Scoreboard: Consumed with confidence

Wall Street jumped further ahead as investor confidence was reinforced by strong consumer credit numbers.

As if a surge in US jobs wasn’t enough, consumer credit also shot higher in May – up $19.6 billion, which is the strongest gain in about a year, although then we were looking at record increases. Or close enough to. The US consumer is on the march and has been for some time, although many chose not to accept it.

This data came out early this morning as the US market was entering the last hour of trade. By that point the market was already up some 0.3 per cent ahead of second-quarter earnings, but a couple of more points were added on the data and the S&P500 closed 0.5 per cent higher (1640). This is clearly a good effort after Friday’s strong gains. Consumer services and utilities were the key outperformers for the session, while telecommunications and tech stocks lagged. Elsewhere, the Dow was up 0.6 per cent (15224) and the Nasdaq was only 0.2 per cent higher (3484). Now as for those earnings, after the market closed, Alcoa released its earnings reporting earnings of 7 cents per share, from 6 cents, excluding one-offs or special items.

European stocks had a better session of it (Dax 2.1 per cent, CaC 1.9 per cent and FTSE100 1.2 per cent), although not quite offsetting those huge falls we saw Friday. So you’ve got a bit of a bounce back here or a correction from an oversold position, but also supporting were comments from ECB head Mario Draghi stating that policy would be accommodative for the foreseeable future. Similarly, Portugal seems to have resolved its crisis and calm has prevailed.

Price action elsewhere wasn’t that exciting. Crude fell about 0.4 per cent to $102.8, while copper was up 1.3 per cent, silver rose 1.6 per cent and gold was $22 higher, reversing some of Friday’s losses. Then in the forex space, the Australian dollar was about 80 pips higher to 0.9140, the euro rose 50 pips to 1.2873, the British pound is 80 pips higher at 1.4954 and the yen was little changed at 100.97. As for rates, the US 10-year yield was down a few basis points, well, 4 bps to 2.64 per cent. The 5-year then slipped about 7 bps to 1.504 per cent, while the 2-year is of a few bps to 0.359 per cent.  

There were a few bits out otherwise. One of the world major news services, Thompson Reuters, has been investigated for releasing data early to high frequency traders – a couple of seconds before the rest of the market gets it – for a fee. As far as I can tell it only relates to consumer confidence data, but the bigger question is whether all market sensitive news and data gets released early to those high-frequency traders who pay the fee. Even if it’s only micro seconds. In Europe, Greece got its latest installment of bailout monies, again, as long as it promises to stick with its reform program etc. Same old. As for the data, nothing view changing. German industrial production fell by 1 per cent in May, although this follows a 2 per cent increase the month prior. German trade data was also out and this showed imports rising 1.7 per cent and exports falling 2.4 per cent.

So, for our market today the SPI suggests Aussie stocks will be up around the 0.5 per cent mark. For the data, the key releases include NAB business survey at 1130 AEST alongside Chinese inflation data. For the US, there isn’t any major data, only small business optimism. Needless to say, US businesses are feeling more optimistic.

Have a great day…

Adam Carr is a leading market economist. Follow @AdamCarrEcon on Twitter.