Welcome to my daily Markets Musings.
You’ll see things are different from now on. That’s because the full note was approaching 2,000 words some days and I’m breaking it up into a number of reports on the Axi Blog each day now.
That way traders can subscribe to the Axi Blog easily and then cherry pick the yarns and markets of interest
Feedback always welcome
Market Summary (7.32am Wednesday, August 8)
After the roaring rally on Chinese stocks yesterday, which saw the Shanghai Comp and CSI 300 rise 2.74% and 2.95% respectively, stock markets across the globe had a pretty solid night. Likewise the Chinese Yuan had a better time of it gaining 0.7% in offshore trade and 0.3% in onshore trade against the US dollar.
That shift in tone and sentiment helped buoy risk assets like copper, where the HGc3 price rose 0.73% to 2.7585, and the Aussie dollar which was half a per cent higher at 0.7423.
And of course it’s driven the S&P 500 even closer to it’s record high. At 2,858, up 0.27%, it’s a handful of points below the high of the day at 2,863 and just 14 points or so from the record high set January 28. I must say it’s a dodgy looking candle on the days trade sitting out there on it’s own.
The Dow finished up 0.5% at 25,628 while the Nasdaq 100 rose just 0.3% to 7,462 even after Tesla’s Musk Tweet induced surge of more than 9% - he said he’s thinking of taking the company private but the company said nothing is final yet. So the question is if a Short screams in a forest does anybody hear? Maybe a securities lawyer or two.
But I digress. The FTSE rose 0.71%, the CAC was 0.81% higher and the DAX rose 0.4%. Here at home SPI traders have come back from small loses an hour or so ago and prices are now flat after the ASX 200 fell 20 points to 6,254. If we see the physical ASX down through 6,230/40 today things could get a little ugly.
Back to forex markets now and the USD came under some pressure overnight. Chinese foreign exchange reserves weren’t the event they might have been given they actually rose – again not a typo - from $3.112 trillion to $3.118 trillion. SO the USD index has again backed off the top of the range and is down 0.2% this morning at 95.17. The Euro is up 0.4% however at 1.1597 while the Pound is largely unchanged at 1.2940 as Brexit worries continue to dominate traders thinking. USDJPY is at 111.37 even though yesterday’s wages growth data – 21 year highs - does suggest the BoJ will eventually tweak policy properly.
Of the commodity bloc the Aussie’s 0.5% gain left the CAD and Kiwi behind. USDCAD is actually up 0.4% to 1.3051 while the Kiwi is at 0.6735, up just 0.05%.
Besides the move higher in copper iron ore has been rallying lately and is back testing the trendline from the 2011 highs in US futures terms. Oil was higher too as traders again seemed to focus on the Iranian sanctions. WTI is up just 0.1% at $69.04 while Brent is 1% higher at $74.50. Gold is up a few bucks at $1210. Bitcoin is hanging in at $6889, down 0.5% after the SEC deferred another ETF decision.
US 10’s are a little higher at 2.98% while 2’s are at 2.68% and the curve is around 30 points rounded.
On the day we get the BoJ summary of opinions, bank lending and trade data from Japan. Home loans and Westpac Consumer confidence are out here in Australia while RBA governor Phil Lowe will be speaking at the Annika Foundation lunch at 1.05pm AEST today – more colour on that inflation and unemployment change in his statement yesterday I’d bet.
Chinese trade, exports, and imports for July are also out around the same time Lowe will be speaking. Tonight it’s fairly quite in the US with mortgage applications and then EIA inventory data out for oil and energy markets.
Speaking of which the API data is just out and it has shown a bigger than expected draw of 3.7 million bbls against the 3.3 million expected.
Have a great day.
Macro Stuff that everyone and everything – either today or eventually
Have a great day's trading.
Chief Market Strategist
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