The Morning Jumpstart Macro view

OVERNIGHT MARKET SNAPSHOT FOR FRIDAY 30/04/21 (as at 7:30am AEST)

  • SPI200 (Jun) overnight futures up 18 pts to 7059
  • SP500 up 28.29 pts to 4211.47
  • NASDAQ Composite up 31.52 pts to 14082.55
  • Dow Jones up 239.98 pts to 34060.36
  • FTSE100 down 2.19 pts to 6961.48
  • DAX30 down 137.98 pts to 15154.20
  • GOLD futures US session (June) down $1.90 to $1772.00 an ounce
  • COPPER futures US session (Comex July) down $0.0155 to $4.4820 a pound
  • OIL futures US Session (Nymex Jun) up $1.15 to $65.01 a barrel
  • CRB Index up 0.31 pts to 200.67
  • AUDUSD trading at 0.7767
  • EURUSD trading at 1.2123
  • GBPUSD trading at 1.3939
  • USDJPY trading at 108.9300
  • USD Index US Session (ICE Jun) up 0.042 to 90.635

US indexes played with traders emotions overnight but did manage to end in the green. Major Indexes opened strong being fueled by earnings but then sold down to give up gains before reversing straight back to where they started. Apple and Facebook both beat consensus on earnings but it seems that traders are happy to lock in some gains and take some risk off the table, with a lot already being factored into price, which we expect will bring in some volatility and potentially cap rallies. GDP data came in strong to show that economic growth accelerated in the first quarter and is on good footing while unemployment claims came in less that expected. GDP was supported by massive fiscal stimulus and free money mostly to lower income households that fueled consumer spending which is expected to further accelerate growth as businesses open up. Bonds were pressured lower in the Asian and European session before making back some of the losses after the US open. The DOW closed up 0.71% while the broader SP500 ended up 0.68% and the Nasdaq closed up 0.22% for the session. In Europe, major Indexes saw some profit taking even as banks shares continued to rally and hit 14 month highs. Prices on major Indexes were weighed down by a rise in Euro Zone bond yields.

In a speech to Congress Biden attacked trickle-down economics and said that they have never worked and only increased the divide between the haves and have nots. The theory, which asserts that tax breaks and other benefits for corporations and the wealthy will benefit everyone else, has been debated strongly since the 1980s and now with 50 years of data from 18 countries, there shows no benefit to unemployment or economic growth. Biden proposes tax hikes on the wealthy and a higher minimum wage and if this continues to gather momentum, we will see more profit taking into shares as these changes will weigh on growth.

The USD Index spent most of the Asian and European session grinding higher but to push back up to the breakout level and now resistance around 90.800. Price did react lower off the zone in US trade and looks set to continue lower being weighed down by stimulus with no support from the Fed. A rise in bond yields may bring in buyers to the dollar but we expect to see price hold below 90.800 for a new leg lower. The EURUSD saw some heat come out of the recent rally through 1.2100 with price retesting the zone. Buyers still look to be in charge and we expect to see the action higher continue with a break up through 1.2135. The GBPUSD broke up through the 1.3945 zone early before we saw some choppy action and a grind lower. The price action suggests that bulls are building and setting for another run higher so we expect to see the 1.3925 level flushed and then bulls to ramp up off a higher low. The AUDUSD worked its way back down off 0.7813 resistance early in ASX trade as the idea of ‘no interest rates’ on the horizon weighed on the action. Price pushed back to test rising support and held up above 0.7760 where we would expect to see some buyers step back into the action to support price. The USDJPY traded back up to the recent highs to flush them out on a move through 109.000. Price did react lower into the US close so we are watching this level closely for further selling pressure or for price to continue to consolidate just below the level before a rally higher.

SPOT GOLD continued to come under pressure as bears are desperate to test lower levels and squeeze out more buyers. Bulls are showing some resilience and reacted up off support around 1755. Price was weighed down by a US bond yield rally which we expect will be short lived so we are looking for Gold to consolidate highs above 1755 before another leg up over the longer term. Crude Oil had a big night to again spike higher and drag in more buyers and has its sights firmly set on new highs above 66.30 and potentially 68.00. For now bulls are in charge with the trend up holding as long as price holds above the 64.50 area. If price breaks the level, then we may see some back and fill as some heat comes out of the action. Copper initially rallied to pop its head into a resistance zone above 4.5315 before sellers dived in to lock away some gains and pressure price lower into the US close. Price remains in an uptrend as long at the 4.4215 zone holds.

Cryptocurrencies were mixed overnight with some following Bitcoins lead and moved lower while others hovered around highs like Ethereum. Bitcoin is currently trading at $53318.2 down 2.77% while Ethereum is at $2735.71 down 0.68% and Ripple is at $1.39069 up 1.78%.

The ASX200 had an early rally yesterday before fading into the close to end the day up 17.6 points to 7082.3. The Gold and IT sectors led the charge higher followed by Metals and Mining and Resources. Rising stocks outnumbered declining ones by 779 to 579 and 378 ended unchanged. We expect to see a muted session into the weekend as the overnight SPI200 price action points to some corrective action.

The ASX200 is expected to open down 15 points as the SPI200 sold off on the US open and could not recover.

ECONOMIC DATA OUT TODAY (AEDT)

JPY Tokyo CPI Data and Unemployment Rate 9:30am

CNY Manufacturing PMI 11am

AUD PPI 11:30am

CNY Caixin Manufacturing PMI 11:45am

EUR German Prelim GDP 6pm

EUR CPI Data 7pm

CAD GDP 10:30pm

USD Personal Income and Spending 10:30pm

USD Consumer Sentiment 12am

SPI200 INTRADAY LEVELS TO WATCH