Most of the hard hitting data out last night was centred on US housing -- and it was all good. House prices are still surging higher with the S&P/Case-Shiller index up 0.2 per cent in April to be 10.8 per cent higher annually.
Then new home sales skyrocketed 18.6 per cent in May (after a 3.7 per cent gain), which is the biggest one month spike in home sales in about 12 years. At this level (504,000) sales are at the highest in about six years. Throw in a 3 point jump in consumer confidence for June (from 82.2 to 85.2) and its all good right?
Well yes, except that US equities were offered and European equities didn’t have a great session either. I can see no catalysts for that move -- maybe Middle Eastern tensions. But on the whole, data and news flow supported a solid bid -- or should have.
Equities were bid up initially I suppose, but it was short lived and at the high the S&P 500 was only up 0.3 per cent, which is fairly modest given the strongest gain in new home sales in 12 years. The offer on, the S&P 500 then fell 0.9 per cent from that point to close 0.6 per cent weaker (1949). The Dow followed suit, shedding 119 points (16818), while the Nasdaq fell 0.4 per cent (4350). Over in Europe, the session was a little better with the Dax and CaC up 0.2 and 0.1 per cent respectively. The FTSE 100 fell 0.2 per cent.
Commodities too were soft given the data, especially copper. Despite strong momentum in the US housing sector, copper fell 0.1 per cent. Gold ($1319) and silver were then up smalls (less than 0.1 per cent). Crude was otherwise mixed, with WTI off 0.2 per cent ($105.99), and Brent up 0.3 per cent.
Forex markets saw the euro trade on 50 pip range but ended little changed from 4.30pm (AEST). As I write the unit is at $US1.3604. In contrast the British pound sold off about 45 pips (1.6985) following comments from the Bank of England’s Canadian overlord, Mark Carney. A couple of weeks ago he was feeling feisty and said that rates could rise sooner than expected. But hey, that was ages ago.
This week he seemed to play down the chance of a rate hike, noting weak wages growth and how that could keep a lid on inflation or some such. Oh and he also mentioned that the economy had to absorb more slack before rates rose. English MP’s on both sides have suggested that Carney (a Canadian) is giving confusing signals to the electorate. Turning to the Australian dollar, it was largely one-way traffic downward. The unit lost 40 pips from 4.30pm (AEST) yesterday to be at 0.9369 at the time of writing.
Rates eased further overnight, the US 10-year yield falling 4bp to 2.578 per cent. The 5-year followed suit, falling about 3bp to 1.667 per cent, while the 2-year is at 0.46 per cent. Aussie futures were bid up, rising 4-5 ticks a piece. 3s are at 97.30 and 10s at 96.39.
Elsewhere, the German IFO survey slipped a little in June, the business climate index falling to 109.7 from 110.4. The current assessment index was steady at 114.9, while expectations weakened a bit -- 104.8 from 106.2. In the US, the Richmond Fed manufacturing index fell to 3 in June from a reading of 7 the month prior.
Markets today. The SPI suggests our market will fall about 0.5 per cent today. On the data front, the only piece for Australia is the skilled vacancies index at 11am (AEST). Shortly after that we see a measure of Chinese consumer sentiment (11.45am AEST). Later in our session the GFK consumer sentiment survey for Germany is out, while tonight we see the final estimate of first quarter US GDP (-1.8 per cent expected), durable goods orders and mortgage applications.
Have a great day.