Global Markets Overview – August 28, 2014
Pacing time ahead of the central banks
Volumes are down, trading activity is subdued and the Street is nonplussed about a key driver for the next leg up or down. The current situation has the bullish and bearish views sitting at around 50/50 as the market awaits the first two weeks of September and the meeting of central banks.
Although the BoJ and Fed will move sentiment markets globally, we are watching one bank and one bank only - the ECB.
Expectations are running high that some form of asset purchase plan or cash stimulus program will be announced at the September 4 meeting - or, at the very least, clear statements that a European version of quantitative easing is imminent.
Anything short of this will see European markets returning to the July slide. France and Italy are under political and economic pressures and Germany's confidence is falling by the week. If there was ever a moment for 'whatever it takes', next week's ECB meeting is likely to be that.
Expect August trading in Europe and the US to trickle into the close onFriday. Trading appears to be exhausted before it ramps up come Mondayfor what will be a very interesting month of policy tweeting.
Ahead of the Asian open
Asia remains in a state of stasis. There has been next-to-no news on the commodities front from China. Southeast Asia has seen a quiet period as it awaits the outcomes from Japan's data drop.
Expectations that the BoJ will further expand its balance sheet has seen the Nikkei strengthening and the yen falling since Kuroda addressed the Jackson Hole Symposium in Wyoming. The BoJ, which has being relatively happy with current state of play, suggested that inflation estimates have been track as wage negotiations progressed. However, this theme has softened and now reversed as it acknowledges it may have to act as inflation looks to be under pressure.
The CPI read on Friday is expected to have stagnated at best. Stripping out the consumption tax impact of 2% from last month's CPI read, excluding fresh food, expectations are for 1.2%. Any read below this will see USD/JPY and the Nikkei higher, as it will only fortify the theory the BoJ will be forced back into the market.
Turning to Australia, with only two more trading days of the core parts of earning season left, the ASX has performed well. It is up 0.5% from the close on July 31th until last night, and that includes the fact CBA, BHP, RIO, WES TLS, QBE and WPL have all gone ex-dividend over the period.
We are currently calling the ASX 200 down 15 points to 5636, having seen the market make a six-year closing high last night. A consolidation is in order and ASX too will be governed by the outcomes from Japan and Frankfurt if it is to push higher still.
Asian markets opening call | Price at 8:00am AEDT | Change from the Offical market close | Percentage Change |
Australia 200 cash (ASX 200) | 5,636.50 | -15 | -0.26% |
Japan 225 (Nikkei) | 15,475.10 | 25 | 0.16% |
Hong Kong HS 50 cash (Hang Seng) | 24,940.30 | 22 | 0.09% |
China H-shares cash | 11,080.20 | 6 | 0.05% |
Singapore Blue Chip cash (MSCI Singapore) | 380.00 | 0 | 0.06% |
US and Europe Market Calls | Price at 8:00am AEDT | Change Since Australian Market Close | Percentage Change |
WALL STREET (cash) (Dow) | 17,105.30 | -17 | -0.10% |
US 500 (cash) (S&P) | 1,998.67 | -2 | -0.12% |
UK FTSE (cash) | 6,823.00 | 10 | 0.14% |
German DAX (cash) | 9,559.60 | -21 | -0.22% |
Futures Markets | Price at 8:00am AEDT | Change Since Australian Market Close | Percentage Change |
Dow Jones Futures (September) | 17,095.50 | -8.50 | -0.05% |
S&P Futures (September) | 1,996.88 | -2.00 | -0.10% |
ASX SPI Futures (September) | 5,613.50 | -12.00 | -0.21% |
NKY 225 Futures (September) | 15,482.50 | -50.00 | -0.32% |
Key inputs for the upcoming Australian trading session (Change are from 16:00 AEDT) | Price at 8:00am AEDT | Change Since Australian Market Close | Percentage Change |
AUD/USD | $0.9334 | 0.0011 | 0.12% |
USD/JPY | ¥103.870 | -0.115 | -0.11% |
Rio Tinto Plc (London) | £33.45 | -0.13 | -0.37% |
BHP Billiton Plc (London) | £19.73 | 0.30 | 1.52% |
BHP Billiton Ltd. ADR (US) (AUD) | $37.30 | -0.03 | -0.08% |
Gold (spot) | $1,282.95 | -1.15 | -0.09% |
Brent Crude (October) | $102.60 | -0.16 | -0.15% |
Aluminium (London) | 2082 | -1.25 | -0.06% |
Copper (London) | 7025.25 | -32.00 | -0.45% |
Nickel (London) | 18866 | -74.00 | -0.39% |
Zinc (London) | 2359.25 | 4.00 | 0.17% |
Iron Ore (62%Fe) | 88.2 | -0.70 | -0.79% |
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