Tag Archives: Currencies

article 3 months old

The Overnight Report: Show Me The Way

By Greg Peel

The Dow closed flat while the S&P rose 0.2% to 2130 and the Nasdaq rose 0.4%.

Get Me In!

Was HSBC’s take on China’s May manufacturing PMI good or bad? One can offer two differing views.

At 49.1, HSBC’s flash estimate is an improvement on the April result of 48.9 (good) but missed forecasts of 49.3 (bad) and represents the third straight month of contraction (bad). Persistent weakness will likely encourage Beijing to implement further monetary easing and other stimulus policies (good) but it would seem measures taken to date are not having much effect (bad).

But did it matter? Not yesterday. We saw the signals for a potential rally yesterday in Wednesday’s trade, in which the bargain hunters had clearly decided it was time to move in on both a fundamental (value, including yield) and technical basis (5600 is a clear support level). This suggested to the wider market a bottom had been seen in this pullback and so yesterday, it was a case of get in quick.

It was green across the screen as all sectors finished positively. Healthcare again led the way with a 2.1% rise while energy (1.8%) was relieved the oil price stopped falling and materials (1.5%) must have simply been happy the government was wavering on the idea of an iron ore inquiry, given the iron ore price continues to ominously slide. The banks (0.6%) and the telco (0.9%) have found fully-franked yield support levels.

The government has now officially dismissed the idea of an iron ore inquiry, incredulous that anyone thought they were considering one in the first place. It was him, it was him, they said, pointing at Nick Xenophon.

Mixed PMIs

Having posted a not so encouraging March quarter GDP this week, Japan would have been happy to see its manufacturing PMI estimate suggest a swing into expansion in May, with a move to 50.6 from 49.9. Not so happy were QE co-conspirators the eurozone, which saw the estimate of composite (manufacturing plus services) PMI slip to 53.4 from 53.9. Germany’s individual manufacturing PMI fell to a three month low of 51.4.

The US also wavered, seeing a fall in the manufacturing number to 53.8 from 54.1, to add yet another reason to feel the Fed will hold off. But if these estimates are accurate, at least we can say the manufacturing industries of Japan, Europe and the US are all expanding, while China’s is contracting.

Directionless

Given the monotonous regularity with which the various US indices seem to hit new all-time highs these days, it’s interesting to note that the last time the big three actually hit a new ATH together on the same day was back in 1999. Last night looked like a strong chance for a trifecta once again, but while the S&P just snuck over the line, a typical late drift-off saw the Dow and Nasdaq retreat.

That the Dow closed about as flat as is possible on the session (+0.34 points) is testament to the apparent directionlessness of Wall Street this past week or so. They can’t find any real reason to buy it but they don’t really want to sell it either.

After a very strong read on US April housing starts earlier in the week, last night April existing home sales disappointed with a 3.3% fall. The year on year trend nevertheless remains positive.

More disappointing was the Philadelphia Fed activity index, which fell to 6.7 from 7.5 in April when forecasts suggested 8.3. The Chicago Fed national activity index saw improvement, but only to a slower pace of contraction at minus 0.15 from minus 0.36.

The Conference Board’s leading index for April forecast 0.7% growth, which seems a bit out of tune with the rest of the data. The Board suggested it means the US economy will rebound out of a sluggish, weather-bound first quarter, yet not dramatically so.

So that’s why Wall Street can’t go anywhere at present. Weak economic data are bad, but that keeps the Fed in its box, so that’s good.

Which makes you wonder why the US ten-year bond yield fell 7 basis points last night to 2.18%. Some bond buying is fair enough if the Fed is going to hold off, but the volatility in this market of late is really blowing away the long-held wisdom of the bond market representing the “smart money” and the stock market being a bunch of trigger-happy cowboys.

After a very strong week, the US dollar index finally eased slightly last night, by 0.3% to 95.35. The Aussie is thus 0.3% higher at US$0.7897.

Broken China

The oil markets apparently took three months of contraction for the Chinese manufacturing PMI to be a positive last night, as it implies further stimulus measures. Never mind that Chinese oil imports have only ever grown consistently even as the economy as a whole has slowed.

West Texas crude jumped US$1.91 to US$60.68/bbl while Brent rose US$1.60 to US$66.45/bbl.

The feeling was similar on the LME but the movements among metal prices were mixed. Copper rallied back 1% and lead jumped 2%, but elsewhere prices were weaker.

The iron ore price continued to drift away, down another US20c to US$57.60/t.

And gold continued to retreat to the sanctuary of a familiar 1200, falling US$3.30 to US$1206.50/oz.

Today

Futures traders expect the local market to go on with it today; the SPI Overnight closed up 19 points or 0.3%.

We’ll find out how German businesses are feeling about the state of play tonight with the release of the IFO survey, while the CPI result in the US will fuel up more Fed discussion.

On the local stock front, PanAust ((PNA)) will hold what will likely be its last AGM as a standalone entity today.
 

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article 3 months old

The Overnight Report: Greenback Growls

By Greg Peel

The Dow closed up 13 points while the S&P lost a point to 2127 and the Nasdaq fell 0.2%.

Don’t Panic

“Members agreed that, as at the time of the reduction in the cash rate in February, the statement communicating the decision would not contain any guidance on the future path of monetary policy. Members did not see this as limiting the Board's scope for any action that might be appropriate at future meetings.”

And with this statement in the minutes of the RBA’s May policy meeting we can finally put to bed the notion the central bank has ended its easing cycle. Most of the angst on the release of the May policy statement was based on the omission of the line “The Board will further assess the case for such action at forthcoming meetings”. This line appeared in April, and in March, but not, as the May minutes rightly point out, in February, when the RBA previously cut its rate.

Seems the market missed that one. And it makes sense – cut the rate, then wait to see what happens before signalling further action. Now we can all get some sleep.

Not that the minutes provided any great comfort on Bridge Street yesterday. We fell back in early May when the market thought perhaps the RBA had finished cutting, but we have not recovered on the knowledge that is not necessarily the case. Other factors are at work, and to some degree these are technical. On a failure to regain 5750, the ASX200 would be destined to return to 5600 or lower, so the tea leaves suggested.

Technical influence was evident yesterday when the SPI Overnight signalled a 22 point rally on open and the physical proceeded to fall 40 points. The fundamentalists pushed the index back to the flatline late in the morning but the selling pressure quickly returned. There were falls in energy and materials given lower commodity prices and, in the case of materials, the great Twiggy tanty. But the big losers on the day were the supermarkets (consumer staples), down 1.9%.

