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OVERNIGHT MARKET SNAPSHOT FOR FRIDAY 5/03/21 (as at 8am AEDT)
- SPI200 (Mar) overnight futures down 17 pts to 6736
- SP500 down 51.14 pts to 3768.58
- NASDAQ Composite down 274.28 pts to 12723.47
- Dow Jones down 345.95 pts to 30,924.14
- FTSE100 down 24.59 pts to 6650.88
- DAX30 down 23.69 pts to 14056.34
- GOLD futures US session (April) down $19.40 to $1695.50 an ounce
- COPPER futures US session (Comex May) down $0.2000 to $3.9420 a pound
- OIL futures US Session (Nymex April) up $2.92 to $64.20 a barrel
- CRB Index up 0.78 pts to 190.75
- AUDUSD trading at 0.7722
- EURUSD trading at 1.1971
- GBPUSD trading at 1.3894
- USDJPY trading at 107.9200
- USD Index US Session (ICE Mar) up 0.700 to 91.642
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US indexes came under fire to get pummelled into the close. It seems that traders were not happy with Fed Powells speech and see him having problems with keeping inflation in check and interest rates low if the government fiscal stimulus taps are left wide open. Bond yields continued to rally which will in turn put pressure on funds who are highly leveraged long bonds and will need to take some risk off the table and sell to further pressure prices lower. Powell said that the recovery in the labour market will take some time and expects inflation to remain in check. He may be underestimating the state of the share market and traders willingness to lock in gains on any reaction lower. The Nasdaq is now well and truly under pressure and on the verge of unraveling the long term rally. If this is the case then expect to see a flow on affect into the SP500 and DOW. The coming days and weeks will be important to see if prices are again supported by a ‘Buy The Dip’ mentality…but previously they did not have the concerns of rising real yields to contend with. With vaccinations increasing and the improving conditions, families are sitting on an estimated $1.5 trillion in extra savings they may be eager to spend once it is safe which will only stoke the inflationary flames some more. The DOW closed down 1.11% while the broader SP500 ended down 1.34% and the Nasdaq closed down 2.11% for the session. In Europe, major Indexes edged lower for the session but will see a rough open for the last trading session of the week as they play catchup to the US. Prices edged lower on rising yields concerns but the acceleration lower did not begin until after European indexes were closed. Traders will not want to dive into to support prices until the US employment data comes out late in the session tonight.
The USD Index rallied hard once the market was focused in on Powells speech as there was no mention of increasing the Feds monthly bond buying to fend off the yield rally and contain long dated bond prices. This left bulls in charge and it triggered a short squeeze to push the dollar higher with buyers holding the gains into the close. Expect to see further pressure into the dollar in the Asian session as traders play catchup and adjust positions. The EURUSD saw a wave of selling once the USD spiked higher. Price pushed straight down through the 1.2000 lows to squeeze out any remaining buyers. Expect that the lows from Mid-Feb around 1.1950 will be the next stop. If buyers are not happy with the dollar rally, then expect the level to be broken. For now, the move down is extended but there remains a lot of long term fuel tied up in the action that is yet to exit and sell back into the market. The GBPUSD flushed resistance around 1.4000 before the rot set in and price moved lower. Price action is looking a bit better that the Euro and has support around 1.3850 that will see some interest from buyers. The AUDUSD has now held a key lower high that threatens to unwind the bulls good work and send prices lower. The long term trend up from the March 2020 lows is now broken so if shares markets come under increased pressure, the AUDUSD risk trade will take a hit and price move lower. Key to watch again will be the USD and US bond prices. The USDJPY rocketed higher once the USD made its move up. Price has been supported for a while and remains extended. Expect that the pressure up will continue today as the USD consolidates the gains until the employment data release late in the European session.
SPOT GOLD bulls are on their knees at the moment with the likelihood that 1670 lows will be tested soon. The move up in the dollar continues to pressure the precious metal and we do not see that falling anytime soon…but potentially accelerating up. Gold is being anchored down around 1722 so until this level is broken, relief is not in sight for bulls. Crude Oil prices rallied as news filtered through the market that OPEC decided to extend output cuts into April when they will re-assess the action. They said that they still see the demand recovery as fragile and need to support prices further to stave off a major correction after the recent rally. The move up into resistance is extended and we expect to see the volatility increase and traders lock in some gains…but remember that OPEC always has the reins and can increase production cuts in the even of a major selloff. Copper prices were already under fire before the USD melt-up. Prices broke down below support and then triggered a stop loss run lower. Bulls tried to provide support before the weight of the USD pressured prices back down. Expect that the move will trigger some more selling into the commodity as longer term holders are forced to re-assess their positions.
Cryptocurrencies came under pressure as the negative sentiment spilled over to the crypto enthusiasts. Bitcoin saw an orderly selloff which is a good sign for holders although bulls are not out of the woods yet as price searches for support. Bitcoin is currently trading at $48026.0 down 4.95% while Ethereum is at $1525.72 down 3.31% and Ripple survived the selling pressure and is at $0.46839 up 4.83%.
The ASX200 had a rough day yesterday with price heading lower from the open until the final 40 mins when the index ramped higher to minimise the damage….seems like someone didn’t want prices lower. The Index closed the session down 57.3 points to 6760.7 around 50 points off the lows at 3:20pm. The Gold sector felt the brunt of sellers while Metals and Mining and Materials were not far behind. Falling stocks outnumbered advancing ones by 1044 to 336 and 325 ended unchanged.
The ASX200 is expected to open down 20 points as the SPI200 was supported off previous lows. Expect that the pressure lower will increase as traders assess the action in the US and hold off on any bargain hunting.
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ECONOMIC DATA OUT TODAY (AEDT)
EUR German Factory Orders 6pm
EUR French Trade Balance 6:45pm
USD Non-Far Employment Change, Unemployment Rate and Average Hourly Earnings 12:30am
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SPI200 INTRADAY LEVELS TO WATCH
