The Morning Jumpstart Macro view

OVERNIGHT MARKET SNAPSHOT FOR THURSDAY 15/04/21 (as at 8:15am AEST)

  • SPI200 (Jun) overnight futures down 38 pts to 6955
  • SP500 down 16.93 pts to 4124.66
  • NASDAQ Composite down 138.26 pts to 13857.84
  • Dow Jones up 53.62 pts to 33730.89
  • FTSE100 up 49.09 pts to 6939.58
  • DAX30 down 25.21 pts to 15209.15
  • GOLD futures US session (June) flat to $1736.30 an ounce
  • COPPER futures US session (Comex May) up $0.0058 to $4.1123 a pound
  • OIL futures US Session (Nymex May) up $2.36 to $63.15 a barrel
  • CRB Index up 4.31 pts to 192.45
  • AUDUSD trading at 0.7726
  • EURUSD trading at 1.1982
  • GBPUSD trading at 1.3779
  • USDJPY trading at 108.9500
  • USD Index US Session (ICE Jun) down 0.202 to 91.642

US indexes reversed the previous sessions action with weakness in the Nasdaq weighing on the SP500 and the DOW ended higher. High flying growth stocks came under pressure while value stocks again took center stage. The first hint of what is to come with earnings was shown in JPMorgan and Goldman Sachs earnings which saw an outstanding increase in its profit for the first quarter. The data also showed a mixed picture for loans with indications that consumer credit demand is coming back to life but demand for bread-and-butter business loans is lacking as companies as cashed up from stimulus. Traders will be watching this metric closely in other bank earnings to gain a better picture of the sector as a whole. Although the earnings were stellar thanks to trading and investment revenue, they were expected by traders and now the question is…how do they grow from here. With corporates having a good cash position, many expect that to lead to further money flow into risk assets and higher stock prices. The DOW closed up 0.16% while the broader SP500 ended down 0.41% and the Nasdaq closed down 0.99% for the session. In Europe, major Indexes were supported by better than expected earnings while the DAX was weighed down after sources say that economic institutes will cut their joint 2021 growth forecast for Europe’s largest economy to 3.7% from 4.7% due to longer than expected lockdowns. The FTSE did better as it continues to find support by the pound and a better vaccine rollout.

The USD Index continued to slide lower with rallies being capped buy sellers. As bond yields fail to continue higher and data suggests that inflation will be kept in check, the USD will loose its appeal for the carry trade against other major currencies. We expect to see the long USD position continue to be attacked unless the US Bond market starts to get nervous again and inflation fears kick higher. The EURUSD gained ground and traded straight up into resistance around 1.1985 as expected. The trend up remains intact for now but we do expect to see a reaction from sellers to lock in some short term gains. If price holds the trend up then expect to see a clean break of the zone and then a pullback and retest of 1.1985 hold, leading to higher prices. The GBPUSD moved higher to hit a one week high as bulls are supported by Britains vaccine rollout and as price recovered from the previous sessions dip which was triggered by the resignation of the BOE’s chief economist. We are now watching for further buying pressure and bulls to lift price to test towards the 1.3830 area as long as 1.3750 holds. The AUDUSD saw some minor consolidation on the Asian session open before price smashed straight up through 0.7660 resistance. Bulls remained in charge and continued the ramp into the US close. Price is extended so may see some heat come out of the action but we expect that the longer term action will take price up to test the highs. The USDJPY continues to be weighed down by the weakness into the USD although price actually held up well overnight. Some YEN selling may be holding price up so we expect that this theme may continue today if 108.880 holds. If not, then a push down to test 108.355 is on the cards.

SPOT GOLD flushed below support before the USD fell, to target some stop losses below the 1740 area. Price was then supported by weakness into the USD but we may see another squeeze lower today if the 1732 level can not hold. Longer term bulls may have to be patient but expect that price will be supported by any continued weakness into the USD. Crude Oil did not have any problem pushing up through the 60.85 resistance area as bulls were firmly in charge. Price broke the level early and then spiked hard on the back of oil inventory data that came out more negative than expected. Price smashed up through 62.00 and is well extended so we do expect to see some heat come out of the rally and price to pullback to test 62.00 as support. Copper initially backed away from the 4.0400 level but was quick to turn and ramp back up and through the level to drag in more buyers. Price action was supported by the weaker USD and a note from Goldman Sachs that painted a robust outlook for copper miners, adding there is potential for re-rating stocks higher. The next key level standing in the way for bulls is around 4.1745.

Cryptocurrencies had a mixed night with Bitcoin backing away from highs while Ethereum pushing up into new highs. Ripple, EOS and Cardano were relatively range bound for the session. Bitcoin is currently trading at $62848.8 down 0.67% while Ethereum is at $2427.28 up 6.21% and Ripple is at $1.79628 up 2.24%.

The ASX200 moved up out of the recent range yesterday through the 7000 level and held the gains into the close. The index ended up 46.2 points to 7023.1 and within striking distance of new all time highs. The biggest gaining sector was Gold which was followed by IT and Metals and Mining. Rising stocks outnumbered declining ones by 738 to 587 and 408 ended unchanged. Asian trade was lifted by the Hang Seng while the Nikkei weighed as rising coronavirus cases raised doubts about Japan’s economic recovery with 100 days to go before Tokyo hosts the Olympics.

The ASX200 is expected to open down 32 points after the SPI200 spent all night on the back foot and working its way lower. Aussie employment data out today which may mute bulls on the open and bring in some volatility after yesterdays gains.

ECONOMIC DATA OUT TODAY (AEDT)

AUD Employment Change and Unemployment Rate 11:30am

EUR German Final CPI 4pm

USD Retail Sales Data and Unemployment Claims 10:30pm

USD Industrial Production 11:15pm

SPI200 INTRADAY LEVELS TO WATCH