SCOREBOARD: Old world calm

Following the carnage that markets in Asia saw yesterday, the response in the old world was much more positive. The major indices were very much mixed overnight and, sure, stocks in Greece were smashed with that index down 6.7 per cent. But then again the party who got the second highest number of votes apparently wants to place landmines next to Turkey. Try negotiating anything with people like that. While we're on it, and not surprisingly given the distribution of votes to extremists, the first attempt at forming a Greek coalition failed. Talks continue.

But – while the Greek index was down and the FTSE100 closed – in France, the CaC rose 1.7 per cent, and the German Dax was 0.1 per cent higher. Spain had the strongest session of the major economies, the IBEX up 2.7 per cent, probably because the government is pledging to bail-out one if its lenders. Even euro is stronger – up some 70 pips to 1.3052 having hit a low of 1.2955 yesterday morning. So nothing like the reaction that we saw in our own region. Part of the reason for that is because the new French socialist president only has limited scope to change things apparently. Greece stands as a real threat, but there is little fear that Hollande will shake things up too much. In any case, German factory orders surged in March, rising 2.2 per cent which was much better than the 0.5 per cent expectation, and follows an increase of 0.6 per cent in February (upgraded from a 0.3 per cent rise).

So over to Wall Street, the S&P just managed to finish up in the black (up 0.04 per cent to 1369) with financials, telcos and healthcare the key outperformers. On the flipside were industrials, tech stocks and energy. At the low, the index was down 0.4 per cent and then up 0.4 per cent at the high. What probably helped give the market a boost and throw it ever so gently into positive territory was another surge in consumer credit in March. American consumers were only expected to take on a mere $9 billion in debt in March but they ended up with an additional $21 billion (average growth is about $6.7 billion, which by the way is a new record – breaking the record or near record growth we saw previously in November, December and January). In any case, the Dow was down 0.2 per cent at the bell (13008), while the Nasdaq rose 0.05 per cent (2957). As for the SPI, and following the beating that the ASX200 took yesterday, futures rose 0.8 per cent (4322).

Having rallied aggressively in the previous session, US treasuries gave some of those gains away and yields rose slightly last night. From 1630 AEST, the 10-year yield is up 5 basis points to 1.87 per cent, the 5-year is up a basis point or so to 0.77 per cent, while the 2-year did little and sits at 0.25 per cent. In Europe, Spanish yields were up a touch to 5.76 per cent on the 10-year or just over 2 basis points higher, while Italian yields fell, the 10-year down just over 3 basis points to 5.4 per cent.

That excitement out of the way, commodities really didn't do a lot either. Gold was off smalls ($1638), copper rose about 1 per cent and then crude was mixed. WTI fell 0.6 per cent ($97.9), while Brent rose 0.2 per cent to $113.3. Other than that, the Australian dollar was about 40 pips higher from yesterday at 1630 and sits at 1.0198 currently. Sterling is about 50 pips higher at 1.6192 while yen did little and is at 79.90.

Not much else to talk about really. The Aussie data that we saw yesterday highlights to me why the RBA board made an error in panicking and cutting rates a further 50 basis points, and further demonstrates how it is that economics is not guiding policy at the moment. People who have been calling for rate cuts got their cuts. But in doing so they have misread and misinterpreted the economy – and yesterday's data highlight this.

Today then we get the Aussie trade balance at 1130 and of course tonight we get the budget. My gut feel is that a weak and unpopular government won't do much. They'll attack the Coalition's voter base probably and tinker here and there. Other than that I reckon they'll rely on strong growth and revenue forecasts – that's about it. Data globally is light otherwise. We see German industrial production and then some Fed presidents give speeches. Not much.

Adam Carr is a leading market economist. See Business Spectator's glossary for definitions of technical terms used in SCOREBOARD articles.

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