Global Markets Overview – 4/24/14

The equity rally we've been seeing in the US finally came to a halt on the back of mixed earnings and some disappointing economic data. The US flash manufacturing PMI and new home sales both missed estimates and contributed to dampening sentiment. While earnings weren't great in US trade, after hours trade has seen some monster results from tech giants Apple and Facebook. In fact, US futures are up 0.6% in after-hours trade and this is likely to also translate to good gains in Asia.

Apple shares are up around 7% in after-hours trade after yet another impressive result. While the company went through sluggish growth recently for its flagship iPhone, access to China certainly seems to have bolstered demand with the company selling a whopping 43.7 million phones while the market was expecting 37.7 million. Apple also announced an increase to its share repurchase plan, a seven for one stock split and increased its dividend. The numbers look strong on all accounts and we are likely to see the stock enjoy some good buying heading into the end of the week.

RBNZ hikes as expected

Meanwhile closer to home, the RBNZ has announced a 25 basis point rate hike to 3% as expected. As this was widely anticipated, the commentary was always going to carry more weight. Governor Graeme Wheeler reinforced that inflation pressures are expected to continue increasing over the next couple of years and will need to be contained. The RBNZ plans to raise interest rates towards a level at which they are no longer adding to demand. Analysts feel this is the key line. However, he was cautious on the potential impact of a higher NZD. The Kiwi has seen good buying against the greenback and AUD this morning given the diverging fundamentals. Yesterday's disappointing CPI reading for Australia put the AUD on the back foot and this has really allowed NZD/AUD to push higher today. The pair is now at its highest since April 10 and could be headed to test 0.93 in the near term.

Strong start for the ASX 200

The Aussie market is in a good position right now and is set to extend its gains at the open today. We are currently calling it up 0.4% to 5540. Yesterday's close above April 10's high of 5503 was a bullish sign for the ASX 200 and it is now comfortably at a near six-year high. The fact that CPI missed expectations yesterday is also good for equities as it dispels talk of a rate hike in the near term. Once again we'll be looking towards the banks for some inspiration, particularly ANZ and Westpac which have had a good run recently. Also look at stocks like WOW and WPL which continue to see good buying momentum at the moment. Once again it might be the resource names that lag after a disappointing performance recently, with no real risk appetite. Iron ore fell again while Atlas Iron releases its 3Q output report. Horizon will be in focus after rising over 10% yesterday on good volume. Reports the company is in talks with a potential buyer are likely continue to underpin it in the near term. ResMed will also be one to watch after its 3Q revenue missed estimates. RMD was down 1.8% in US trade.

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