Markets have become nothing if not complacent since the dark days of the GFC and the redux in 2010 and 11 for the European crisis. It’s a function of central bank QE and free money.
So the best way to describe price action at the moment is that it is twitcy – traders are a little nervous but have become so immune to bad news that they dont want to be caught short stocks, long bonds or long the US dollar.
So nothing happens – not really anyway.
So at the close the Dow was down 48 points for a loss of 0.28% to 17,052, the Nasdaq was 0.16% lower at 4,425 and the S&P 500 lost just 4 points after being down 12 at one stage to end 0.21% lower at 1,974.
In Europe German PPI showed that year on year prices fell 0.7% as expected but the primary focus was to the East and the implications of the MH17 downing. Britain is out seeking a strong rebuke and sanctions of Russia but with 30% of its natural gas sourced in Russia Germany has said its too soon for blanket sanctions. It’s a test for the EU and there is a big meeting tonight.
At the close in Europe however the DAX fell 1.11% to 9,612, the CAC fell 0.70% to 4,305 while the FTSE was 0.32% lower at 6,728. In Milan stocks tanked 1.48% while Spanish stocks dropped 0.48%.
Locally the ASX looks set to open lower and even though September SPI 200 Futures were only off 4 points at 5,495 the risk is of further selling of the miners and the banks today.
In Asia yesterday with Japan out thre was mild disquiet with the geo-political tensions and stocks in Hong Kong and Shanghai traded lower. The Hang Seng closed down 0.29% to 15,216 while stocks in Shanghai were 0.25% lower at 2,054.
On Currency markets traders are pretty bored even if they have a slight USD bid tone. This morning the Aussie is a bit lower at 0.9370 while Euro sits at 1.3523. Sterling sits at 1.7074. Watch USDJPY though if it heads down through 101 we’ll know something is up.
A break of last week’s low will signal a big move.
Honestly by any measure I can’t understand why you own Euro and I’m short. But we’ll see how it goes and when – or if – it can take out the low of last week it will be a big signal that a deeper, potentially much deeper, move is afoot.
On commodity markets the iron ore rally is so far proving as ephemeral as any hope of a Collingwood flag this year with September futures down another 63 cents a tonne to $94.50. Newcastle coal on the other hand was unchanged at $67.65 tonne.
On Nymex as noted above the price of oil leapt higher with July Nymex light crude up by $1.46 Bbl to $104.58. Gold gained $4.50 to $1,313.40 and silver settled at $20.91. Copper isa t $.19 lb and the Ags were at it again as corn tanked another 1.95%. Wheat fell 0.42% while soybeans was largely unchanged.
On the data front today we get a speech from RBA Governor Stevens at the Anika Foundation at 1 pm. This speech has become one of his most important thematic speeches each year so it is worth keeping an eye out for.
Elsewhere RBA Assistant Governor Debelle is speaking and the Chinese and Japanese leading indices are out. Tonight there is not much in Europe save for the EU meeting on Russia and Ukraine but in the US we get the mega important CPI data fro June along with home sales data, Richmond Fed manufacturing survey and the Redbook index.
Greg McKenna
NB: Please note all references to rates above are approximate
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