in the 105.80’s yesterday.
Turning back to stocks now and it is a mixed day in the US after a reasonably positive day in Europe where the DAX gained 0.88%, the CAC was 0.65% higher, while in Milan the volatility in Italian stocks continued with the FTSE MIB up 1.16%. London missed the memo with a 0.1% increase in the FTSE.
Perhaps some of that is the continuing imbroglio over the poisoning of the former Russian spy, accusations about Russian involvement, and expelling of diplomats. But it’s also got a little worse for Russia with the US imposing sanction on more Russians over cyber attacks and election meddling. So far Russia has been bellicose and belligerent but is yet, YET, to hit back.
And of course, there was news that Special Prosecutor Robert Mueller is seeking documents from the Trump organisation.
The wash up is that the S&P 500 has had its fourth down day in a row as it again struggles to make headway. At 2,747 it is only down 0.06% though. If it falls below 2,740 the risk is it falls to the 38.2% Fibo support of the most recent rally which comes in at 2,698. The Dow is currently up half a percent and the Nasdaq 100 is down 0.11%.
The corollary of all that is, strangely, that local traders on the SPI have added 14 points to the June contract overnight. That feels like a stretch given the moves in copper and iron ore and the fact that gold is down under the weight of the US dollar and trading at $1316 off 0.6% - though I guess Aussie gold is slightly higher. Equally intriguing on the SPI is the fact the big global miners reversed their previous night’s rally in trade. We’ll see.
And oil is higher this morning. Not materially so, but it has again shaken off forecasts of excess production outweighing supply. Of course, WTI and Brent are simply trading this recent narrow range but perhaps they have caught a little geopolitical bid which is hold price up at $61.18 and $65.10 respectively. Just a few minutes ago the Saudis said if the Iranians get the nuclear bomb they develop one and earlier tweets broke that Israeli PM Netanyahu told his security cabinet that the US will pull out of the Iran nuclear deal.
And thus the last day of trade for the week begins. It’s been interesting with many competing forces. It’s trite to say, but where the S&P and US 10’s finish tonight is very important to the outlook as we head toward the FOMC next week. Levels below 2,740 and 2.80% respectively spell trouble to me. For markets broadly.
On the day here at home its quiet but EU CPI data tonight might be a little interesting. In the US it’s industrial production, Michigan sentiment, and the JOLTS survey that will have the most interest.
h2 Here's What I Picked Up (with a little more detail and a few charts)/h2 h2 International/h2
h2 Australia/h2
h2 Commodities/h2
Have a great day's trading.
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