The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR TUESDAY 29/06/21 (as at 7:15am AEST)

  • SPI200 (Sept) overnight futures down 15 pts to 7190
  • SP500 up 9.91 pts to 4290.61
  • NASDAQ Composite up 140.12 points to 14500.51
  • Dow Jones down 150.57 pts to 34283.27
  • FTSE100 down 63.10 pts to 7072.97
  • DAX30 down 53.79 pts to 15554.18
  • GOLD futures US session (Aug) up $1.0 to $1778.80 an ounce
  • COPPER futures US session (Comex July) down $0.0108 to $4.2797 a pound
  • OIL futures US Session (Nymex July) down $1.14 to $72.91 a barrel
  • CRB Index up 0.52 pts to 210.94
  • AUDUSD trading at 0.7567
  • EURUSD trading at 1.1927
  • GBPUSD trading at 1.3881
  • USDJPY trading at 110.6200
  • USD Index US Session (ICE Sep) up 0.044 to 91.888

US indexes were supported by tech again as traders have expectations for robust earnings with interest rates remaining low. The SP500 did an about face from a weak open to rally into the close and end at new all time highs thanks to tech gains. Traders pushed the DOW lower as they prepare for the end of quarter window dressing. Fears of a spike in covid-19 cases across Asia pressured cyclical sectors such as energy and financials which fell 3.33% and 0.81% respectively. Investors will be starting to look forward to the upcoming earnings session which is expected to see the year-over-year growth for SP500 companies top 60%. Traders will also be tentatively waiting for the key jobs data release this Friday for another snapshot of the US labour market and potential for inflationary pressure. As was expected, US banks raised their payouts as they bumped up dividends after a clean bill of health on stress tests…thanks largely to the Fed. Next, investors will be looking for news on share buybacks to support prices. The DOW closed down 0.44% while the broader SP500 ended up 0.23% and the Nasdaq closed up 0.98% for the session. In Europe, major Indexes ended the session lower led by declines in travel stocks on British travel ban concerns. Flights from the UK into Germany and Hong Kong may be or are being banned due to the highly contagious Delta variant of the coronavirus. Markets were also dragged lower by energy stocks as oil took a hit on the travel concerns while pandemic-resistant sectors, such as tech, did well.

The USD Index found some safe haven buying during the European session on the travel and virus concerns. Price pushed up through resistance at 91.900 but later moved back down below the level in US trade. The Dollar may continue to grind its way up on any further negative travel news out of Europe or the UK although we still see the potential of a break below the 91.800 zone leading to a push to the bottom of the range around 91.525. The EURUSD also flushed a key level with a push through support around 1.1917 but later moved back above the zone into the US close. The action remains choppy and lacking conviction in either direction. Will be watching for signs whether the flush was a trap of sellers before a move higher to 1.1950 and above, or the start of an expansionary phase lower. If the USD finds further safe haven bids, then expect to see more selling pressure into the Euro. The GBPUSD again held a lower high and continued to apply the pressure on buyers. We still expect to see a flush into the 1.3835 level to clear out some bulls although the recent action lower is lacking the conviction from sellers as we saw in the previous selloff from 1.4100. The AUDUSD, like the Euro, took a hit on travel concerns as the USD spiked. Price moved down through 0.7565 support and tested into a major support zone around 0.7550 before buyers lifted price back up. We will be watching to see if price can find further buying pressure to build a minor higher low and work its way up off the 0.7550 area for a squeeze on recent sellers. The USDJPY was quick to reject a spike higher into the 111.000 level and ended down near its lows for the session. Price remains choppy and there is a case for both bulls and bears. Expect to see some action on the JPY side of the currency pair with retail sales and employment data out today but we do not expect a clear direction yet for either bulls or bears before the USD decides to move.

SPOT GOLD continues to be stuck between the 1788 resistance level and support around 1772. The volatility has all but disappeared from the action as traders await a clearer trigger. Gold bulls are still awaiting for the inflation hedge to kick in and would love to see a break up through 1790 which would drag in buyers. For now, we see price remaining range bound being trapped by the lack of direction in the USD. Crude Oil took a hit on UK travel concerns and on anticipation for a possible increase in production ahead of a key OPEC+ meeting this week. Price did attempt a rally early with a push up through 74.20 before failing so we are now watching the 72.50 area to see if bulls remain convinced of higher levels and start to defend the zone and hence the longer term trend up. Copper was also unenthusiastic with a range bound session as buyer soaked up any spike lower into 4.2625 while sellers continued to press price down and cap rallies. For now, price may remain sideways until the USD makes a move. If price starts to break down again, then we are watching for move into 4.1750 support.

Cryptocurrencies mostly consolidated or edged higher with Bitcoin moving sideways while Ethereum found buyers to push prices higher through resistance around 2040. Bitcoin is currently trading at $34390.1 down 0.16% while Ethereum is at $2095.06 up 7.23% and Ripple is at $0.64473 up 0.63%.

The ASX200 had a very uneventful session to start the new week yesterday with the index ending around where it started. At the close the ASX200 was down 0.7points to 7307.3 with the IT and Gold sectors coming under pressure while Consumer Staples and Consumer Discretionary helped to offset the losses. Falling stocks outnumbered advancing ones by 882 to 514 and 405 ended unchanged.

The ASX200 is expected to open down 15 points after the SPI200 moved lower into the US close. Expecting to see more bearish pressure today from the open.

ECONOMIC DATA OUT TODAY (AEDT)

JPY Unemployment Rate 9:30am

JPY Retail Sales 9:50am

EUR German Prelim CPI All Day

GBP Mortgage Approvals and Net Lending to Individuals 6:30pm

USD FOMC Member Barkin Speaks 11pm

USD Consumer Confidence 12am

EUR German Buba President Weidmann Speaks 2am

SPI200 INTRADAY LEVELS TO WATCH