Consumer staples has proven the most volatile of all sectors in May, belying the sector’s natural state of being as a cash flow defensive.

The Aussie dollar dipped a little on the release of the RBA minutes yesterday but given both the RBA’s Statement on Monetary Policy and a speech delivered by the deputy governor had already put the kybosh on end-of-cycle fears, the reason the Aussie is down 0.9% to US$0.7916 over 24 hours is because the US dollar index is up another 1.2% to 95.30.

Mario Rushes In

The US dollar index is up because the euro is down. The pullback in the US dollar from its prior peak lends itself as much to signs of improvement in the eurozone economy as it does to assumptions the Fed will hold off for longer. The euro has been a little wobbly of late given all the talk over Greece being destitute, and on Friday night it started to tip over, sending the US dollar up a percent.

Last night it really crashed, posting its biggest session fall in two months, and sending the greenback up another percent. It was not about Greece this time however, it was about the ECB.

Mario Draghi is worried that in the northern summer, European treasury officials and bond market traders all go off to lie on some pebbles and bond markets become decidedly summer-thin. The ECB is implementing a massive bond purchase plan (QE) and were monthly purchases to be consistent, the risk is the central bank would steamroller through a lack of supply in the July-August period. So while there will be no alteration, at this stage, to the total size of the intended QE package, the ECB will step up its monthly bond purchases in May and June before the markets all go quiet.

That was enough to set the euro off. Granted, the eurozone April CPI, released last night, came in at a lower than expected 0.0% at the headline, the zone’s March trade balance missed expectations, and the ZEW investor sentiment survey for May came in weaker than forecast.

But what Draghi probably wasn’t thinking about at the time is the unintended flow-through consequences of his seemingly sensible announcement. Euro down, US dollar up, and dollar-denominated commodities taken to the cleaners.

Commodity Crunch

Thanks Mario, they said on the LME, as aluminium and lead fell 1%, copper and zinc 2% and nickel a whopping 5.5%.

Iron ore posted its sixth consecutive decline with a fall of US60c to US$58.40/t.

West Texas crude fell US$2.34 or 3.9% to US$57.26/bbl. Brent fell US$1.90 or 2.9% to US$64.37/bbl.

Gold fell US$17.70 to US$1208.00/oz. Silver, which has been on a tear of late, fell 3.5%.

Wall Street Angst

Admittedly the US dollar was also supported last night by news US housing starts leapt 20.2% in April to mark the highest pace of construction since 2007. While clearly the result represented a rebound out of the snowbound March quarter, it still blew away forecasts.

But is this good news or bad, vis a vis Fed policy? No one’s quite sure anymore. The Dow initially rose around 50 points but could not hold on, dragged down, as it was, by the energy sector in particular on lower commodity prices.

Normally we’d look to the US bond market to provide a clearer signal of market perception, unlike that madhouse of a stock market, but unfortunately the US bond market has become its own madhouse of late. The US ten-year yield jumped 9 basis points to 2.24%, which is actually what it should do if it fears a Fed rate rise, but such persistent volatility is rarely seen in a market which is something like six times the size of the US stock market.

As it was, the Dow closed just over the line of another all-time high, but new ATHs have ceased to become cork-popping accomplishments in 2015. There is a lot of concern valuations are stretched ahead of said Fed rate rise, and that we still haven’t seen that 10% correction everyone said was long overdue two years ago.

Today

Unlike the Australian market, which is now down 6.3% from its April (post-GFC) high, and counting. The SPI Overnight closed up 2 points but this seems ambitious given the extent of commodity price falls overnight, the general sogginess that seems to have set in at the moment, and the fact the tea leaf readers called a move to 5500 if 5750 was not breached.

Westpac will release its monthly consumer confidence survey today – the first assessment post rate cut and post budget.

Japan will release its March quarter GDP result.

The minutes of the Fed meeting will be released tonight and as usual, will be pored over. However that meeting was back in April, so the value of those minutes is somewhat diminished.

On the local stock front, APN News & Media ((APN)), Boral ((BLD)), Graincorp ((GNC)) and Wesfarmers ((WES)) will all hold investor/strategy days today while Iluka Resources ((ILU)) is among those companies holding AGMs.
 

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article 3 months old

The Overnight Report: Wanna Get High?

By Greg Peel

The Dow closed up 26 points or 0.1% while the S&P gained 0.3% to 2129 as the Nasdaq added 0.6%.

No Go Joe

It is “unlikely to be in Australia’s long-term interests to engineer a consumption boom by encouraging people to borrow large amounts against future income,” RBA deputy governor Philip Lowe told an audience of chief financial officers yesterday morning. “This is especially so when debt levels are already high and prospects for future income growth are not as positive as they once were. So, there is a fairly fine line to tread here.”

This assessment rather puts a dampener on the Treasurer’s appeal to Australians to “go out there and have a go”. Lowe’s rather more grounded assessment of the Australian economy’s capacity to navigate its transition away from mining investment in the near term also seems rather in contrast to the Treasurer’s optimistic growth outlook, but then Mr Lowe is appointed and Mr Hockey is elected.

But if the RBA is concerned that transition may prove difficult, why then did it appear to herald the end of its easing cycle in its last policy statement? Well, apparently that is not the case.

“We still have scope to lower interest rates if we need to,” said Lowe, when asked that question. “That doesn’t mean we’re going to, but we have scope to do that.”

The RBA’s biggest problem remains the fine balance between providing economic stimulus through another rate cut and the collateral damage of runaway housing investment. The more the housing market issue is raised by the regulators, the more the market begins to assume APRA may be preparing to act more decisively than it has to date in attempting to restrict a housing investment bubble.

Heading South

In essence, Philip Lowe rather cast a pall over last week’s post-Budget party in the stock market. Thus yesterday saw heavy selling, led down by the banks (-1.9%) with budget winner consumer discretionary following close behind (-1.4%). All sectors finished in the red. BHP Billiton ((BHP)) closed down 7.3% which would otherwise put a big dent in the index, but this was largely a mathematical adjustment to account for the spin-off of South32 ((S32)) and thus roughly a zero sum move.

It was not an auspicious start for the love child, falling 3.8% on debut, but given BHP shareholders were handed South32 shares for nothing it was an opportunity to take some cash out of an investment in the former leviathan. I suppose now we’ll have to refer to BHP as “the company formerly known as the Big Australian”.

There is likely some concern among resource sector investors with regard the government’s bizarre talk of holding an enquiry into the iron ore industry. Sorry, which stripe of political ideology is in power at present? The irony is that the supermarket duopoly has been getting away with murder for years but that’s a domestic issue. Now Tony Abbott wants to bite the hand that feeds him.

