Global Markets Overview – June 26, 2014

Once again we saw a sharp contrast in sentiment from European to US trade as a different set of forces dictated sentiment. European trade remained fairly risk-off as investors focused on rising geopolitical tension on the Iraq and Ukraine front. Latest reports suggest the US is considering further sanctions against Russia, while militants in Iraq continue to expand their territory.

However, in US trade investors focused on the final Q1 GDP print which came in much lower than expected at -2.9% (-1.8% anticipated). Durable goods orders also disappointed and these readings resulted in a slight unwind of the hawkish tone we heard from Fed members Dudley and Plosser. Additionally the market is expecting to see a bounce in US growth in Q2 after a poor Q1 performance. Given the weather-related impact on data earlier in the year, there is a good chance the recent momentum in Q2 will continue.

Risk currencies bid higher

With that in mind, the USD unwound and this lifted most of the risk currency pairs. AUD/USD bounced back above 0.9400 and GBP/USD edged back towards the 1.700 mark. The sterling is in for another bid day with BoE Gov Carney speaking on the financial stability report. Perhaps his comments will offer more clarity on the current uncertainty around rates and what the trigger for a rate hike will be. Once again a retest of this week's highs just above 1.7000 will be in focus.

USD/JPY was quite choppy but managed to find some buying off the lows. The pair is back near 102 and this will be a positive for the Nikkei today. As it stands we are calling the Nikkei up 0.4% to 15,328. However should geopolitical risk ramp up in Asian trade then we could see this gains swiftly evaporate.

Ex-div stocks to weigh on ASX 200

Ahead of the local market open we are calling the ASX 200 down 0.1% at 5396. Perhaps this is also to do with the 9.774 point dividend which is coming out of the market today, with the likes of TCL and SGP trading ex-div. After some good buying momentum earlier in the week, it seems interest has faded fast in the local market. Perhaps an improvement in the metals complex will help lift sentiment in the materials.

Iron ore, gold, copper and nickel all enjoyed some solid gains. The energy space will remain one to watch as geopolitical risk remains rampant. With the US now looking to export oil in light of the recent developments, then we could see WTI start playing catch up to Brent.

Asian markets opening call	Price at 8:00am AEDT	Change from the Offical market close	Percentage Change
Australia 200 cash (ASX 200)	5,395.90	-6	-0.11%
Japan 225 (Nikkei)	15,327.80	61	0.40%
Hong Kong HS 50 cash (Hang Seng)	22,897.50	31	0.13%
China H-shares cash	10,189.60	-16	-0.16%
Singapore Blue Chip cash (MSCI Singapore)	371.20	0	0.05%
US and Europe Market Calls	Price at 8:00am AEDT	Change Since Australian Market Close	Percentage Change
WALL STREET (cash) (Dow)	16,853.00	38	0.23%
US 500 (cash) (S&P)	1,956.31	7	0.36%
UK FTSE (cash)	6,740.80	-16	-0.23%
German DAX (cash)	9,882.20	-11	-0.11%
Futures Markets	Price at 8:00am AEDT	Change Since Australian Market Close	Percentage Change
Dow Jones Futures (June)	16,833.00	19.00	0.11%
S&P Futures (June)	1,950.00	6.00	0.31%
ASX SPI Futures (June)	5,361.00	7.00	0.13%
NKY 225 Futures (June)	15,368.00	70.00	0.46%
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	$0.9403	0.0042	0.47%
USD/JPY	¥101.850	-0.035	-0.03%
Rio Tinto Plc (London)	£30.78	-0.19	-0.60%
BHP Billiton Plc (London)	£19.00	-0.22	-1.12%
BHP Billiton Ltd. ADR (US) (AUD)	$36.16	-0.02	-0.04%
Gold (spot)	$1,319.60	7.05	0.54%
Aluminium (London)	1899.5	5.75	0.30%
Copper (London)	6922	45.00	0.65%
Nickel (London)	18610	430.00	2.37%
Zinc (London)	2182.75	6.50	0.30%
Iron Ore (62%Fe)	93.7	0.40	0.43%