Global Markets Overview – June 12, 2014

Equities unwound overnight in a move that started in European trade. Data in the US was limited and as a result investors just chose to focus on a couple of negative headlines. The World Bank lowered its global growth forecast for 2014 to 2.8% (from 3.2%) and the shock Eric Cantor loss was among some of the headlines investors focused on.

NZD in focus on the back of a rate rise

Making headlines in Asia this morning is the RBNZ's decision to raise rates by a further 25 basis points to 3.25%. The central bank still sees considerable momentum in the economy and said future rate moves will depend on how data progresses. It seems some of the market was beginning to feel we might see a pause in rates after today, but comments seem to have changed market perception. The market is pricing in an additional 60 basis points worth of hikes this year and the three-month bills are forecasting rates to be 4%.

After having had a lacklustre week, the NZD finally came back to life on the back of the decision and NZD/USD rallied to 0.8629. During the process it managed to break downtrend resistance and is now testing the 23.6% retracement of the February low to May high move. The momentum seems to be firmly to the upside at the moment, but a concern will be the fact that the RBNZ is talking down the currency. In light of the commodity price weakness, the RBNZ feels the exchange rate is not quite reflecting that.

AUD and ASX focus on jobs

The AUD will also be in focus today with the May jobs data due out. The unemployment rate is mostly expected to remain steady at 5.8% with around 10,300 jobs added. A strong reading tomorrow could see the AUD extend its gains against the USD and EUR today. Apart from the jobs numbers we also have MI inflation expectations due out. In the emerging markets space we have China's money supply data and India's CPI reading. These releases could have a bearing on commodities and commodity currencies.

Ahead of the local market open we are calling the ASX 200 down 0.3% at 5440. There isn't a lot going on in the company news space but I expect to see a modestly risk-off theme. Iron ore lost further ground along with most of the metals complex. This will keep the mining names on the back foot today. Should the jobs numbers support further AUD gains, then we could actually see losses accelerate through the session due to the adverse effect of a firmer AUD. Goodman Group announced an earnings upgrade and will be in focus with an investor briefing taking place today.

Asian markets opening call	Price at 8:00am AEDT	Change from the Offical market close	Percentage Change
Australia 200 cash (ASX 200)	5,439.50	-14	-0.27%
Japan 225 (Nikkei)	14,947.70	-121	-0.80%
Hong Kong HS 50 cash (Hang Seng)	23,133.20	-124	-0.53%
China H-shares cash	10,397.00	-98	-0.93%
Singapore Blue Chip cash (MSCI Singapore)	373.75	-1	-0.14%
US and Europe Market Calls	Price at 8:00am AEDT	Change Since Australian Market Close	Percentage Change
WALL STREET (cash) (Dow)	16,855.70	-85	-0.50%
US 500 (cash) (S&P)	1,944.34	-6	-0.28%
UK FTSE (cash)	6,836.70	-29	-0.43%
German DAX (cash)	9,943.10	-79	-0.79%
Futures Markets	Price at 8:00am AEDT	Change Since Australian Market Close	Percentage Change
Dow Jones Futures (June)	16,855.00	-66.00	-0.39%
S&P Futures (June)	1,944.38	-4.50	-0.23%
ASX SPI Futures (June)	5,443.00	-8.50	-0.16%
NKY 225 Futures (June)	14,970.00	-92.50	-0.61%
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	$0.9385	0.0000	0.01%
USD/JPY	¥101.980	-0.335	-0.33%
Rio Tinto Plc (London)	£31.67	0.18	0.57%
BHP Billiton Plc (London)	£19.12	0.24	1.27%
BHP Billiton Ltd. ADR (US) (AUD)	$36.08	0.20	0.57%
Gold (spot)	$1,260.74	-0.46	-0.04%
Aluminium (London)	1866	-30.00	-1.58%
Copper (London)	6673.75	-23.25	-0.35%
Nickel (London)	18250	-450.00	-2.41%
Zinc (London)	2117.25	-15.75	-0.74%
Iron Ore (62%Fe)	93.5	-0.10	-0.11%