Weakness in the materials sector yesterday was aided by an iron ore price that has continued to trickle back from its sudden rebound peak. It won’t get much better today, with the trickle turning into a flood overnight. Iron ore is down US2.00 to US$59.00/t.

High-Ho

Philip Lowe’s speech yesterday also included a mandatory talking down of the Aussie dollar. The currency did fall marginally but likely more so on the confirmation the RBA can still cut if it feels the need rather than the broken record of a too-high exchange rate. The fact the Aussie is down 0.6% over 24 hours to US$0.7988 is mostly a result of last night’s snap-back rally in the US dollar after a period of weakness. The dollar index is up 1.0% to 94.18.

The snap-back suggests the market has become oversold dollars of late, having previously become overbought on Fed rate rise speculation. The recent stream of weak US economic data has pushed rate rise expectations further out in time, and last night’s fall in the US housing market sentiment index to 54 from 56 last month, when economists had forecast 58, is just another in a long line of disappointing numbers.

There is little doubt the US bond market had become very overbought, and still is, and last night the volatility continued. The longer the Fed holds off the less reason there is to sell bonds, but the US ten-year jumped up 9 basis points to 2.23% last night as selling in German bonds continued unabated.

US stock markets were being spooked last week when bond yields were going the wrong way but traders seem to have come to terms with the contradiction, given last night the Dow hit a new all-time high for the first time since early March and the S&P500 marked its third ATH in three sessions. The weaker the data, the longer the Fed will hold off, the better that is for stocks. Or so the story goes.

Bucked Off

Commodity markets have been a little unsure of where they should next be heading in recent sessions, following rebounds in oil, iron ore and to some extent among the base metals. But when the US dollar jumps 1% it’s easy to come up with an excuse to sell.

Iron ore fell 3.3% last night as noted, while all base metals bar tin were sold down 0.5-1.0%, other than aluminium, which fell 2%.

The oils were also weaker but only marginally so, with West Texas dropping US31c to US$59.60/bbl and Brent dropping US54c to US$66.27/bbl for its new July delivery front month.

Gold, of course, rarely behaves the way you’d expect, so it rose US$2.20 to US$1225.70/oz.

Today

New high for the Dow? The SPI Overnight closed up 22 points or 0.4%.

Philip Lowe probably said it all yesterday but this morning’s release of the minutes of the May RBA meeting may still provide more colour.

Tonight the eurozone will be able to see if ECB QE is beginning to work as inflation and trade numbers are released along with the ZEW investor sentiment index.

Rudi will today travel through cold Canberra to present his latest insights, and more, to local members of the ATAA.
 

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article 3 months old

What’s Up With The US Dollar?

By Kathleen Brooks, Research Director UK EMEA, FOREX.com

The USD is one of the worst performers in the G10 so far this month, and is down more than 4% vs. the GBP, and 3% vs. the NOK and AUD. Even the EUR, which has been weighed down by the ECB's QE programme and the ongoing Greek sovereign debt crisis, has managed to eke out more than 2% in gains vs. the greenback so far in May.

What is driving the dollar lower, and can it last?

  •          US economic data continues to surprise on the downside, the Citibank economic surprise index for the US has slumped to a 3-year low, which could delay the timing of the first Fed rate hike.
  •          On that note, the market has also pushed back expectations for when the Fed will raise rates; the market now expects only 30 basis points of tightening before the end of the year, which is a little over 1 hike. If we continue to see weak economic data then a rate hike could be priced out for 2014 altogether.
  •          Momentum – the dollar has made a series of lower lows, and the downtrend continues to look entrenched. It has already fallen through key support including the 200-day sma and is below the daily Ichimoku cloud, suggesting that weakness in the buck could be here to stay.

The yield effect:

Interestingly, as you can see in figure 1, the dollar is selling off even though bond yields are rising. The 10-year Treasury yield is now at its highest level since November. Usually rising yields can lend support to a currency, but not so with the dollar. Why? 

  1.        The dollar's relationship with yields looks weak at best. It rose while Treasury yields were falling, and is falling as they rise.
  2.        If the rise in global DM bond yields is a sign that the global economy can avoid the scourge of deflation and is thus a collective sigh of relief, it would be natural for a safe haven like the dollar to weaken.
  3.        US yields may be rising, but they are rising faster elsewhere, for example in Germany, which is why the dollar cannot keep up.  As you can see in figure 2.

 Conclusions:

The dollar rally is on hold for now and has sold off some 7% since peaking in mid-March. This does not look like a mere pullback, if we continue to see weakness then it could be curtains for the dollar rally that the bulls were waiting so long for.

In the meantime, we would be cautious about looking for a reversal in the dollar at this stage, as the downtrend seems fairly entrenched. We think GBP could rally to 1.60 and beyond in the next week or so, and there may be further gains for EURUSD if we continue to see upward pressure on German bond yields. 1.1534, the high from end of Jan, is a critical level of resistance for EURUSD that opens the way for a return to 1.20.
 



 
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article 3 months old

The Monday Report

By Greg Peel

Recovery

Friday ended a volatile but ultimately positive week for the Australian stock market on a strong note, with the ASX200 pushing towards the technically significant 5750 level. Thanks to a boost to new all-time highs on Wall Street, everything that was on the nose on Thursday was once again sought after on Friday, including a turnaround for materials despite another slip in the iron ore price.

Energy was the only sector to close in the red, down 0.7%.

For some reason there is talk from Canberra of holding a parliamentary enquiry into the iron ore industry. As to how that possibility impacts on mining stocks we’ll have to see.

Weakness

Volatility also continued in the US bond market on Friday night. After several sessions of inexplicable selling panic, the market saw renewed buying on Friday night to take the benchmark US ten-year yield down 10 basis points to 2.14%.

This time the market was moving as one might expect, given a set of weak US data releases on the day.

Michigan Uni’s fortnightly gauge of consumer sentiment plunged to a seven-month low 88.6 from 94.5 at the end of April. Economists had forecast 94.5, so many commentators are scratching their heads as to why the US consumer is so downbeat.

US industrial production fell 0.3% in April to mark five month decline. A fall of 0.2% was forecast. The Empire State activity index did manage to rise to plus 3.1 from minus 1.2 last month, but economists had expected 5.5.

Hence bond yields fell and the US dollar followed suit. The dollar index is down another 0.1% to 93.23.

