Scoreboard: Wellness program

Wall Street was buoyed by corporate earnings and a surge of biotech M&A activity.

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Stronger-than-expected earnings and some action in the merger space gave stocks a boost overnight. On the earnings front companies such as Netflix, Harley Davidson and Comcast reported stronger results. Then most of the merger activity or proposed activity was in the healthcare space and stocks on both sides of the pond surged here. Valeant Pharmaceuticals has offered to merge with Allergen in a $45 billion deal while in Europe, AstraZeneca has apparently been approached for a takeover from Pfizer and there is talk of an asset swap deal between GlaxoSmithKline and Novartis.

On the data front, we saw US house prices rise another 0.6 per cent in February; the Richmond Fed Index then rose to 7 from -7, while existing home sales fell 0.2 per cent in March after a 0.4 per cent decline the month prior. It’s a fall, sure, but the thing is the result was actually better than expected - a 0.9 per cent fall was forecast. That flow probably helped sentiment as well, although none of the releases are major.

Equities pushed higher on Wall Street, on stronger volumes with the S&P500 up 0.4 per cent (1879), while the Dow was up 65 points (16514) and the Nasdaq was 0.97 per cent higher (4161). By sector, gains were driven by healthcare, consumer services and financials. Over in Europe, investors came back from Easter in a buying mood. The bid was strong and the Dax closed 2 per cent higher, the CaC was up 1.2 per cent and the FTSE100 was 0.9 per cent higher.  

Commodities had a mixed session, with some big falls in the crude space. Mainly that was on WTI, which was down 2.2 per cent ($102.13) -- the biggest fall in three months -- the sell-off perhaps sparked by expectations of rising stockpiles (forecasts published overnight). Brent was otherwise down 0.4 per cent ($109.49). Finally, in the metals space, gold fell $7.4 to $1280, silver was up 0.4 per cent and copper was 0.5 per cent higher.

Forex markets saw small moves generally. Overall, punters look to have ignored Joe Hockey’s unwise comments on the Australian dollar and took the unit a little higher to 0.9365. Where it goes from here will obviously depend on today’s inflation figures. The euro too was only up smalls, maybe 20 pips to 1.3805, while sterling rose 30 pips to 1.6824. Yen is at 102.6.

Rates initially pushed higher in the US, the 10-year hitting a high of 2.74 per cent and the 5-year at 1.75 per cent, perhaps pushing higher after weaker demand at a 2-year Treasury note auction. Treasuries went bid though and yields soon came down. At the close they were little changed - the 10-year maybe a basis point higher than at the open (2.71 per cent) and the 5-year 2 basis points higher at 1.73 per cent.  

Elsewhere, eurozone construction rose 0.1 per cent in February to be 6.7 per cent higher annually. Another investment bank, Barclay’s, confirmed it was exiting trading income commodity markets -- namely base metals and physical commodities.

In markets today, the SPI suggests it should be an okay session locally with stocks up 0.5 per cent. Otherwise the key release domestically will be the consumer price data at 11.30am AEST. Markets look for a 0.8 per cent rise on the headline number (3.2 per cent annually) and 0.7 per cent in the cores or 2.9 per cent annually. Shortly after that at 11.45am AEST, HSBC’s estimate of the Chinese PMI comes out. Other than that we see the European PMIs tonight at about 6.00pm AEST, then new home sales for the US. The RBNZ rates decision is due tomorrow morning at 7.00am AEST and the market expects a 25 basis point rate hike to 3 per cent.

Have a great day…

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