A mixed session for the market overall as tech stocks continue to be hammered with companies like AOL and Yahoo taking the index lower. Outside that stocks generally rose, boosted by upbeat comments from the Fed Chair, Janet Yellen, who noted in comments to the Congressional Joint Economic Committee that “many recent indicators suggest that a rebound in spending and production is already under way". However she was less enthusiastic about the housing market, noting that recent indicators showed a flattening out could prove to be permanent.
At the same time Yellen assured everyone that rates would remain low for a very long time yet. She wisely dropped her previous comment that rates would rise in six months, noting when asked when rates would rise, “I’m afraid I can’t give you a timetable”.
Otherwise, markets were buoyed by comments from Russian President Vladimir Putin. He urged separatists in Eastern Ukraine to delay a vote on independence and said, in a significant shift, that the Ukrainian election to be held on May 25 was a step in the right direction -- but talks should be held with separatists first. Finally, Putin said that Russian troops had pulled back from the Ukrainian border.
Equities generally pushed higher with the exception of technology stocks and perhaps consumer services. Otherwise the mood on Wall Street was more upbeat. Most other sectors pushed higher, with gains led by financials, utilities and consumer goods. The major indexes then rose 117 points on the Dow (165,187) and 0.6 per cent on the S&P500 (1878), while in Europe the Dax was 0.6 per cent higher and the CaC rose 0.4 per cent, although the FTSE100 fell slightly (-0.03 per cent).
Forex markets saw most of the majors trade on comparatively narrow ranges. The Australian dollar bounced around on a 25 pip range to end slightly weaker at 0.9331. It was a similar range for the euro, which was little changed from 4.30 (AEST) at 1.3911. The British pound had one-way traffic downwards, losing just under 30 pips to 1.6953. The yen otherwise weakened against the greenback, up to 101.9 from 101.5.
Commodities were mixed again -- metals finding themselves offered, with gold down $18.5 to $1290 on the Fed’s more upbeat comments on the economy and as Russian troops pulled back from Ukraine. Silver fell 1.5 per cent and copper was down 0.8 per cent. As for crude, Brent and WTI both rallied as the EIA reported that crude stocks unexpectedly fell in the last week. WTI was up 1.3 per cent to $100.7 and Brent was 1.04 per cent higher to $108.1.
Rates traded on a relatively narrow range again, yields moving higher initially with the 10-year Treasury note hitting a high of 2.616 per cent. At the session’s end yields had largely retraced -- the 10-year was little changed at 2.589 per cent; the 5-year, in turn, initially rose 3 bps to a high of 1.698 per cent before a modest bid developed and yields fell. At the close, the 5-year yield was down a couple of bps to 1.649 per cent. The 2-year then sits at 0.406 per cent while Aussie futures were flat on the 3s (97.15) and the 10s (96.175).
Elsewhere, non-farm productivity for the US fell by 1.7 per cent for the March quarter, following a 2.3 per cent rise in the December quarter. Unit labour costs rose by 4.2 per cent for the March quarter, following a fall of 0.4 per cent in the prior quarter. Over in Europe, German factory orders then fell 2.8 per cent in March, following a 0.9 per cent gain the month prior.
Markets today -- the SPI suggests our stocks will follow US and European markets with a 0.8 per cent gain. Data-wise, we see labour market numbers out for Australia at 11.30am (AEST). The market is forecasting a gain of just under 9000 in April, following a gain of 18,000 the month prior. Unemployment is then forecast to rise to 5.9 per cent from 5.8 per cent. Chinese trade data is also scheduled to come out at some stage today. That’s the key data for the region.
Elsewhere abroad, German industrial production is out at 4.00pm (AEST), while tonight we see the Bank of England's rates decision -- no changes expected, although talk is building that the bank may signal a rate hike sooner than expected. Soon after that decision is out the European Central Bank rates decision also comes. Again, no changes expected. Finally, for the US we see jobless claims and a few Fed speakers -- Bullard, Tarullo and Evans.