The weak data led to initial weakness for the US stock indices but having seen a possible break-up in the S&P500 the day before, the buyers were quick to respond. A choppy session saw the Dow close up 20 points or 0.1%, the S&P gain 0.1% to 1223 and the Nasdaq close as good as flat.

Interesting week for Greece

It has been revealed that the Greek prime minister had prepared for a default on the country’s debt to the IMF, even writing to Christine Lagarde to inform her there was no money left to make last week’s E750m payment, until someone pointed out a slightly ironic option still open to the government.

So it was Greece was able to make its IMF repayment by drawing down on emergency funds available to it under normal procedure from, whaddya know, the IMF. Meanwhile, while the ECB has kept a trickle of funds flowing to Greece’s banks to avoid a run, the central bank has in turn banned those banks from buying Greek government bonds and thereby lending the government that money. Tspiras has now rifled through every coat pocket and raided the back of the couch, so this time he really does have nothing left for which to make subsequent repayments to the IMF.

Greece’s negotiators are now hoping to reach a deal with its creditors by the end of this week.

And so it goes on.

Quiet Commodities

The iron ore price continues to trickle back, down US20c on Friday to US$61.00/t.

Activity in all commodity markets was muted on Friday night. On the LME, base metal prices all saw mixed but small moves, while in the oil markets, West Texas rose US21c to US$59.91/bbl and Brent was flat at US$66.57/bbl.

Gold fell US$2.40 to US$1221.10/oz.

The Aussie dollar continues to slip back following last week’s RBA-spurred short-covering rally. Despite another dip in the US dollar index, the Aussie is down 0.6% to US$0.8033.

The Week Ahead

The SPI Overnight closed up 2 points.

The Fed will release the minutes of its last policy meeting on Wednesday which will no doubt prompt the usual search for any subtle hints on exactly when the central bank may begin raising rates. As the weak US data continue to roll in, those arguing “not before 2016” are becoming increasingly confident.

It is likely the minutes will only reinforce that the Fed is simply data-dependent and to that end, the data releases continue to roll in this week.

Tonight sees the US housing sentiment index, tomorrow housing starts, Wednesday the minutes and Thursday existing home sales, the Chicago Fed national activity index, the Philadelphia Fed activity index, the Conference Board’s leading economic index and a flash estimate of May manufacturing PMI. Friday brings the CPI.

The PMI flashers will all be out on Thursday, including Japan, China (HSBC) and the eurozone.

Beijing will announce monthly property prices today while in Europe, this week’s data include the eurozone CPI and trade balance along with both the ZEW investor and IFO business sentiment surveys.

Westpac’s monthly consumer confidence gauge is the highlight of Australia’s economic releases this week but the RBA will be squarely in the frame. Deputy governor Philip Lowe will deliver a speech today while tomorrow the minutes of the May policy meeting will be released.

Has the central bank really now completed its easing cycle? The market will be scouring the minutes for clues.

On the local stock front, DuluxGroup ((DLX)) releases its half-year result today and James Hardie ((JHX)) provides quarterly numbers on Thursday. The AGMs roll on, including those of Iluka Resources ((ILU)) on Wednesday and PanAust ((PNA)), subject to takeover, on Friday.

Investor slash strategy days are becoming increasing popular among Australian corporates and can be largely grouped in with an increasing number of simple quarterly reports. How long before we go down the US path of quarterly reporting? Companies holding such “days” this week include Boral ((BLD)), Wesfarmers ((WES)) and Graincorp ((GNC)) on Wednesday, and Woodside Petroleum ((WPL)) on Thursday.

Rudi will not make any appearances on Sky Business this week. He's spending the week in ice-cold Canberra and will present to the local chapter of the Australian Technical Analysts' Association (ATAA) on Tuesday. Weekly Insights will return next week.
 

For further global economic release dates and local company events please refer to the FNArena Calendar.

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article 3 months old

The Overnight Report: Break Up?

By Greg Peel

The Dow rose 191 points or 1.1% while the S&P gained 1.1% to 2121 and the Nasdaq added 1.4%.

And down again…

Wednesday’s budget party quickly turned into yesterday’s hangover as the ASX200 gave back everything it had gained on Wednesday and more by lunchtime, before finding some stability towards the close. Initial excitement waned as one by one, economists pointed out that the glossy shine on Joe’s second attempt actually hides the fact it is still a fiscally contractionary offering.

Or maybe everyone cottoned on to the fact that if the budget brings a spree in iPad sales, the major beneficiary will be Apple, which doesn’t even pay tax here.

The consumer sectors did actually hold up yesterday to finish slightly in the green again, despite a net weaker index. Remember how I noted yesterday everyone seemed to miss the Chinese data in the budget haze? Well yesterday the materials sector led the market down with a 1.2% fall. There was also an outlier at play, with ResMed’s ((RMD)) heart attack dragging down the healthcare sector by 1.2%.

Perhaps the good news yesterday is that we did see a modicum of sanity return to the Aussie dollar, as buying eased off and the currency began to fall back from threatening 82c. Seems like only the other day we were looking at 75c, and we’ve had a rate cut in between. It’s mostly to do with the US dollar part of the equation nonetheless, but despite the US dollar index being down 0.3% to 93.36 last night, the Aussie is still down 0.4% over 24 hours to US$0.8080.

Still Super Mario

It was Ascension Day in Europe, which must be why the German DAX rose 1.8% in thin holiday trade. Or it might have been because Mario Draghi, in a speech he was delivering, reaffirmed his commitment to ECB QE for as long as it takes to put the eurozone economy back on a stable footing.

Whether or not that will include a contribution from Greece is yet to be determined. Last night the Greek finance minister suggested at a conference that Greece’s debt repayment obligations to the ECB should be pushed into “the distant future”. No doubt that went down well.

Aside from strength in European stocks, Draghi’s speech also sparked some lost strength in European bonds, and for once yields fell back. This was not lost on US bond markets.

Record Territory

Last night’s release of the US producer price index for April showed a 0.4% decline following a 0.2% gain in March, against economists forecasts of a flat result. The headline PPI has fallen in seven of the past nine months.

This provides heart to those hoping the Fed won’t raise its rates too soon, and was also the reason the US dollar index was again lower. But the headline number is not what the Fed is watching. The headline PPI showed a 1.3% year on year decline in April but the core PPI showed a 0.7% gain. The difference is, of course, the oil price. Still, 0.7% is hardly suggestive of runaway inflation.

So why did Wall Street suddenly take off last night?

Primarily it was because the mischievous bond market actually decided to behave itself last night. The US ten-year yield fell 4 basis points to 2.24% on the back of the PPI as well it should, and stayed there, rather than jumping back up 10 bips as it has been wont to do recently.

