It was another record breaking session for equities with the S&P 500, Nasdaq, Dax, CaC all given a boost by a combination of strong data and some more activity in the M&A space.
One of the stand outs was US house prices -- the boom accelerated with prices surging 1.2 per cent in March according to the S&P/Case-Shiller index -- that’s nearly double the expectation of a 0.7 per cent gain and a strong pick-up from the 0.8 per cent we saw the month prior. Annually, house price growth is double digit, 12.4 per cent for March. And the Fed prints money.
The other big surprise was durable goods orders. These were expected to fall something like 0.7 per cent in April according to economists, but instead they surged 0.8 per cent. To be fair, core orders (ex-volatile items) did soften in the month, falling by 0.4 per cent, which was more than the 0.2 per cent expectation. This is more a base effect than anything as these orders spiked by over 2 per cent in the month prior.
Bits and piece otherwise -- precious metal slump and the reports here are of unwinding safe-haven flows -- but then discrediting that, US Treasuries rallied.
Equities saw a solid bid in some cases -- especially on Wall Street with the Nasdaq (4237) closing 1.2 per cent higher. The S&P 500 also had a decent session, rising 0.6 per cent (1911) to an even newer record high, while the Dow was up 69 points to 16675 -- still just shy of its own record high. By sector, tech stocks, financials and utilities were the key outperformers, with telecommunications, basic materials and energy weighing heavy. In Europe, the Dax was 0.5 per cent higher, the CaC rose 0.1 per cent and the FTSE100 put on 0.4 per cent.
Forex markets saw the euro weaken slightly -- about 20pips to 1.3633 (15 at the low), with the British pound having a bigger downside move -- 53 pips to 1.36806. The Australian dollar was off about 30 pips at the low to 0.9233, before a brief spike in the early hours of this morning back to 0.9258 -- off smalls from yesterday at 4.30pm (AEST). The Japanese yen otherwise hovers at 101.99.
Rates eased yet again as US Treasuries continue to rally -- bizarre given the strengthening data and unwinding of tensions in Ukraine. The 10-year yield fell 3bp to 2.516 per cent, the 5-year is about 1bp lower at 1.527 per cent, while the 2-year is at 0.346 per cent. Aussie futures were up 1 ticks on the 3s to 97.19, while the 10s were up 2.5 ticks to 96.285.
Commodities saw some big moves overnight, especially in the precious metal space. Gold slumped $26.4 to $1265 as investor appetite for the safe-haven asset continues to diminish, while silver was down 1.8 per cent. In the crude space falls were more modest with both Brent ($110.1) and WTI ($104.2) down 0.2 per cent.
Elsewhere, we saw a couple of Fed manufacturing surveys -- the Richmond Fed manufacturing survey which was steady at 7 in May, and the Dallas Fed manufacturing survey which slipped to 8 in May from 11.7. Finally for the US data, consumers were slightly more optimistic in May, that index rising to 83 from 81.7 according to the conference board.
Markets today. The SPI suggests the market will be flat today, that index up only five points. In terms of the data, the key stuff for Australia includes construction work down at 11.30am (AEST), with the CBA/HIA housing affordability index out just before that at 11am (AEST).
Looking at data abroad, Chinese industrial profits comes out at 11.30am (AEST), while tonight we see German unemployment data, the eurozone business climate indicator, while for the US, all we see are mortgage applications.
Have a great day.