SCOREBOARD: G20 fizzer

No one really expects much from the G20 meetings and that's just as well, as we didn't get a lot. As we already know, Germany went into the meeting asking other nations to contribute more to the IMF so they in turn could contribute more to Europe. Other nations scoffed and pointed out that Europe was rich enough to deal with its own problems. That naturally got a few headlines in our session yesterday and is being cited as the reason European equities fell last night – Dax down 0.2 per cent, CaC off 0.7 per cent and FTSE down 0.3 per cent. The euro was also off – 50 pips or so to 1.3393.

I'm not so sure though. I get the sense markets are just treading water, waiting for further direction, whichever way that goes. I guess there is also some concern that high oil prices could derail growth and that is a legitimate concern, but not at these levels. Crude was off anyway overnight with WTI and Brent down 1 per cent ($108.7 and $124 respectively). Much of that price move I suspect reflects US Treasury Secretary Timothy Geithner's comments on Friday that the US may tap the strategic petroleum reserve, plus just a generalised caution. Crude has had a decent run up over the last month after all, rising by about 9 to 11 per cent over that period. In any case, commodities elsewhere were mixed with gold down smalls ($1769) and silver and copper up smalls.

US stocks initially sold off and were down 0.8 per cent at the low. Nevertheless a bid soon developed after better-than-expected housing data showed pending home sales rose 2 per cent in January to be 10 per cent higher annually. December's fall of 3.5 per cent was revised up to a 1.9 per cent fall. Housing is still weak for sure, but most indicators suggest a modest recovery underway. So the S&P retraced earlier losses and is up smalls overall. At the close, the S&P was up 0.14 per cent (1368) – its highest level since mid-2008 – led higher by financials, technology and consumer stocks, while utilities and energy were the key dead-weights. The Dow for its part was down 1.44 points (12982), the Nasdaq was 0.08 per cent higher (2966) – its highest level since 2000 – while our own SPI was down 0.1 per cent (4266).

In the debt space, US treasuries pushed higher in what was a very unexciting session. So the 10-year yield is off four basis points (1.923 per cent), while the 5-year yield is down four basis points to 0.84 per cent and the 2-year is two basis points lower at 0.28 per cent. Aussie futures were up a few ticks on the 3s and the 10s (from 1630 AEDT) to be at 96.36 and 95.94 respectively.

Finally then for the price action, the Australian dollar wasn't doing much until we saw those housing figures out of the US. The unit then jumped about 60 pips or so from there to now sit at 1.0768. Sterling edged lower however, and sits at 1.5820 from 1.5861 at 1630 AEDT. That's it.

In other news, the German parliament approved the latest Greek bailout with a massive majority of 496-90. German Chancellor Angela Merkel said that while questions on whether Greece should remain in the euro have their justification, the risks of such moves are incalculable. That's the major stuff, though.

The calendar is reasonably light today in our region. There is literally nothing for Australia or NZ, while for the rest of the region we see South Korean trade and Japanese retail data. For tonight, it's worth keeping an eye on the European business climate indicator, German CPI for February and the US durable goods (January). The consensus view is that German inflation will rise 0.5 per cent (2.2 per cent year-on-year from 2.3 per cent), while durable goods will fall 1 per cent after a 3 per cent increase the month prior. Otherwise it's worth watching US consumer confidence (February) and the Richmond Fed manufacturing index (February).

Adam Carr is senior economist at ICAP Australia. See Business Spectator's glossary for definitions of technical terms used in SCOREBOARD articles.

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