The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR TUESDAY 22/06/21 (as at 7:15am AEST)

  • SPI200 (Sept) overnight futures up 89 pts to 7244
  • SP500 up 58.34 pts to 4224.79
  • NASDAQ Composite up 111.10 points to 14141.48
  • Dow Jones up 586.89 pts to 33876.97
  • FTSE100 up 44.82 pts to 7062.29
  • DAX30 up 155.20 pts to 15603.24
  • GOLD futures US session (Aug) up $14.50 to $1783.50 an ounce
  • COPPER futures US session (Comex July) up $0.0202 to $4.1772 a pound
  • OIL futures US Session (Nymex July) up $2.02 to $73.66 a barrel
  • CRB Index up 2.01 pts to 207.87
  • AUDUSD trading at 0.7537
  • EURUSD trading at 1.1918
  • GBPUSD trading at 1.3936
  • USDJPY trading at 110.3200
  • USD Index US Session (ICE Sep) down 0.354 to 91.855

US indexes bounced back hard to start the new trading week on the front foot. The move down Friday and subsequent move back up today looks like it had more to do with options expiry than the start of a new risk off move due to future rate hikes. It was again a story of growth versus value for traders as value stocks made a fight back overnight…but to be fair, it was a sea of green so all sectors did well. Fed officials Bullard and Kaplan spoke about the early debate over how the Federal Reserve could begin to withdraw some of its massive support for the economy. They mentioned that the the Fed has had to change its tune a few times in response to a changing macroeconomic landscape and stronger growth than originally expected. They also mentioned that the main concern is how to grapple with stronger inflation at a time when the labour market is weaker than expected but the discussions are to be had now to get on the front foot with rate rises down the track. Bond prices moved back down after seeing a minor safe haven bid Friday and in the Asian session yesterday. The DOW closed up 1.76% while the broader SP500 ended up 1.40% and the Nasdaq closed up 0.79% for the session. In Europe, major Indexes made back some of the losses from the previous session as bargain hunters come out to play. Bulls were also supported by comments from ECB president Lagarde that eurozone economic growth could ‘rebound quicker than expected as consumers begin spending again’ and also mentioned that accommodative policy will continue.

The USD Index moved lower as traders continue to tussle with inflation and rate rise comments from Fed officials. Prices moved down off the highs but it is yet to be seen whether the recent rally is a squeeze of the long term sellers or is more of a serious changing landscape to a more bullish tone. We feel that there is still a good argument for shorts and expect to see pressure again build on the downside as rate rises remain a long way off yet and the rally was more of some unwinding of a ‘crowded trade’. The EURUSD mirrored the USD move with a grind up off the lows being supported by comments from ECB’s Lagarde. Price stalled up around 1.1924 which is providing some minor resistance as bulls await the next move into the USD. We expect that price may flush lower to clear out some buyers before a deeper corrective move up through 1.1924. The GBPUSD held up well off support around 1.3799 as expected squeezed out sellers on a push higher. We feel that the move up has run out of steam so would expect to see some profit taking from buyers with price holding below 1.3945 and a pullback to build a higher low before another run up. If price does break straight up and through 1.3945 in the Asian session then we would expect an extension of the rally into 1.4000. The AUDUSD was happy with the risk on tone back into the share markets. Price held up nicely off the 0.7480 area and rallied through Asian and European sessions into the US close. Price may extend on the rally into the 0.7555 area today as stocks markets are expected to open well into the green. The USDJPY initially took a hit to squeeze out some buyers before ramping back up into the US close. The move up was attributed to an unwinding of safe haven Yen buying to offset the dollar selling. Price is back into a chop zone so we expect that both buying and selling will be capped today.

SPOT GOLD bounced back from the recent selloff to find some buyers on the dollar weakness. Price moved up off the 1760 lows but was capped around the 1785 area. We would expect to see some more bullish action today and a run on minor highs at 1795. Crude Oil managed to consolidate the gains above 71 in the Asian and European sessions before launching higher at the start of the US session. Bulls are well and truly focused on the growth narrative so we will be watching to see if price can hold the gains above previous highs around 72.80. Copper also moved up at the start of the US session as bulls came back out to play. Buyers found support from the falling USD but may still need another flush lower before resuming the longer term daily trend higher. We will be watching for a move into the 4.0200 zone before bulls will look to re-establish longer term bullish positions.

Cryptocurrencies poor recent performance continued overnight as prices were hit hard across the board. Bitcoin is currently trading at $31953.8 down 10.12% while Ethereum was also smacked down and is at $1896.22 down 15.88% and Ripple is at $0.63715 down 17.75%.

The ASX200 was hit hard right from the open yesterday as traders had the weekend to dwell on the US selloff and took some risk off the table. The Index ended the day down 133.6 points to 7235.3 with bulls never really able or willing to fight back during the session. The Financial sector took a beating down 3.42% with Utilities, Energy and Metals and Mining not far behind. Falling stocks outnumbered advancing ones by 1103 to 308 and 351 ended unchanged.

The ASX200 is expected to open up 90 points as the bulls were back out in the US to start the new week and lifted the SPI200 back to where it started Friday.

ECONOMIC DATA OUT TODAY (AEDT)

JPY BOJ CPI Data 3pm

GBP Public Sector Net Borrowing 4pm

EUR Consumer Confidence 12am

USD Existing Home Sales 12am

USD FOMC Member Daly Speaks 1am

USD Fed Chair Powell Testifies 4am

SPI200 INTRADAY LEVELS TO WATCH