Global Markets Overview – June 13, 2014

The near-term pullback in equities continued overnight, with investors focussing on developments in Iraq and a round of surprisingly weaker-than-expected US economic data. Tension in Iraq escalated, while US unemployment claims and retail sales came in below expectations. This gave investors an excuse to sell equities with sentiment relatively risk averse.

There were some interesting moves in the commodities space with some good gains for oil and natural gas on the back of the Iraq concerns. Precious metals gold and silver also gained ground due to their safe-haven appeal.

Yen strength to weigh on Nikkei

In the FX space, the yen was predictably a beneficiary of the Iraq concerns which resulted in a USD/JPY pullback. The pair dropped to around 101.60 and this will put the Nikkei under pressure today. As it stands we are calling the Nikkei 0.7% lower at 14,873.

There will be a bit of activity in Japan today with the BoJ meeting and press conference taking place. Nothing major is expected from today's meeting and investors are more likely to remain focused on the recent strategic review which is looking at corporate tax cuts.

Pound and AUD outperform risk

The sterling was also a big mover overnight on the back of comments by BoE Governor Mark Carney, suggesting rates could be lifted from a record low level sooner than the market expects. However, any rate rises will be gradual and limited unlike the New Zealand situation. This pushed GBP/USD back above 1.68 and momentum remains quite positive. There is a good chance we could see the pair head back to retest May highs just shy of 1.70.

AUD/USD continues to surprise everyone and has finally nudged through 0.94 for the first time since May and could be headed back to retest May highs of around 0.946. There is no local data today, but we have some regional data out of China to look out for. China releases its industrial production, fixed asset investment and retail sales at 15.30 AEST. This could have some implications on risk through Asian trade, particularly given the recent improvement we've been seeing in China data. There is a good chance there could be some upside risk.

Iron ore slumps further

Ahead of the local market open we are calling the ASX 200 down 0.6% to 5398. The last time the local market traded below 5400 was a good three weeks ago and this could trigger further selling pressure. Iron ore took another leg lower, dropping another 2.1% to 91.50. This will rattle confidence in the iron ore miners even further. BHP's ADR is pointing to a 1.3% drop at the open.

Yesterday we already saw sharp drops for the pure plays like Fortescue and Atlas Iron and this could extend today. We will have to watch iron ore futures closely when they reopen this morning for some direction. A big recovery for gold on safe-haven demand should support the local gold miners today. Newcrest could also get a further lift after confirming FY15 guidance after the close yesterday. The energy space will also be one to watch following good gains for oil and natural gas on the back of Iraq concerns.

Asian markets opening call	Price at 8:00am AEDT	Change from the Offical market close	Percentage Change
Australia 200 cash (ASX 200)	5,398.20	-31	-0.56%
Japan 225 (Nikkei)	14,872.50	-102	-0.68%
Hong Kong HS 50 cash (Hang Seng)	23,117.30	-58	-0.25%
China H-shares cash	10,390.10	-37	-0.35%
Singapore Blue Chip cash (MSCI Singapore)	373.50	-1	-0.28%
US and Europe Market Calls	Price at 8:00am AEDT	Change Since Australian Market Close	Percentage Change
WALL STREET (cash) (Dow)	16,757.00	-108	-0.65%
US 500 (cash) (S&P)	1,932.31	-13	-0.69%
UK FTSE (cash)	6,826.00	-18	-0.26%
German DAX (cash)	9,916.20	-40	-0.40%
Futures Markets	Price at 8:00am AEDT	Change Since Australian Market Close	Percentage Change
Dow Jones Futures (June)	16,753.00	-113.00	-0.67%
S&P Futures (June)	1,931.88	-13.25	-0.68%
ASX SPI Futures (June)	5,401.50	-33.00	-0.61%
NKY 225 Futures (June)	14,872.50	-110.00	-0.73%
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	$0.9427	0.0038	0.42%
USD/JPY	¥101.700	-0.365	-0.36%
Rio Tinto Plc (London)	£31.21	-0.36	-1.14%
BHP Billiton Plc (London)	£19.05	0.13	0.66%
BHP Billiton Ltd. ADR (US) (AUD)	$35.30	-0.48	-1.33%
Gold (spot)	$1,273.10	12.20	0.97%
Aluminium (London)	1839	-27.00	-1.45%
Copper (London)	6618	-55.75	-0.84%
Nickel (London)	18087	-163.00	-0.89%
Zinc (London)	2076	-41.25	-1.95%
Iron Ore (62%Fe)	91.5	-2.00	-2.14%