The Morning Jumpstart Macro view

OVERNIGHT MARKET SNAPSHOT FOR THURSDAY 22/04/21 (as at 8am AEST)

  • SPI200 (Jun) overnight futures up 37 pts to 7006
  • SP500 up 38.48 pts to 4173.42
  • NASDAQ Composite up 163.95 pts to 13950.22
  • Dow Jones up 316.01 pts to 34137.31
  • FTSE100 up 35.42 pts to 6895.29
  • DAX30 up 66.46 pts to 15195.97
  • GOLD futures US session (June) up $15.90 to $1794.30 an ounce
  • COPPER futures US session (Comex May) up $0.0737 to $4.2867 a pound
  • OIL futures US Session (Nymex Jun) down $1.32 to $61.35 a barrel
  • CRB Index down 0.12 pts to 193.66
  • AUDUSD trading at 0.7752
  • EURUSD trading at 1.2033
  • GBPUSD trading at 1.3929
  • USDJPY trading at 108.0700
  • USD Index US Session (ICE Jun) down 0.132 to 91.095

US indexes followed the Asian market lead and rallied from the open to make back some of the recent losses. The rally was broad based and across the board as traders went bargain hunting from the open. Traders bought up value and growth stocks evenly with 9 of the 11 sectors rallying…only communication (led by a fall in Netflix down 7.4%) and defensive utilities ended in the red. The VIX volatility Index slide back to where it started a few days ago suggesting more calm range bound action in coming sessions. US bond prices held their highs and fended off some earlier selling pressure which supported Gold for a run up. The DOW closed up 0.93% while the broader SP500 ended up 0.93% and the Nasdaq closed up 1.19% for the session. In Europe, major Indexes also bounced back from the recent risk off tone although not with as much enthusiasm as the US so we expect some catchup from bulls on the open later today. The rally was on the back of positive earnings and expectations for more to come. Bond prices also rallied to take pressure off the currency as traders await the ECBs policy statement out later tonight.

The recent selloff over the last few days highlights the concern over high prices. More and more investors are aware that earnings may provide some risk to the downside as companies find it hard to put a spin on a positive reason to justify a further appreciation in their stock prices. This opens the door to more shocks to the downside if investors are not convinced as they look to lock away some gains. For the short term, momentum remains higher and still the main area for yield.

The USD Index initially rallied into the start of the US session before being sold back down to end around slightly lower than the previous close. Price was triggered lower by Canada’s central bank signaled it could start an interest rate hike in 2022 and reduced the scope of its asset-buying program. Buying into the CAD pressured the dollar lower to clear out some late buyers and set the USD up for another push down. The EURUSD mirrored the USD move in reverse and made back some initially losses once the dollar fell. Price ended the session around the same levels as the previous close and also looks set for a move to test towards previous highs. We would like to see a flush of 1.2025 minor support area before price rallies up through 1.2038 for any buy entry setup. The GBPUSD initially spiked lower early in the European session but managed to bounce straight back once the USD moved lower. Price then consolidated the 1.3930 level and was range bound into the close. We see the spike lower as a flush of buyers before price starts another leg up to test back towards the 1.4000 area. If the action can hold a higher low above the 1.3888 level then expect buyers to get active. The AUDUSD bounced well off support and held 0.7705 through Asian and European trade before launching higher once the dollar fell and shares started to rallying in a risk on tone. Price consolidated at the highs of the session into the US close and looks set for another risk on move up today to extend on the gains. The USDJPY continues to be pressured into support as the USD falls and a safe haven bid into the YEN, from previous sessions, eases. Price held a lower high which may lead to another push down through support around 107.960 if a bid can not hold and clear out some of the minor lower high levels around 108.130 and 108.200.

SPOT GOLD rallied off 1777 into the US session open and managed to hold the gains into the close. Price continues to look bullish in the near term and set for a move above 1800 into a potential resistance zone if buyers can hold above the 1789 area today. Crude Oil was again pressured lower into potential support around 60.70. Price rejected the level in the European session only to move back into the zone after inventory data came out positive. We will be watching the zone for buyers to step in and support the level as share markets continue to go risk on. Copper had a good session to rally off lows and push up into previous highs around 4.2930. With the current price action looking bullish, we expect to see further buying pressure take price up to test the 4.3745 highs.

Cryptocurrencies were generally well contained and range bound accept for Ethereum which saw a bounce off support and rally in the US session to end with gains. Ethereum is now moving back up to all time highs but will need to reset before pushing up and through. Bitcoin is currently trading at $54944.7 down 3.59% while Ethereum is at $2398.73 up 2.52% and Ripple is at $1.34830 down 4.12%.

The ASX200 was hit hard from the open down to the 6900 level before staging a strong recovery to rally nearly 100 points off the lows into the close. What could have been a very bad day for bulls turned out to be just another ‘buy the dip’ opportunity as the index ended down 20.3 points to 6997.5. The IT and Energy sectors were the biggest drag on the action while Utilities and Consumer Discretionary ended with minor gains. Falling stocks outnumbered advancing ones by 894 to 467 and 379 ended unchanged.

The ASX200 is expected to open up 30 points as the SPI200 bounced back strong into the close of the day session and then continued that momentum higher into the European and US sessions.

ECONOMIC DATA OUT TODAY (AEDT)

AUD Business Confidence 11:30am

EUR Monetary Policy Statement and Refinancing Rate 9:45pm

EUR ECB Press Conference 10:30pm

USD Unemployment Claims 10:30pm

EUR Consumer Confidence 12am

USD Existing Home Sales 12am

SPI200 INTRADAY LEVELS TO WATCH