Global Markets Overview – July 1, 2014

  • Rate this Story
  • 0
  • 0

By Stan Shamu, IG Markets Overview | July 1, 2014 9:42 AM EST

A labourer works at a construction site in Beijing, June 23, 2014. An oversupply of residential property and a market slowdown have left Chinese developers with their worst cash crunch in more than two years, revealing the extent of China's real estate downturn and paving the way for further consolidation in the sector. Picture taken June 23, 2014. REUTERS/Kim Kyung-Hoon (CHINA - Tags: BUSINESS CONSTRUCTION REAL ESTATE EMPLOYMENT TPX IMAGES OF THE DAY)
A labourer works at a construction site in Beijing, June 23, 2014. An oversupply of residential property and a market slowdown have left Chinese developers with their worst cash crunch in more than two years, revealing the extent of China's real estate downturn and paving the way for further consolidation in the sector. Picture taken June 23, 2014. REUTERS/Kim Kyung-Hoon (CHINA - Tags: BUSINESS CONSTRUCTION REAL ESTATE EMPLOYMENT TPX IMAGES OF THE DAY)

Global markets wrapped up the second quarter of the year on a mixed note on the back of some mixed economic data. In US trade, Chicago PMI missed estimates, while pending home sales came in well ahead of estimates. The housing market certainly continues to show some strong signs of improvement and this is helping lift confidence. Despite some encouraging data, the US dollar broadly lost ground, with the dollar index slipping below 80 for the first time since May. GBP/USD finally managed to break June highs which resulted in a breakout, with the pair rallying to 1.712. The pair is now trading at its highest sinceOctober 2008 and looks poised for further near-term gains. Data out of the UK showed a better-than-expected reading in net lending to individuals, but this doesn't seem to have been the catalysts for the gains as the big move occurred in US trade. Perhaps comments by Fed member Williams saying he still believes the first rate hike will be in the second half of 2015 contributed to see USD weakness.

Japan Tankan report in focus

The only currency pair the USD didn't lose too much ground to was actually the yen, as USD/JPY just maintained a tight range around 101.30. This will not do the Nikkei many favours today, as it is set to start the session flat. The Tankan report at 9.50 AEST will be key for Japan today as most analysts feel it will show some weakness following the sales tax hike. There will also be average cash earnings and manufacturing PMI data out of Japan.

RBA and China PMI could trigger AUD

AUD/USD continues to have a solid run and is holding its ground above 0.943. The pair will be one to watch today with the RBA decision due out at 14.30 AEST. Before we even get to that we have another round of China data starting with manufacturing PMI at 11.00 AEST and HSBC's final manufacturing PMI at 11.45 AEST. Activity is expected to show further signs of improvement with a rise to 51 (from 50.8).

Should this come to fruition then we could see AUD/USD test April highs in the 0.946 region ahead of the RBA decision. Should this data miss estimates then a pullback could be on the cards, but there is an uptrend support in the 0.936 region, which could see buyers come in. The RBA is expected to remain on hold, but there have been contrasting opinions on the statement front. Some analysts feel the statement will turn a bit more dovish, particularly given the strength of the AUD. However, should the 'period of stability in interest rates' line be maintained, then this is unlikely to make too much of a difference.

ASX 200 could bounce after yesterday's weakness

Ahead of the open we are calling the ASX 200 up just 0.1% at 5403. Following yesterday's losses, the ASX 200 finished the first half of 2014 up just 0.9%. As a result, we need a stellar second half if we are to match annual returns seen in the past. The local market was a significant underperformer yesterday, which puts it in prime position to bounce today.

There were mixed moves in the commodities space with iron ore and oil weaker while gold firmed. Broad USD weakness would have been expected to drive some strength in the commodities space. Perhaps this will filter through in today's Asian session, but the biggest lead for commodities is likely to be from China data.

On the company news front, Ansell will be in focus after announcing a write-down, restructure and intention to drop non-core brands. The restructure will cost ANN around $124.7 million pre-tax. While the company announced a slight downgrade to guidance along with the write-down, the restructure might be enough to encourage buying and could see the stock challenge $20.

Asian markets opening call

Price at 8:00am AEDT

Change from the Offical market close

Percentage Change

Australia 200 cash (ASX 200)

5,401.70

6

0.11%

Japan 225 (Nikkei)

15,164.00

2

0.01%

Hong Kong HS 50 cash (Hang Seng)

23,110.50

-81

-0.35%

China H-shares cash

10,266.20

-54

-0.52%

Singapore Blue Chip cash (MSCI Singapore)

370.90

0

0.01%

US and Europe Market Calls

Price at 8:00am AEDT

Change Since Australian Market Close

Percentage Change

WALL STREET (cash) (Dow)

16,834.40

-15

-0.09%

US 500 (cash) (S&P)

1,961.87

1

0.06%

UK FTSE (cash)

6,751.30

-19

-0.28%

German DAX (cash)

9,837.20

-2

-0.02%

Futures Markets

Price at 8:00am AEDT

Change Since Australian Market Close

Percentage Change

Dow Jones Futures (June)

16,807.00

-11.00

-0.07%

S&P Futures (June)

1,954.00

2.00

0.10%

ASX SPI Futures (June)

5,364.00

5.00

0.09%

NKY 225 Futures  (June)

15,193.00

0.00

0.00%

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

$0.9430

0.0010

0.11%

USD/JPY

¥101.300

-0.010

-0.01%

Rio Tinto Plc (London)

£31.35

0.11

0.37%

BHP Billiton Plc (London)

£19.07

-0.07

-0.37%

BHP Billiton Ltd. ADR (US) (AUD)

$36.29

0.24

0.68%

Gold (spot)

$1,326.75

9.90

0.75%

Aluminium (London)

1887

3.00

0.16%

Copper (London)

7014

80.25

1.16%

Nickel (London)

19070

164.00

0.87%

Zinc (London)

2216.75

30.00

1.37%

Iron Ore (62%Fe)

93.8

-1.10

-1.16%

[Kick off your trading day with our newsletter]

More from IBT Markets:

Follow us on Facebook

Follow us on Twitter

Subscribe to get this delivered to your inbox daily

(Photo: / )
A labourer works at a construction site in Beijing, June 23, 2014. An oversupply of residential property and a market slowdown have left Chinese developers with their worst cash crunch in more than two years, revealing the extent of China's real estate downturn and paving the way for further consolidation in the sector. Picture taken June 23, 2014. REUTERS/Kim Kyung-Hoon (CHINA - Tags: BUSINESS CONSTRUCTION REAL ESTATE EMPLOYMENT TPX IMAGES OF THE DAY)
  • Rate this Story
  • 0
  • 0
Copyright IG Markets All rights reserved, get CFD Trading account

Join the Conversation

IBTimes TV
E-Newsletters

We value your privacy. Your email address will not be shared.