It doesn’t look like there’s too much going on in the market at the moment. The absence of any major economic news or data flow didn’t help and I suspect investors are also waiting to hear US Federal Reserve Chair Janet Yellen give her monetary policy report to Congress tonight. While data was light, it was generally positive – investor sentiment in Europe rose to 13.3 in February, from 11.9.
Global equity markets weren’t too different from zero overnight. Wall Street is mixed as I write with the S&P500 up 0.1 per cent (1798) and the Dow off 13 points (15,780), although the Nasdaq is up 0.4 per cent (4145). By sector, healthcare, tech and utilities outperformed, while industrial and energy stocks were the key underperformers. In Europe, the Dax was 0.1 per cent lower, the CaC was up almost 0.2 per cent, while the FTSE100 was 0.3 per cent higher.
Forex moves were generally contained. The Australian dollar hovers around 0.8944, which is little changed from yesterday afternoon. There was only a little more action for the euro, which is up 20 pips to 1.3642, while the British pound is unchanged at 1.6404. Finally, the yen is at 102.22, down from 102.4.
Commodities were mixed: gold was up nearly $12 to $1275 as Chinese buyers returned from lunar new year holidays. Silver was up 0.7 per cent and copper was down 0.5 per cent. Crude was mixed, with Brent down 0.7 per cent ($108.7) and WTI up 0.2 per cent to $100.07.
Rates were quiet with the yield on the US 10-year up less than 1 bps to 2.686 per cent. The 5-year is at 1.48 per cent and the 2-year at 0.315 per cent.
In markets today, The SPI points to flat outcome locally. In terms of the data, we get a run at 1130 AEDT which includes home loans, National Australia Bank’s business survey and the Australian Bureau of Statistics’ house price series.
On the global front, Chinese trade data is due sometime over the next 24 hours, while for the United States the only data releases out are minor. Stuff like the NFIB Small Business Optimism Index, and wholesale inventories. The focus will probably be on Yellen’s report on monetary policy to the House. I suspect she will give a cautiously upbeat statement, perhaps noting some mixed data out of the labour market. Otherwise I don’t think she will depart too much from recent Fed statements. About the only thing I think she will emphasise is the still extremely accommodative stance of policy and the fact that interest rates are going to move for some time. The Fed’s Charles Plosser also gives a speech on the economic outlook. In contrast to Yellen, Plosser is more hawkish and has stated he would like QE to wind up at a faster pace.
Have a great day…
Adam Carr is a leading market economist.
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