SCOREBOARD: Aluminium jack

Wall Street turned up after Alcoa's strong results but European markets remained subdued despite improving conditions.

Stocks managed to push a little higher overnight but magnitudes were small. It seems the jobs report on Friday instilled some caution into the market and of course investors will be waiting for earnings season to kick off.

So, for much of the session stocks traded flat to red, hitting a low of 1548 (-0.3 per cent). Whenever the market pushed lower though, buyers came in – there is support there whenever stocks come off it seems.

Then after Alcoa reported (earnings per share of 13 cents from 9 cents a year ago – and that’s with falling aluminium prices) stocks got a further boost. So at the close, the S&P was up 0.6 per cent (1563), the Dow rose 48 points (14,613) and the Nasdaq was up 0.6 per cent (3222).

Over in Europe, and without the benefit of those Alcoa results, things were even quieter. In fact the Dax and CaC were pretty much flat ( 0.1 per cent a piece). News in Europe is good though so I would have thought we’d see stronger gains.

For instance, German industrial production rose 0.5 per cent in February after a flat outcome the month prior – a pick-up. Then of course Cyprus seems to have died down. Maybe May? Is it May when the Bilderberg group (who else can it possibly be?) usually manufacture a new crisis? Not sure. But for now, things have died down and you can see this most clearly on the Spanish and Italian 10-year bond yield. From a recent peak just under 4.8 per cent (about a month ago), the Italian 10-year yield is now down to 4.29 per cent. The Spanish 10-year, having hit a peak of around 5.14 per cent is now down to 4.72 per cent – huzzah!

In contrast, Treasury yields rose in the US, with the 10-year up about 4 bps or so to 1.748 per cent, the 5-year at 0.7 per cent and the 2-year at 0.23 per cent. Aussie futures were then off 5 ticks a piece – the 3s at 97.18 and the 10s at 96.73.

Elsewhere, commodities were mixed with crude up 0.9 per cent ($93.5) and copper up 0.9 per cent, although gold fell a few bucks to $1573. The Australian dollar was up 40 pips to 1.0412, the yen is now at 99.37 from about 98.57 and the euro is up 30 pips or so to 1.3006. Not much in it.

For our session today, the SPI tells us we can look forward to an increase of 0.3 per cent. Outside of that the main macro interest will be National Australia Bank's business survey today at 1130 AEST.

NAB’s survey so far tells us that confidence and conditions are still well below average despite the fact that rates are have been slashed to their lowest in many decades (ex-GFC). In fact even the vast improvement in global conditions seems to have had little impact to date. We’ll see what today brings – in theory we should see a sizeable improvement in both conditions and confidence, notwithstanding the unpopularity of the Gillard government, the sheer number of policy blunders and the clear desire of the electorate to see this government go.

There isn’t much domestically apart from that, so looking abroad, we see Chinese inflation data out around 1230 AEST (my calendar says Chinese trade data is also out some time over the next 24 hours apparently, but I don’t have an exact time), while late this afternoon German trade statistics are released.

Tonight, and in addition to UK industrial production, it’s worth keeping an eye on a US small business optimism index, wholesale inventories and sales. And that’s about it.

Have a good one…

Adam Carr is a leading market economist.

Follow @AdamCarrEcon on Twitter.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles