The Overnight Report: Then Suddenly, Nothing Happened

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By Greg Peel

The Dow rose 7 points while the S&P gained 0.2% to 1799 and the Nasdaq added 0.5%.

The ASX 200 recovered the 5200 mark yesterday which seems to have become the line of equilibrium since September last year. It was a solid performance prompted by an indecipherable US jobs report and likely aided by stability in the Aussie these past few sessions. Someone appears to have had a big go at it at the death, given a late spike.

If 5200 is the equilibrium point for now then it’s a good launch pad from which to respond to the flood of earnings reports about to hit the market these next three weeks. While the macro picture will overhang, Bridge Street is about to go micro.

The opposite is true in the US where the quarterly earnings season is now tailing off. After last week’s volatility, Wall Street screamed to a halt last night as a bit of morning argy-bargy gave way to a flat-lining afternoon. Tonight new Fed chair Janet Yellen will make her first testimony to the House Financial Committee and thus her first public speech out of the shadow of departed chair Ben Bernanke. Yellen has been quiet up to now and Wall Street is keen to hear her own thoughts on Fed policy going forward. Has Bernanke simply passed the baton or will Yellen now run her own race? Tonight’s testimony will be followed up by a second on Thursday night to the Senate Banking Committee.

Wall Street was not taking any chances last night and thus manoeuvered into position and stopped. The S&P 500 is sitting just under the 1800 mark and has just reclaimed the 50-day moving average.

Gold is about the only market making a statement at present as it moved up another US$6.80 to US$1274.80/oz to add to the rallies of last week, despite a little changed US dollar index at 80.63. The gold market is playing offset, one might presume, in case Yellen exerts her dovish credentials and alters the perception of ongoing tapering. The Aussie is off 0.1% to US$0.8949.

Base metals were little moved last night other than a 1% fall in aluminium, while spot iron ore fell another US10c to US$120.80/t.

There was some convergence in the oils last night – which has been anticipated for months – with Brent falling US$1.25 to US$108.32/bbl and West Texas rising US21c to US$100.09/bbl. US oil over the psychological mark of 100 could play on Wall Street’s assumption of the pace of economic recovery. Surging gas prices during the cold winter are already much the talking point with regard to households.

The SPI Overnight rose one point.

We now await Yellen’s words of wisdom.

Locally today we’ll see house price and finance data and the NAB business confidence survey while Cochlear ((COH)) provides the earnings highlight, ANZ Bank ((ANZ)) offers a quarterly update and a revitalised Macquarie Group ((MQG)) holds an operational briefing.

Japan is closed today.
 

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