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OVERNIGHT MARKET SNAPSHOT FOR TUESDAY 2/03/21 (as at 8am AEDT)
- SPI200 (Mar) overnight futures up 60 pts to 6817
- SP500 up 87.74 pts to 3898.89
- NASDAQ Composite up 396.48 pts to 13588.83
- Dow Jones up 603.14 pts to 31,535.51
- FTSE100 up 105.10 pts to 6588.53
- DAX30 up 226.53 pts to 14012.82
- GOLD futures US session (Mar) down $7.70 to $1720.40 an ounce
- COPPER futures US session (Comex May) up $0.0120 to $4.1045 a pound
- OIL futures US Session (Nymex April) down $1.12 to $60.38 a barrel
- CRB Index down 1.06 pts to 189.37
- AUDUSD trading at 0.7772
- EURUSD trading at 1.2045
- GBPUSD trading at 1.3920
- USDJPY trading at 106.7900
- USD Index US Session (ICE Mar) up 0.165 to 91.047
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US indexes are off and racing again as they powered higher after stimulus news over the weekend. Bond markets were calmer although held steady below Fridays lows so bulls took this as a positive and loaded the boat with cheap shares. Data from the Institute for Supply Management (ISM) showed inflationary pressures are building in manufacturing as factories face higher raw material costs and labour shortages. As they have been struggling to deliver due to transportation challenges, the backlog will be cleared when the economy opens up more which will add to inflation pressures. Some expect that the pressure will ease once vaccinations take hold and stay at home workers (who have been driving demand for goods) get back to work. If that is the case then it will be offset by spending as many have accumulated excess savings through lockdowns which will flow back into the economy. All in all it is being reflected in Bond prices which opened lower but held in a tight range for the session. The DOW closed up 1.95% while the broader SP500 ended up 2.30% and the Nasdaq closed up 3.01% for the session. In Europe, major Indexes rallied as European bonds bounced back to take the heat off markets. Bulls were also supported by another massive US aid package and data that showed manufacturing activity picked up pace in the Eurozone. Shares have again proved resilient and the number one choice for yield although traders will be watching real yields closely as continued stimulus can not have ‘no’ repercussion.
The USD Index rallied up through 91.000 and held the gains through US trade. Although price pushed into previous highs, it was discounted by the market as traders followed on from a positive Asian session and loaded into shares. Traders will be watching the level to see how sellers react and we expect any further upside pressure cause some concern into bulls as it may be accompanied by a bond yield rally. The EURUSD continued to move lower but held up off major support around 1.2020. Traders will be watching the USD closely to see if prices continue up but we expect that the support zone may be tough to break without a pullback first to clear out some sellers. For now, the anchor to the move lower is at 1.0269. The GBPUSD also felt the pressure from the dollar rally as price pushed back down to Fridays lows around 1.3900. Expect to see some more selling pressure if price moves down below the level today and holds 1.3955. If the 1.3955 area breaks then expect a deeper correction higher and move up through 1.4000. The AUDUSD did find some buyers willing to step into the action on the back of the risk on sentiment into shares although price was weighed down by the USD rally. The Aussie still looks a little heavy so may see another push lower if the 0.7800 level holds. The USDJPY continued the march higher with minor higher lows holding as bulls soaked up any selling pressure. The move up is extended but the momentum is strong so if the 106.520 level holds then bulls will remain in charge.
SPOT GOLD rallied off lows to retest the 1760 area before falling in a hole as the USD started to rally. Buyers were trapped trying to pick the lows and were quick to exit the action. This is not a good short term sign for buyers and we continue to expect to see lower prices with a push to 1675 on the cards. Crude Oil took a hit as buyers locked in some gains on the dollar rally. Expect that price may need more of a complex correction to clear out some buyers before another leg up as the underlying theme of inflation and higher demand from economies transitioning out of the pandemic, provides support. Copper also felt the pressure of a rising USD and triggered some profit taking off highs after a stronger open in Asian trade. Like Oil, the longer term trend is still up and may need to see a deeper correction to clear out some buyers before building a base for another leg up. If the dollar continues to rally, then the pressure on price will cap bullish action.
Cryptocurrencies found some renewed buying interest as traders were again risk on. Bitcoin will need to consolidate current levels before dragging in more buyers to support the buying sentiment across cryptos. Bitcoin is currently trading at $48545.0 up 7.81% while Ethereum is at $1516.00 up 7.44% and Ripple is at $0.43431 up 4.22%.
The ASX200 reversed Fridays sentiment and made back a lot of the losses to start the new month and week on a positive note. The index ended the day up 116.3 points to 6789.6 with the IT, Telecom Services and Consumer Discretionary sectors leading the charge higher while Gold stocks were again under pressure. Falling stocks outnumbered advancing ones by 722 to 673 and 318 ended unchanged.
The ASX200 is expected to open up 60 points to continue the positive move from yesterday.
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ECONOMIC DATA OUT TODAY (AEDT)
AUD Building Approvals and Current Account 11:30am
AUD RBA Rate Statement and Cash Rate 2:30pm
EUR German Retail Sales 6pm
EUR German Unemployment Change 7:55pm
EUR CPI Flash Estimate 9pm
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SPI200 INTRADAY LEVELS TO WATCH
