The Morning Jumpstart Macro view

OVERNIGHT MARKET SNAPSHOT FOR FRIDAY 26/03/21 (as at 8am AEDT)

  • SPI200 (Jun) overnight futures up 20 pts to 6774
  • SP500 up 20.38 pts to 3909.52
  • NASDAQ Composite up 15.79 pts to 12977.68
  • Dow Jones up 199.42 pts to 32,619.48
  • FTSE100 down 38.06 pts to 6674.83
  • DAX30 up 10.97 pts to 14621.36
  • GOLD futures US session (April) down $8.20 to $1725.00 an ounce
  • COPPER futures US session (Comex May) down $0.0680 to $3.9960 a pound
  • OIL futures US Session (Nymex April) down $2.80 to $58.38 a barrel
  • CRB Index down 3.56 pts to 184.35
  • AUDUSD trading at 0.7577
  • EURUSD trading at 1.1765
  • GBPUSD trading at 1.3732
  • USDJPY trading at 109.1800
  • USD Index US Session (ICE Mar) up 0.385 to 92.915

US indexes opened weaker thanks largely to a selloff in Europe but then proceeded to rally intraday into the close and end the session with gains. Bulls were supported by better than expected unemployment claims and GDP data showing the economy is expanding and on the verge of stronger growth. The negative correlation between the DOW and Nasdaq was again present as traders rotated from growth into so-called value stocks…again. End of quarter shenanigans and rebalancing of portfolios by institutional investors added to the choppy trade as recent shorts were covered. US Senate voted to extend the Paycheck Protection Program (PPP) to help small businesses that struggled during the pandemic which is seen as a positive for the economy and employment. The DOW closed up 0.62% while the broader SP500 ended up 0.52% and the Nasdaq closed up 0.12% for the session. In Europe, major Indexes were hit hard during the session on the back of the biggest increase in covid cases since Jan 9. Banks saw some selling as yields eased and went lower while a selloff in oil saw energy stocks reverse gains. Prices later fought back as the DAX made back the losses although the FTSE lagged the bounce back off the lows as the EU mulled the possibility of blocking vaccine shipments to countries with higher inoculation rates such as Britain.

The USD Index continued to push higher and pressure other currency crosses as the dollar was supported by positive economic numbers and expectations of a faster recovery. Bond yields also edged higher as the expectation for higher inflation continues to linger. The higher yields weighed on dollar bears as traders turn away from the Euro and Pound looking to the USD for yield as covid cases persist in Europe. The EURUSD came under pressure right from the European open as price heads down towards the 1.1620 zone. The level is a long way down but this would be a measured move off the highs around 1.2200 and clean out a lot of longer term bulls. Price is extended but momentum is with the bears for now. The GBPUSD was essentially range bound as lows around 1.3673 held and saw a short squeeze higher. The question is now whether the Pound can continue to push higher against the pressure of the dollar rally. Price is extended so may entice some sellers back into the action. The AUDUSD was a grind initially but bears did eventually push price lower into the 0.7560 zone which is previous lows from 3rd Feb. Buyers may want to defend the level if the USD finds some sellers and Indexes make a push to the highs. For now the action is being held down at 0.7610 so if the level holds then bears remain in control…if it breaks then we expect to see a squeeze higher. The USDJPY held up off the 108.350 area yesterday and proceeded to rally to the top end of the range around 109.260. We expect that there will again be some selling pressure to cap price as momentum up runs out of steam.

SPOT GOLD flushed both buyers and sellers in and out of the market in very choppy trade. With all the central bank speakers on and the US unemployment not long after, it was a good opportunity for algorithmic trading systems to put the squeeze on sellers and ramp price higher. Once they were done, price came racing back down at the start of the US session to close on its lows. The recent choppy action may be good for longer term bulls as it shows that sellers are starting to loose faith in lower prices so the coming days will be interesting. Crude Oil took another hit on the back of the European coronavirus issues and expectations for weaker demand than was originally factored into the price action. Sellers to the opportunity to put the squeeze back on buyers and push price down to potential support around 57.30. We will be watching to see if buyers can again support the level and engineer a rally. Copper continued to add to the move down as the USD rallied. The momentum is now with sellers as the ramp up the pressure and look for a bigger move lower. Watching to see if price will hold another lower high around the 4.0000 mark but expect that this will be dependent on the USD continuing higher.

Cryptocurrencies were weighed down overnight as buyers remained on the sidelines after the recent run lower. Bitcoin is currently trading at $52.301.3 down 3.25% while Ethereum is at $1607.22 down 0.73% and Ripple is at $0.51994 down 0.55%.

The ASX200 lacked conviction yesterday but the bulls managed to come out on top and end the index in the green. At the close the ASX200 was up 11.8 points thanks to the closing match, up 15 points out of negative territory. Most sectors were either up slightly or down slightly while IT ended down 1.08%. Falling stocks outnumbered advancing ones by 737 to 580 and 355 ended unchanged.

The ASX200 is expected to open up 20 points thanks to a late surge higher on the SPI200 into resistance.

ECONOMIC DATA OUT TODAY (AEDT)

JPY Tokyo CPI Data 10:30am

GBP Retail Sales 6pm

EUR German ifo Business Climate 8pm

EUR Euro Summit EU Economic Summit Day 2

USD Personal Income and Spending, Wholesale Inventories and Goods Trade Balance 11:30am

SPI200 INTRADAY LEVELS TO WATCH