Scoreboard: Stocks stalemate

US markets are still in hibernation on cold weather and soft data, while the local market is tipped to start the week flat.

US markets ended a little weaker on Friday night and there wasn’t much action elsewhere. Markets are still in hibernation at the moment given bad weather and a run of soft data. Existing home sales were the latest on Friday and they were pretty bad – down 5.1 per cent in January, after a 0.8 per cent rise the month prior.

Combined with the view that US stocks are already expensive, there’s no reason to be bullish at this point. However, no one is really selling either, with stocks doing little over the last week.

Global equities were mixed either side of the Atlantic, with Wall Street underperforming as the S&P500 fell 0.2 per cent (1836 points), the Dow lost nearly 30 points (16103) and the Nasdaq declined 0.1 per cent (4263). Energy and telecommunications were the key underperformers for the session, with the former hit by a 0.5 per cent fall on WTI crude ($US102.2). Over in Europe, equities had a better session driven by stock-specific factors, the Dax up 0.4 per cent, the CaC 0.6 per cent higher and the FTSE100 adding 0.4 per cent. The SPI suggests Aussie stocks will open flat today.   

Rates generally saw some buying action on the US Treasury front – the 10-year yield was down just over 2 bps to 2.73 per cent. Meanwhile, the 5-year yield is at 1.54 per cent and the 2-year at 0.32 per cent. Australian futures rose about four to four-and-a-half ticks a piece, with the 10s at 95.885 and the 3s at 96.99.

Forex markets were sedate. The Australian dollar is at 0.8976, which is about 15 pips lower than Friday afternoon (1630 AEDT). The euro went the other way, gaining about 20 pips to be at 1.3733. Otherwise, the British pound was 20 pips lower at 1.6623 and yen was little changed at 102.48.   

Commodities didn’t share in the equity bid, although falls were generally modest. In the crude space, I already mentioned the 0.5 per cent fall in WTI. Brent, for its part, was also down, about 0.6 per cent to $US109.85, the catalyst here apparently lower heating oil demand than punters thought would be the case. Gold then rose $US6.70 to $US1323, while silver and copper were up 0.5 per cent.

Elsewhere, UK public sector net borrowing was £6.4 billion in January, while retail spending fell 1.5 per cent in that month after a 2.5 per cent increase the month prior. Then we saw little from the G20 finance ministers meeting held over the weekend. There is talk of boosting global GDP by 2 per cent over the next five years, although the truth is that’s a fairly meaningless statement.  

In markets this week, there’s not much for the Australian market in regard to macro data, but what is out is critical. We get construction data on Wednesday at 1130 AEDT, followed up by private capital expenditure on Thursday. Remember it was nearly two years ago that ministers of the crown, and even our own central bank, put the call out that the mining boom was over. That proved to be am embarrassment for all concerned, although of course the boom will end at some point. Data so far suggests that point is a couple of years away, although if the RBA, some ministers and most economists (all members of the 'Cult of Doom') have their way, they will spend all that time in hysterics over the end of the mining boom – just like they have these last two years.  

The data is volatile though and investors need to keep an important asymmetry in mind. When it dips, it's proof the end of the world is nigh, when it rises – the data is rubbish and quite obviously the mining boom ended two years ago! The only other data of importance for Australia are the preliminary balance of payments data on Tuesday and credit figures, which come out on Friday at 1130 AEDT.

Looking abroad, the data kicks off with Chinese property price today at 1230 AEDT. While tonight we see the German IFO survey, the final estimate of eurozone inflation, more house price data from the UK and some lower tier activity indexes in the US – the Chicago National Activity index and the Dallas Fed manufacturing index.

For the rest of the week the more important dataflow includes US house prices on Tuesday night, new home sales on Wednesday, durable goods Thursday night and another US fourth quarter GDP estimate. The consensus is that GDP will be revised down to 2.9 per cent from 3.3 per cent. Germany and the UK also put out the detailed fourth quarter GDP figures during the week.

Have a great day…

Adam Carr is a leading market economist.

Follow @AdamCarrEcon on Twitter.