The debate still rages over why US bonds have suddenly been sold off when a Fed rate rise is not yet looming on the horizon. Oversupply of corporate issues meeting lack of buyers of government paper, technical breaches, moves in Europe, overbought “bubble” giving way – all of these factors have been argued and likely all have been conspiring together. What everyone does agree on is it has had nothing to do with fundamentals, and that has made US stock markets nervous. So last night, confidence returned.

The close of 2121 for the S&P500 not only marks another new record high, technical analysts suggest a close above 2020 represents a break-out of what has been a fairly entrenched 2015 year to date range. We shall see. Meanwhile, the Dow is still short of its all-time high, albeit by only 0.2%. But it you want to talk tea leaves, technicians will point out that the Dow Transports average is actually trading at a 2015 low. Dow Theory dictates that any new leg in the bull market requires both the Dow Industrial and Transport averages to be firing.

Of course with bond rates so low and the market overcrowded, many attribute Wall Street strength simply to the TINA trade – there is no alternative, if you want to see any return on your investment. One wonders how Tina might respond when the Fed finally hikes.

Just a dream?

The tip-over in the recovered iron ore price continued last night with an accelerated US80c fall to US$61.20/t. It is fair to say most observers have been expecting consolidation following the sharp rebound, but it doesn’t mean mining investors won’t become nervous again. Until iron ore can move more emphatically into the sixties, many smaller miners are still burning cash.

The falling US dollar is still failing to fire up base metal prices, as LME traders continue to worry about Wednesday’s weak Chinese data. Trading was thin last night with most of Europe celebrating Ascension Day, allowing lead to fall 3% and aluminium, nickel and zinc to all fall around 1%.

The oils had a quieter session as well, with West Texas falling US43c to once again be back under 60, at US$59.70/bbl, while Brent ticked up US18c to US$66.59/bbl.

Gold added another US$6.00 to US$1221.10/oz. Could gold, too, be breaking out? Best to see some further proof, one might suggest.

Today

So does the yo-yo go up again today? The SPI Overnight closed up 36 points or 0.6%.

The banks will be initially handicapped by National Bank ((NAB)) going ex-div. Oil Search ((OSH)) is among those holding an AGM today while it appears Paladin Energy ((PDN)) will provide its quarterly result today and not yesterday, as calendars had assumed.
 

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article 3 months old

The Overnight Report: Don’t Mention The Data

By Greg Peel

The Dow closed down 7 points while the S&P was flat at 2098 and the Nasdaq added 0.1%.

Did anyone notice China’s April data dump yesterday was alarmingly weak?

Chinese industrial production rose 5.9% year on year in April, exceeding March’s 5.6% but missing forecasts of 6.0%. Retail sales fell to 10.0% year on year, down from 10.2% and missing expectations of 10.5%. Fixed asset investment plunged to 12.0% year to date from 13.5% in March to mark its lowest level in twenty years.

One might argue that April data are pre the recent PBoC rate cut but that was the third cut in six months, the RRR has also been slashed and other stimulus measures have been implemented by Beijing. Volatile February and March Chinese data can usually be dismissed due to the New Year disruption but by April, things should have settled down again.

No, no one noticed, because everyone was focused on the budget. Causing particular excitement was the proposed small business stimulus package, which saw the consumer discretionary sector jumping 1.2% on expectation retailers will see the biggest spending spree, on everything from laptops to socket sets, since 2009’s Pennies from Kevin. The banks rose 0.8%, probably because small businesses that don’t have $20,000 in the till will be keen to borrow it.

It was interesting that there was no mention of a proposed deposit tax in the budget, but that doesn’t mean it has been ruled out. A deposit tax is still on the table when the Treasurer gets round to addressing the FSI recommendations.

But overall, yesterday saw a level of positivity related to a budget which is not expansionary – the government is allowing a bigger deficit but not actually borrowing at today’s low rates to foster fiscal stimulus – but at least not as dangerously contractionary as the last spin of the wheel. At some point over the last twelve months Joe took a road trip to Damascus.

With regard to getting the budget through the Senate, the sticking point will clearly be the paid parental scheme about-face. But I’m happy to bet this was included as the big “nasty” that the opposition and crossbenchers would jump on. The government will concede ground, Labor and friends will claim victory and pass everything else, and there’ll be a lot of winking around the cabinet room.

Eurosurge

The first estimate of eurozone March quarter GDP came in at 0.4% growth, up from 0.3% in December, to mark the fastest pace of growth in two years. The zone economy grew faster than both those of the UK and the US in the period. The result was driven by a turnaround in fortunes for the economies of France and Italy, back into expansion, such that the four biggest economies among the nineteen in the bloc all posted growth.

Spain, near broke only a few years ago, led the pack with a 0.9% increase. The not so good news, however, is that growth in the biggest economy, Germany, slowed to 0.3% from 0.7%. The world’s third largest exporter should be enjoying the spoils of a lower euro but not according to last night’s numbers. There remains the issue of sanctions imposed on Russia but economists also suggest euro weakness will take time to flow into an improved export performance for the eurozone leader. Germany’s weak performance meant that the eurozone result of 0.4% actually missed 0.5% expectations.

The result in the breakdown that’s otherwise drawn a lot of attention is that of Greece, which saw 0.2% contraction and thus a fall-back into recession. Not surprising? In the September quarter last year, Greece was the eurozone’s fastest growing economy thanks to the weight of bail-out funds been thrown at the Greek economy. The European Commission has now pulled its earlier forecast for Greek 2015 growth of 2.5% right down to only 0.5%, and that assumes Greece gets the next tranche of bail-out funds that is presently stalled due to the Greek government’s stubbornness.

If I were Greece’s creditors, I’d be saying “the bail-out is not working anyway, and costing everyone else a lot of money”.

To put Greece’s March quarter contraction into perspective we might look at Cyprus’ result. A couple of years ago it appeared Cyprus might actually be the first eurozone victim but at 1.6% March quarter growth, the Cypriote economy was the fastest growing of all nineteen members.

Wet Sales

US retail sales were flat month on month in April, much to everyone’s dismay. Admittedly economists were only forecasting 0.1% growth but while fuel prices are now higher than they were a couple of months ago, the're still a lot lower than they were a year ago. Yet a forecast consumer rebound is simply not happening.

Initially Wall Street saw the bad news as good news, sending the Dow up 64 points. Aside from assumptions the Fed will hold off, US bond yields did begin to fall back as one would expect following weak economic data. But having hit a low of 2.16%, down 8 basis points, the ten-year yield immediately rebound to 2.26% to be up 2 basis points on the session. Again the stock markets were spooked, so they pulled back to close as good as flat.

