Global Markets Overview – October 24, 2014
Equities bounced back strongly in a move triggered by a round of PMI prints from China and the eurozone. This eased some of the global growth concerns that had escalated recently and the gains managed to extend through US trade as earnings continued to impress. Results from Caterpillar, Microsoft and 3M were all strong, but Amazon didn't do particularly well after-market. Caterpillar is generally considered a bellwether for growth and while it's encouraging to see the company perform well, it still felt China was challenging.
Regardless, there was plenty to cheer and even a rise in unemployment claims did not deter the positive sentiment. Perhaps this is because the four-week average is still very low after recent prints. US 10-year treasury yields rose and the greenback also seems to have picked up some ground as well.
Japan to outperform the region
USD/JPY has managed to squeeze through ¥108.00 and this is the biggest move in the majors. Yen weakness was attributed to reports the BoJ sees a high possibility of inflation falling short. This will see the Nikkei outperform the region today with our opening call suggesting the index will open 1.6% higher at 15,384.
There isn't much data out in the region today, but investors will watch China's September property prices, released at 12.30, with interest after recent significant declines. Further deterioration in China's property prices will be a real concern.
Property poses the single biggest risk to China at the moment and investors will be searching for any signs of stabilisation. This is also likely to dictate how risk currencies trade through Asia after some choppy trade all week. AUD/USD has gone through some consolidation just shy of 0.8800 and this data has the potential to cause some volatility.
Banks likely to be in focus
Ahead of the open, we are calling the ASX 200 up 0.5% at 5408. As we head into bank earnings and dividends, the financials are likely to remain in focus over coming weeks. Yesterday we saw buying interest off the lows for the banks and I suspect investors will be looking to take advantage of the dips for an entry point.
The positive PMI prints really bolstered copper which was the best performing metal. Other metals didn't perform as well, but I feel the buoyant risk mode could support the materials space. Drops in gold and iron ore will be of concern, but I feel this was reflected in yesterday's price action already on the iron ore side. It might be a good day for some of the energy names after oil prices rose on the back of a report showing Saudi oil production fell short in September.
There will be a number of AGMs to look out for including Qantas, Carzales.com and APA group. ResMed will also deserve some attention after its Q1 earnings beat estimates.
Asian markets opening call | Price at 8:00am AEDT | Change from the Offical market close | Percentage Change |
Australia 200 cash (ASX 200) | 5,408.30 | 25 | 0.47% |
Japan 225 (Nikkei) | 15,384.00 | 246 | 1.63% |
Hong Kong HS 50 cash (Hang Seng) | 23,408.00 | 75 | 0.32% |
China H-shares cash | 10,475.50 | 37 | 0.35% |
Singapore Blue Chip cash (MSCI Singapore) | 365.28 | 1 | 0.21% |
US and Europe Market Calls | Price at 8:00am AEDT | Change Since Australian Market Close | Percentage Change |
WALL STREET (cash) (Dow) | 16,697.50 | 193 | 1.15% |
US 500 (cash) (S&P) | 1,952.20 | 21 | 1.06% |
UK FTSE (cash) | 6,412.10 | 58 | 0.89% |
German DAX (cash) | 9,040.00 | 172 | 1.94% |
Futures Markets | Price at 8:00am AEDT | Change Since Australian Market Close | Percentage Change |
Dow Jones Futures (December) | 16,622.50 | 193.00 | 1.17% |
S&P Futures (December) | 1,945.88 | 21.00 | 1.09% |
ASX SPI Futures (December) | 5,391.00 | 23.50 | 0.45% |
NKY 225 Futures (December) | 15,415.00 | 275.00 | 1.82% |
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 | $0.8757 | -0.0005 | -0.05% |
USD/JPY | ¥108.300 | 1.060 | 0.99% |
Rio Tinto Plc (London) | £30.71 | -0.19 | -0.61% |
BHP Billiton Plc (London) | £16.68 | 0.03 | 0.18% |
BHP Billiton Ltd. ADR (US) (AUD) | $33.54 | -0.10 | -0.28% |
Gold (spot) | $1,232.10 | -11.00 | -0.88% |
Brent Crude (December) | $86.86 | 2.29 | 2.70% |
Aluminium (London) | 1982.25 | -22.00 | -1.10% |
Copper (London) | 6670 | 36.75 | 0.55% |
Nickel (London) | 15210 | -34.00 | -0.22% |
Zinc (London) | 2259 | 6.00 | 0.27% |
Iron Ore (62%Fe) | 80 | -1.50 | -1.84% |
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