Not a bad night all things considered. Global equities managed to push higher eventually as tensions in Ukraine appeared to ease (notwithstanding the new sanctions push from the European Union and the United States) and economic data surprised to the upside, most notably an uptick in US pending home sales. Sentiment probably also got a boost after Pfizer confirmed it had approached AstraZeneca a second time about a takeover.
Now, while the balance of economic data out last night was positive, we’re only talking about lower tier releases, unfortunately. Pending home sales had a decent gain -- up 3.4 per cent in March, which was well above the 1 per cent expectation and after a 0.5 per cent fall the month prior. Not too long after we saw the Dallas Fed manufacturing survey surge to 11.7 in April from 4.9 the month prior. All good.
Equities in fact started off weaker in the US. It wasn’t looking good as tech stocks were smashed early on. At the low for instance the Nasdaq was down 1.9 per cent! At that point, the S&P500 was off 0.8 per cent, but the bid did develop. At around 0330 our time, US stocks turned. In the end the S&P500 rose 0.3 per cent (1869), the Dow was up 87 points (16,448) and the Nasdaq was flat (-0.03 per cent to 4074). Over in Europe it was a similar story -- the Dax closed 0.5 per cent higher, the CaC was up 0.4 per cent and the FTSE100 was 0.2 per cent higher.
Commodities were generally weaker -- about the only major commodity or push higher was WTI and then by only a bit, 0.3 per cent to $100.9. I’d put most of that down to a correction after some fairly sizeable losses last week (down about 4 per cent). Brent was otherwise down 1.2 per cent ($108.14) as tensions in Ukraine seemed to ease. In a sign that the US may finally be prepared to start negotiating properly, Russian troops have returned to their bases. Elsewhere, moves weren’t that big -- gold was down $4.5 to $1296, silver was 0.6 per cent lower and copper was down 0.5 per cent.
Forex markets saw the euro push a little higher, about 35 pips or so to 1.3852 after European Central Bank chief Mario Draghi indicated the bank wouldn’t resort to QE anytime soon. The British pound followed the euro and pushed higher for most of the session, though the unit gave much of those gains back as the US opened and ended about 30 pips higher at 1.6810. For our region, the yen did little, weakening a bit to 102.48. As for the Australian dollar, it also weakened overnight, falling about 35 pips from 1630 AEST to be at 0.9259 as I write.
Rates ended a little higher, with the yield on the 10-year US Treasury at 2.70 per cent, up about 3 bps from 1630 AEST yesterday. The 5-year yield, trading on a 5 bps range, ended at 1.74 per cent or 1 bps higher, while the 2-year is at 0.43 per cent (little changed).
Elsewhere there wasn’t much. Over in Europe, German import prices fell 0.6 per cent in March after a 0.1 per cent fall the month prior. Annually, prices are down 3.3 per cent. Then over in Italy, consumers are more confident, the index rising to 105.4 in April from 101.9.
Markets today should push higher following gains on Wall Street and Europe overnight. The SPI suggests gains in the order of 0.3 per cent. Other than that it’s going to be fairly quiet. There isn’t much in the way of domestic data -- or any data really -- for the region. Tonight we see European industrial confidence, while Germany puts out its April CPI figures. UK GDP for the March quarter is also due. Then over in the US the key data will include the S&P/Case-Shiller home price index and consumer confidence (from the conference board this time).
Have a great day…
Adam Carr is a leading market economist.
Follow @AdamCarrEcon on Twitter.