Yesterday I mentioned that everyone was loaded up with corporate debt on top of government debt positions, reducing any great desire to buy more bonds. Another issue, of course, is that as of last October the Fed is no longer standing the market as a buyer (QE). Thus when a bit of selling is sparked, there’s a black hole to sell in to.

The US dollar index moved as might be expected on weak domestic data vis a vis the eurozone GDP result. It fell 1.0% to 93.66.

Bad news for the Aussie, and the RBA, nonetheless. Clearly the forex market is hell bent on playing the Aussie short, thus short-covering scrambles are becoming common place. On top of Joe’s more stimulatory budget and wildly optimistic economic growth forecasts, the big plunge in the greenback has sent the Aussie racing up another 1.7% to US$0.8108.

Data Driven

The big drop in the US dollar would normally be positive for commodity prices but that was not the case last night.

The Australian market paid no attention to yesterday’s Chinese data but commodity markets did. And they also pay attention to the eurozone’s GDP “miss” and to the weak US retail sales number.

Copper was flat but all other base metals fell in price on the LME, including a 2% fall for nickel.

Iron ore fell US30c to US$62.00/t.

West Texas crude fell US$1.14 to US$60.13/bbl and Brent fell US86c to US$66.41/bbl.

The only winner was gold, but then gold is strictly a currency and not a commodity. It dutifully rose US$22.10 to US$1215.10/oz, but still has gone nowhere for months.

Today

Back to earth? The SPI Overnight closed down 19 points or 0.4%.

Westfield Corp ((WFD)) is among those holding AGMs today while AusNet Services ((AST)) and SingTel ((SGT)) will post full-year results today, Graincorp ((GNC)) will deliver a half-year and Paladin Energy ((PDN)) will provide a quarterly update.

Bad news last night for ResMed ((RMD)) fans. The company announced its SERVE_HF heart failure trial has failed to reach primary goals hence the stock fell 15% in New York.

Rudi will be on Switzer TV tonight, Sky Business between 7-8pm, and again hosting Your Money, Your Call Equities, 8-9pm.
 

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article 3 months old

The Overnight Report: More Bond Panic

By Greg Peel

The Dow closed down 36 points or 0.2% while the S&P lost 0.3% to 2099 and the Nasdaq fell 0.4%.

As You Were

Well so much for having a “quiet” session ahead of the budget. Yesterday’s 0.9% rally was driven by another jump in iron ore prices and further announced cost cuts from BHP Billiton ((BHP)), sending the materials sector up 1.7%, a positive investor day presentation from Qantas ((QAN)), which helped industrials up 1.0%, and sudden renewed buying in yield stocks, for reasons that are not apparent.

The banks managed a 0.8% gain despite a 1.9% fall in a reopened National Bank ((NAB)), adjusting for the capital raising but liking it nonetheless, while the telco came back 0.9% and the supermarkets, which were trounced on Monday, rebounded 1.4%.

Perhaps Joe’s economic growth forecasts were leaked. By Disneyland.

Budgets tend to have little impact on the stock market other than briefly, unless there is a big change in policy impacting on a particular sector or company. There was nothing announced last night that’s going to move the general market dial.

The bad news is that the Aussie spent all night rallying, perhaps because one could almost call last night’s budget stimulatory, thus moving in concert with monetary policy, as opposed to last year’s disaster that intended to tighten fiscal policy in opposition to the RBA’s efforts. But the US dollar index is also down 0.5% to 94.57, helping the Aussie up 1.1% to US$0.7976.

Buddy can you spare a dime?

Joe might have been railing last night that Australia’s government debt costs about a hundred million a day in interest payments, thanks to the other mob yada yada yada, but spare a thought for Greece. According to reports, Monday night’s last minute E750m payment to the IMF has left a total of E90m in the bank. That’s it.

If Greece does not receive the next tranche of its bail-out package pretty much immediately it will go under, default, and possibly exit, either by walking out the eurozone door or being thrown out. The Greek government has indicated it wants to stay in, but has refused to bow to its creditors’ austerity demands.

And so it goes on.

The newly re-elected UK chancellor was over in Brussels last night talking tough on Greece and on the EU in general, warning that the Tory’s intended referendum on remaining in the EU will go ahead unless reforms can be made. So we may yet see a Grexit from the eurozone or a Brexit from the EU, or both.

Bond Panic

Historically low interest rates across the globe have led to a huge surge in corporate bond issuance as companies exploit once in a lifetime cheap funding, often only to buy back their own equity. But there is only so much corporate debt the market can take on before the boat threatens to sink. While Greek fears linger, sending the German DAX down 1.7% last night, a wider sense of timid optimism with regard the eurozone economy is bringing in question just why German bonds need to be as cheap as they are.

Which is why German yields have been rapidly rebounding the past couple of weeks, as investors rush to sell. The impact has flowed across the pond, where a break of technical levels has sent the US ten-year yield surging back as well. Last night the US yield leapt to a six-month high 2.36% early in the session before settling all the way back to 2.26%, down one basis point on the day.

The flighty bond market is giving Wall Street the willies, which is why the Dow was down 180 points last night as bond yields hit their intraday peaks. As yields settled back, so did the stock indices rise back once more to a less intimidating close. All was forgiven, but it does beg the question of what will actually happen when the Fed finally does raise its cash rate.

Well Oiled

Last night the US Energy Information Administration forecast that output from seven major US shale players will fall by 86,000 barrels per day in June. Throw in analyst expectations that tonight’s weekly US crude inventory numbers will see another drop, and renewed air strikes in Yemen, and West Texas crude jumped US$2.03 to US$61.27/bbl and Brent jumped US$2.41 to US$67.47/bbl.

The weaker greenback also helped commodity prices higher, particularly on the LME. Base metal traders were also squaring up in case today’s raft of Chinese data indicate Beijing’s earlier stimulus measures are beginning to gain some traction. All metals were stronger, including 2% gains for lead and zinc.

The iron ore price has slipped a tad, down US20c to US$62.30/t.

The weaker greenback also kicked gold up US$9.30 to US$1193.00/oz.

Today

The SPI Overnight closed down 16 points or 0.3%.

The aforementioned Chinese data include April industrial production, retail sales and fixed asset investment numbers.

Locally, the March quarter wage price index release will provide indication as to whether the RBA has anything to worry about on the inflation front.

