The Morning Jumpstart Macro view

OVERNIGHT MARKET SNAPSHOT FOR TUESDAY 20/04/21 (as at 8am AEST)

  • SPI200 (Jun) overnight futures down 32 pts to 7018
  • SP500 down 22.21 pts to 4163.26
  • NASDAQ Composite down 137.58 pts to 13914.77
  • Dow Jones down 123.04 pts to 34077.63
  • FTSE100 down 19.45 pts to 7000.08
  • DAX30 down 91.36 pts to 15368.39
  • GOLD futures US session (June) down $9.00 to $1771.20 an ounce
  • COPPER futures US session (Comex May) up $0.0710 to $4.2390 a pound
  • OIL futures US Session (Nymex May) up $0.25 to $63.38 a barrel
  • CRB Index up 0.77 pts to 193.98
  • AUDUSD trading at 0.7756
  • EURUSD trading at 1.2036
  • GBPUSD trading at 1.3984
  • USDJPY trading at 108.1600
  • USD Index US Session (ICE Jun) down 0.479 to 91.065

US indexes came under pressure right from the open and held the losses into the close. Traders seemed happy to take some risk off the table as they await more key earnings reports that will show them whether stocks deserve the current lofty valuations that have been factored into the prices. Some key tech earnings will be released this week and next that could weigh on the action and see further profit taking but our bet is that they will come in better than expected. They pullback is seen to many to be a healthy correction in a strong bull market as consumers still hold $2 trillion in savings in excess of pre-pandemic levels which will find its way into share prices. Tesla had a rough day as it took a hit thanks to its Bitcoin holdings and also as a Tesla car believed to be driving without anyone in the driver’s seat crashed into a tree on Saturday killing two occupants. The DOW closed down 0.36% while the broader SP500 ended down 0.53% and the Nasdaq closed down 0.98% for the session. In Europe, major Indexes also drifted lower after a strong end to the last week as traders locked away some gains in a quiet session on the data front. The run higher in the Euro and Pound also weighed on internationally focused stocks which in turn weighed on the overall market. Bulls also had to contend with a rise in Bond yields and bond prices pushing into new short term lows.

The USD Index was hit early in Asian trade and continued lower in the European session to slip to a six week low. Price pushed straight below the 91.500 level and then through support at 91.310. As price is extended we may see some choppy action although the trend down is well entrenched and traders continue to be weighed down by low bond yields and stimulus. The EURUSD initially flushed the 1.1951 zone before rallying hard up through resistance at 1.1990 as expected on the USD weakness. Bulls were also supported by the strength into European Bond yields which may continue higher. The Euro is extended in the short term but if price consolidates the gains, there is no reason that another surge higher could not play out. The next level up, if the Euro holds above 1.1990, is up around 1.2098. The GBPUSD ripped up through the 1.3838 resistance level after a minor bout of profit taking. The move up was strong and all one way action from bulls. Price action extended straight up and into the 1.4000 zone without taking a breath so we expect that there will be some profit taking now from buyers and a squeeze lower although this sill depend on the USD move in the short term. The AUDUSD also surged early in Asian trade on the USD weakness but faded off the highs as traders locked away some gains into shares and went risk off in European and US trade. Bulls will be hoping that the Aussie can hold above the 0.7750 lows and rally up to test highs around 0.7780 today. If not then we expect to see a further grind lower as bulls search for support. The USDJPY naturally took a hit as the USD sank and price pushed below the 108.600 lows and straight through support at 108.400. There will be a lot of longer term bulls that will be felling some heat if price holds below 108.400 so any consolidation below the zone will point to further selling pressure and a move lower eyeing 107.500.

SPOT GOLD initially moved higher along with the weakness in the USD but then turned lower to clean out some stops on a hint of buying into the dollar. With the weakness remaining into the USD we would expect to see further bullish action into gold and a push to the 1800 mark but 1768 will need to hold first. Crude Oil managed to hold up off the 62.60 support zone thanks to the USD and make a run back into recent highs around 63.70. Bulls will now be looking to see if Oil can hold a higher low above 62.60 for a sign that price will make a run for 66.00. Copper did not waste any time building a base and ramped straight up and through recent highs. Price did back off session highs into the US close but continues to be supported by the global reopening theme. Expect that buyers will soak up selling pressure around 4.2225 for another leg higher.

Cryptocurrencies managed to hold off the lows and fend off another selloff overnight. Buyers managed to defend another a push into the weekend ‘spike’ lows so bulls will be hoping that the levels will hold today. Bitcoin is currently trading at $56114.1 down 0.36% while Ethereum is at $2188.13 down 1.42% and Ripple is at $1.35985 down 1.38%.

The ASX200 saw an uneventful session yesterday with price initially pushing higher from the open only to come back down into the close to end up only 2.1 points to 7065.6. With ASX traders having a history of being very tentative on the upside, buyers may be running out of puff and preferring caution to aggression up towards all time highs. The Gold sector was again the best performer while Metals and Mining and Materials also ended in the green and Energy was again the biggest drag on the action. Falling stocks outnumbered advancing ones by 767 to 615 and 375 ended unchanged.

The ASX200 is expected to open down 30 points as the SPI200 added to the days sessions losses with a move into support.

ECONOMIC DATA OUT TODAY (AEDT)

AUD Monetary Policy Meeting Minutes 11:30am

EUR German PPI 4pm

GBP Average Earnings Index, Claimant Count Change and Unemployment Rate 4pm

SPI200 INTRADAY LEVELS TO WATCH