Global Markets Overview – November 4, 2014
Global markets were mixed, with a predominantly risk off tone driven by a disappointing manufacturing PMI print out of China. Fed member Fisher was also on the wires suggesting he is concerned the Fed will be too late to raise rates and he was not too worried about a slight undershoot in inflation. This, along with slightly better US manufacturing data, contributed to the downward bias in equities. Europe was the hardest hit as peripheral bond yields rose, sending EUR/USD below $1.2500. This saw EUR/USD trade at its lowest since August 2012 and really opens the pair up for further near-term losses. Weakness for Europe came despite the ECB saying it had bought €3.1 billion of covered bonds last week. Additionally, ECB members seem to be starting to warm to sovereign QE. Traders are likely to continue looking for opportunities to sell EUR/USD and any strength is likely to be taken advantage of.
Nikkei to trade at six-year high
Japan will be the main event in Asia today as investors look to see if the strength and momentum from Friday's trade can continue. The Nikkei was closed in observance of Culture Day yesterday but futures traded. We are currently calling the Nikkei up 5.8% at 17,360, its highest since 2007. USD/JPY topped ¥114.00 yesterday and remains one of the best performing FX pairs at the moment. It'll be interesting to see if Japanese equities and USD/JPY can hold off some profit taking, which is likely in the near term.
RBA and ABS in focus
AUD/USD has also come under pressure in line with other risk currency pairs and lost the $0.8700 handle. This leaves the pair staring at October lows of $0.8643 heading into today's RBA meeting. No change is expected from the meeting and, as usual, the statement will be watched for any change in language. Perhaps the ABS' revised estimates for jobs for the period December 2013 to September 2014 will be more interesting. Following recent 'controversial' jobs data, it'll be interesting to see what impact new methodology will have on the data. Additionally, we have retail sales and the trade balance due out at 11.30am AEDT.
Ahead of the local market open, we are calling the ASX 200 relatively flat. Resource names will remain in focus after drops in iron ore, oil, gold and thermal coal. With most of the bank results out of the way, it'll be interesting to see where inspiration for the market will come from. The Melbourne Cup is also on today and this might result in reduced activity, as Victoria has a public holiday.
Asian markets opening call | Price at 8:00am AEDT | Change from the Offical market close | Percentage Change |
Australia 200 cash (ASX 200) | 5,504.30 | -3 | -0.05% |
Japan 225 (Nikkei) | 17,365.50 | 952 | 5.80% |
Hong Kong HS 50 cash (Hang Seng) | 23,824.00 | -92 | -0.38% |
China H-shares cash | 10,617.20 | -43 | -0.40% |
Singapore Blue Chip cash (MSCI Singapore) | 371.16 | 0 | 0.08% |
US and Europe Market Calls | Price at 8:00am AEDT | Change Since Australian Market Close | Percentage Change |
WALL STREET (cash) (Dow) | 17,353.60 | -15 | -0.09% |
US 500 (cash) (S&P) | 2,016.44 | 0 | 0.01% |
UK FTSE (cash) | 6,480.90 | -59 | -0.91% |
German DAX (cash) | 9,265.40 | -65 | -0.70% |
Futures Markets | Price at 8:00am AEDT | Change Since Australian Market Close | Percentage Change |
Dow Jones Futures (December) | 17,282.00 | -14.00 | -0.08% |
S&P Futures (December) | 2,010.88 | 0.25 | 0.01% |
ASX SPI Futures (December) | 5,488.50 | -12.00 | -0.23% |
NKY 225 Futures (December) | 17,397.50 | 352.50 | 2.07% |
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 | $0.8683 | -0.0062 | -0.72% |
USD/JPY | ¥114.065 | 1.405 | 1.25% |
Rio Tinto Plc (London) | £29.97 | 0.25 | 0.86% |
BHP Billiton Plc (London) | £16.25 | 0.15 | 0.90% |
BHP Billiton Ltd. ADR (US) (AUD) | $33.80 | 0.09 | 0.27% |
Gold (spot) | $1,165.50 | -4.55 | -0.39% |
Brent Crude (December) | $84.19 | -1.38 | -1.61% |
Aluminium (London) | 2077 | 40.00 | 1.96% |
Copper (London) | 6735 | 24.00 | 0.36% |
Nickel (London) | 15755 | 15.00 | 0.10% |
Zinc (London) | 2311 | 1.00 | 0.04% |
Iron Ore (62%Fe) | $78.63 | -0.96 | -1.21% |
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