Scoreboard: American hustle

Most of the action was in stocks and crude overnight, although it was in opposite directions. Stocks found a decent bid after positive US data in the ISM manufacturing survey. This rose to 53.7 from 53.2, which isn’t a big move or anything and in fact it was below expectation for a rise to 54. But think of where we are.

The Fed is fanning discussion about whether recent weakness in the US economy was weather induced or not, and so anything that shows it was is a positive sign. Meanwhile the Fed is at pains to let the market know that even if the weakness was weather induced, rates will remain low for a very long time yet. Anyway, the report was quite positive against that backdrop and in particular we saw a strong lift in the backlog of orders component and also production.

Equities saw decent gains in the US. As I write, the S&P500 is up 0.7 per cent (1885) and touched an intraday high. The Dow is 58 points higher at 16,516, while the Nasdaq is up 1.4 per cent (4256). Over in Europe, the Dax was up 0.5 per cent, the CaC was 0.8 per cent higher and the FTSE100 rose 0.8.

Rates did little in the end, with the 10-year Treasury yield up only 2 bps or so to 2.75 per cent. The 5-year yield is at 1.73 per cent and the 2-year at 0.44 per cent. Aussie futures were then flat on the threes (96.92) and down one tick on the tens 95.85.

Commodities generally sold off, crude especially with both WTI ($99.49) and Brent ($105.4) down more than 2 per cent at the time of writing, although there is no apparent cause for the slump. BP warned that regulations being imposed could have “very worrying” effects on commodity prices, and the company has already noted a drop off in liquidity. Either way the price move is odd given data out overnight that showed OPEC’s crude output fell to its lowest since December. Gold then fell a few dollars to $1280, although silver was up smalls (0.2 per cent). Finally copper rose 0.5 per cent.

Forex markets took the Australian dollar a little lower overnight, largely in response to the Reserve Bank’s press release yesterday which was ever so slightly more dovish. Certainly no hint in there that a rate hike is imminent. Elsewhere, the euro was up 20 pips to 1.3795, The British pound was then off 30 pips to 1.6632 and the yen is at 103.7.

Elsewhere, unemployment in Germany fell 12,000 in March while the unemployment rate was steady at 6.7 per cent. The unemployment rate for the eurozone as a whole was 11.9 per cent. Over in the US, construction work done rose 0.1 per cent in February after a 0.2 per cent fall the month prior. Finally, it looks as though US car sales have picked up again after a slow winter. Chrysler reported a 13 per cent year-on-year surge in sales in March, with General Motors and Ford reporting gains of 3-4 per cent. Toyota then said sales were up almost 5 per cent and Nissan reported a gain of over 8 per cent.

In markets today, the SPI suggests Aussie stocks will be up 0.4 per cent. Then in terms of the macro data flow, building approvals at 1130 AEST will be the key data piece locally. Looking abroad, there isn’t much. US data includes factory orders, the ADP employment report and two Fed speakers -- Dennis Lockhart and James Bullard.

Have a great day…

Adam Carr is a leading market economist.

Follow @AdamCarrEcon on Twitter.