The eurozone will release its first estimate of March quarter GDP tonight. In the US, retail sales will be in focus.

On the local stock front, Westpac ((WBC)) will go ex-div today, handicapping the index from the open.

Rudi will appear, as a guest, on Sky Business' Market Moves today, 5.30-6pm and then as host on Your Money, Your Call Equities, 8-9pm.
 

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article 3 months old

The Overnight Report: Bonds On The Move

By Greg Peel

The Dow closed down 85 points or 0.5% while the S&P lost 0.5% to 2105 and the Nasdaq fell 0.2%.

Bad Move

The local market took off on a flyer yesterday morning, fuelled by the well-received US jobs report and the weekend’s Chinese rate cut. It was a fair enough call for resource sector stocks, aided by improving oil and iron ore prices, but those assuming all was forgiven in the banking sector and yield stocks in general made the wrong call.

No sooner had the ASX200 gained 64 points from the opening bell the sellers moved in, sending the index rapidly south to a close of down 9. Materials (+1.0%) and energy (+1.5%) maintained their ground but banks (-0.5%), supermarkets (-0.9%) and the telco (-1.7%) were summarily slapped.

The issue for local yield stocks is rising local bond yields, which are being attacked on two fronts. Domestically, the market remains concerned the RBA has implied its easing cycle ended with the May rate cut. Internationally, US bond yields are finally on the rise, about two years after all and sundry assumed they would.

If we think back to the Fed tapering announcement of late 2013 we recall the US ten-year yield shot up to 3%, briefly, in early 2014. The tapering of QE in the face of an improving US economy implied stronger yields. But as the US economy stumbled through the winter of 2014, and one by one the central banks of major economies took the lead from the Fed and introduced drastic easing measures of their own, global yields collapsed. At the same time, Australian yield stocks became ever more attractive.

There is still no agreement on when the Fed might raise its rate but the US bond market is not going to hang around to find out. The international market is very, very long US Treasuries. As the picture begins to improve for the eurozone economy, Greece notwithstanding, near-zero eurozone bond rates have now been left behind and this is forcing US bond markets to respond in kind. We are now coming off a much lower base than late 2013, but last night the US ten-year yield jumped 12 basis points to 2.27% and the US yield curve has now steepened for a consecutive three weeks.

As bond rates here and abroad start rising, the value of Australia’s dividend-paying stocks is undermined on the yield differential.

Note that National Bank ((NAB)) will come out of its trading halt this morning in the wake of its announced capital raising at a 25% discount.

In yesterday’s Australian economic news, NAB’s business survey for April showed conditions falling to plus 2 from plus 4 in March (long-run average zero) and the confidence index holding steady at plus 3 (long-run average plus 5).

Greece Holds On

There has still been no breakthrough in negotiations between Greece and its creditors and as the deadline for Greece’s obligatory E750m incremental repayment to the IMF approached last night, talk of a Greek default heightened. But with only hours to spare and just ahead of the close of European markets, the Greek finance minister pulled his hand out from the back of the couch and came up with the payment.

While this may have provided temporary relief for markets, and keeps Greece in the game for now, the E7.2bn tranche of additional bail-out funds Greece so desperately needs is still tied up and subject to Greece bowing to its creditors’ demands.

And so it goes on.

Aftermath

On Friday night Wall Street decided the April jobs number was “just right” but by last night not everyone was too sure. The 223,000 number may keep the Fed wolf from the door but throwing in March’s downwardly revised 85,000 result, it implies only 154,000 jobs added on average over two months as the US emerged from another snow-bound winter.

The implication is that unlike 2014, a solid economic rebound in the June quarter cannot be safely assumed. So unsure is Wall Street that last night saw unusually thin trading on both the stock and bond markets. No one was much surprised that stocks pulled back after the big surge on Friday but thinness in bond markets is one reason the ten-year yield was able to jump 12 basis points.

The fact that Greece’s last minute repayment actually does nothing to lift the impasse, and thus nothing to quell Greek default and Grexit fears, meant the euro was sold down last night and the US dollar index rose 0.2% to 95.01 as a result.

Rising Australian bond yields would normally imply a rising Aussie dollar but not when US rates are rising faster, reducing the differential. Thus the Aussie is down 0.5% to US$0.7893.

Cracks in China

The iron ore price rebound continued a-pace last night, with the spot price rising another US$1.50 to US$62.00/t.

One might also be forgiven for assuming base metal prices would also have seen buying interest on the LME last night in response to the weekend’s Chinese rate cut, but not so. What we saw is yet another debate over what is good and what is bad.

While Chinese stimulus may seem positive on face value, the accelerated pace of Beijing’s easing measures is beginning to smack of desperation. Thus markets are now looking through the stimulus itself to the reason why stimulus is needed in the first place – the Chinese economy is rapidly slowing.

Copper and nickel were only slightly weaker last night but aluminium fell 0.6% and lead, tin and zinc all fell 1.5-2%.

Chinese stimulus is nevertheless considered positive for oil markets given that while last week’s Chinese trade data showed a big fall in net imports, the breakdown showed China is buying more and more oil every month. But as oil traders pondered the rate cut implications, OPEC came out and suggested oil would not see US$100/bbl again this decade.

Hardly a knock-me-down-with-a-feather prediction, but enough to keep a lid on any enthusiasm. West Texas crude fell US22c to US$59.24/bbl and Brent fell US53c to US$64.86/bbl.

Gold is down US$4.10 to US$1183.70/oz.

Today

Gather your friends, order the pizzas and chill the beers. It’s budget night tonight, in case you’ve been visiting another planet. The local market may just put in a quiet session today ahead of whatever nasties or even kickers Joe might officially deliver, and the SPI Overnight is down just 3 points.

Already there’s talk the government’s new childcare policy, announced on the weekend, which effectively increased rebates for the wealthy and reduced them for the not so wealthy, is destined to crash and burn in the Senate.

Today we’ll see monthly housing finance data, which are always a source of angst for the RBA.

CSR ((CSR)) and Orica ((ORI)) will provide profit results, Qantas ((QAN)) will host an investor day and Coca-Cola Amatil ((CCL)) will hold an AGM.

An don’t forget, as noted, the index will adjust on the open to account for NAB’s capital raising, but as to how much lower NAB shares will open will depend on how keen investors are to participate in the discounted issue.
 

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article 3 months old

The Monday Report

By Greg Peel

Policy Confusion

A square-up rally on Wall Street on Thursday night seemed a good enough reason to bargain hunt from the open on the local market on Friday. There may have also been cause to question the week’s big sell-off given the detail of the RBA’s quarterly Statement on Monetary Policy.

The pullback was largely driven by Tuesday’s RBA policy statement for May, which delivered a rate cut but implied there would be no more to follow. Gone was the usual “we will continue to assess the outlook and adjust policy as needed” line. But hold the phone, that exact line makes an appearance in the quarterly. The central bank also revised down its GDP and inflation forecasts, and reiterated that it expects unemployment to peak at 6.5%. If no one had ever read the May statement, then there would be no change to the assumption another rate cut is still a possibility.

So as you were, let’s buy back those stocks. But around midday, conviction began to waver. China’s trade numbers for April came out and showed a 6.2% year on year fall in exports when a 0.9% gain was expected, and a 16.1% fall in imports when only an 8.4% fall was expected. This was not good news for the miners.

So by day’s end the market was down on the session having been up 44 points. It was a mixed bag, with an RBA-led 0.9% rebound in utilities, for example, matched by a 0.8% fall in materials. But there was one sector that never went up in the first place. On a growing belief oil prices may have now peaked following their stellar comeback, the energy sector was thumped 3%.

Yes, Prime Minister

And they came out of the sun screaming Tory, Tory, Tory, och ai. No one came even close to predicting the outcome of the UK election, which saw the Conservatives claim an outright majority and left Labour and the Lib-Dems in a smouldering heap. And having voted against independence only last September, the Scots decided to establish a nationalist bloc north of the border.

As to whether markets will be back fretting about possible Scottish secession once more was not important on Friday. The FTSE soared 2.3%. A Tory government may be more capitalist-friendly but the overriding issue was that fears of a hung parliament were swept away.

They liked it in Europe too, strangely, given the Tories are committed to holding a referendum on whether or not Britain should remain in the EU. The German market surged 2.7% and the French market 2.5%, despite data showing German industrial production growth slowed to 0.1% in March from 0.5% in February.

But it was not just about the election. It was also about US jobs.

Just Right

Ahead of Friday night’s US non-farm payrolls release, Wall Street had decided that if the April number is as bad as the March number was, then that’s bad. It would mean snow is not the reason the US economy appears to have stalled in the first quarter. But if snow was indeed the issue and April jobs rebounded spectacularly, say 300k+, then that, too, would be bad. It would imply a June Fed rate rise would be back on the cards.

So a result of 223,000 was just what the doctor ordered, after the March figure was revised down to a mere 85,000. It’s enough to suggest the US economy will recover in the June quarter from its winter malaise, but not enough to spur the Fed into action too soon. The UK election result was also well-received across the pond, and European strength flowed over into US markets as the Dow surged 267 points to be back over 18,000, the S&P chimed in with 1.4% to be back over 2100, and the Nasdaq scraped back over 5000 with a 1.2% gain.

So still the hamster is running round and around in its wheel but not going anywhere.

Funnily enough, while US stock markets saw a Goldilocks jobs result, the bond market decided it was a disappointment. The US ten-year yield fell 3 basis points to 2.15%.

Oil Relief

All things being equal, Wall Street would likely not have been surprised if the oil price tanked on Friday night, having apparently tipped over during the week. So there were sighs of relief when West Texas crude rose US50c to US$59.46/bbl, spurred on by the positive jobs number and another reported fall in the US rig count. Brent fell, on the other hand, but only by US25c to US$65.39/bbl.

The response on the LME was more mixed. A positive US jobs number was balanced out by a subsequent 0.3% rise in the US dollar index to 94.79 and by the weak Chinese trade data. Nickel rose 1% but lead fell 1%, while the other metals were up and down on small moves.

Iron ore rose by US50c on Friday to US$60.50 a tonne. Over the week iron ore lifted by US$4.30 a tonne or 7.7%.

Gold rose US$3.40 to US$1187.80/oz.

The Aussie dollar is a little higher at US$0.7933, despite the weak Chinese data and the stronger greenback.

Futures traders have no doubt a big rally on Wall Street is enough for the bargain hunters to give it another shot on Bridge Street today. The SPI Overnight closed up 43 points or 0.8% on Saturday morning.

Beijing Delivers

If futures traders risked being wrong on Saturday morning, by last night they would have been feeling a lot more confident.

On Saturday, Beijing released April inflation data which showed a slight tick-up in CPI to an annual 1.5% from 1.4% in March but economists had forecast 1.6%. Forecasters had also assumed some relief for factory prices but the PPI remained stubbornly at minus 4.6%, flat on March. There is certainly no impediment here to Beijing further upping the ante on its promised stimulus measures.

And right on cue, yesterday the PBoC announced another cut to interest rates – the third in six months. The benchmark one-year lending rate has been trimmed 25 basis points to 5.10% and the deposit rate falls by the same amount to 2.25%.

This will come as no surprise to markets given any weakness in Chinese data has led to further stimulus measures over 2015, and Friday’s trade data were another case in point. But confirmation is still a positive, so the local market should see a boost today.

The Week Ahead

Let’s hope it doesn’t all come crashing down on Wednesday, after Tuesday night’s supposedly dull and boring federal budget release. There have been plenty of leaks but that doesn’t mean some sectors on the ASX won’t be holding their breath, such as healthcare, child care and wealth management.

Before Joe gives it another shot we’ll see the NAB business confidence survey for April out today, and the ever popular housing finance numbers out tomorrow. On Wednesday we’ll see the March quarter wage price index.

China will be back in the frame on Wednesday, delivering April industrial production, retail sales and fixed asset investment numbers.

The eurozone will provide a first estimate of March GDP – the quarter that introduced QE – on Wednesday.

Wall Street will be watching retail sales and business inventories on Wednesday, the PPI on Thursday, and industrial production, fortnightly consumer sentiment and the Empire State activity index on Friday.

On the local stock front, Incitec Pivot ((IPL)) will deliver its half-year result today and Orica ((ORI)) tomorrow along with a full-year result from CSR ((CSR)) and an investor update from Qantas ((QAN)). AusNet ((AST)) releases its full year result on Thursday, Graincorp ((GNC)) its half-year and Paladin Energy ((PDN)) provides a quarterly update.

The week will also see a handful of AGMs being held, including those of Coca-Cola Amatil ((CCL)), Westfield Corp ((WFD)) and Oil Search ((OSH)).

Rudi will appear on Sky Business on Wednesday at 5.30pm and on Thursday at noon and again between 7-8pm for the Switzer Report. On Wednesday, between 8-9pm, he will host Your Money, Your Call Equities on Sky Business.
 

For further global economic release dates and local company events please refer to the FNArena Calendar.

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