The Morning Jumpstart Macro view

OVERNIGHT MARKET SNAPSHOT FOR MONDAY 3/05/21

  • SPI200 (Jun) overnight futures down 7 pts to 6995
  • SP500 down 30.30 pts to 4181.17
  • NASDAQ Composite down 119.87 pts to 13962.68
  • Dow Jones down 185.51 pts to 33874.85
  • FTSE100 up 8.33 pts to 6969.81
  • DAX30 down 18.29 pts to 15135.91
  • GOLD futures US session (June) up $0.50 to $1768.80 an ounce
  • COPPER futures US session (Comex July) down $0.0300 to $4.4565 a pound
  • OIL futures US Session (Nymex Jun) down $1.43 to $63.58 a barrel
  • CRB Index down 0.91 pts to 199.76
  • AUDUSD trading at 0.7716
  • EURUSD trading at 1.2020
  • GBPUSD trading at 1.3822
  • USDJPY trading at 109.3100
  • USD Index US Session (ICE Jun) up 0.694 to 91.287

US indexes ended the week on a negative note as traders took stock at the end of the month. Prices backed off from previous session highs right from the open on concern that valuations are too high and economic recovery and fiscal stimulus may already be priced in. Traders may again be turning to value stocks that have been neglected as just over half of the SP500 companies have reported and 87% have beaten expectations so far. Traders were again focused on inflation as data showed personal spending rose along with personal income thanks largely to stimulus. The Fed Reserve continues to provide support while Biden has a huge Stimulus (inflationary) plan in the pipelines which saw some USD buying from the open while bond yields edged lower. Yellen, over the weekend, knocked back suggestions for increasing inflation over Bidens infrastructure spending plans saying that they will be phased in over a decade. We may expect the USD to give back some of its gains today if it was truly an inflation rally not just end of month re-balancing of shorts. The DOW closed down 0.54% while the broader SP500 ended down 0.72% and the Nasdaq closed down 0.85% for the session. In Europe, major Indexes were also capped going into the weekend after weaker than expected GDP data although sentiment continues to be positive as vaccination programs accelerate and pandemic curbs are lifted. Banks were pressured as European Bond yields dipped and bonds rallied to make back some of the previous losses.

The USD Index rallied right from the open of the European session and continued up after data out in the US hinted at stronger inflation. Bond prices did not show the same concerns for inflation and may have been bid due to end of month re-balancing. The dollar found some early buying on the back of Euro selling pressure which took price up and through the previous lower high at 91.120 and into a resistance zone around 91.410. We expect to see some movement lower on the open after Yellen comments muted inflation concerns although it may be a contained week ahead of non-farm payrolls on Friday. The EURUSD fell early in the European session after weaker than expected eurozone data showing that traders had got overly positive on the currency and were forced to re-assess long positions. Longer term we expect that the Euro will be supported and find a bid as economies open up. The next level of support is around 1.1995 so we may see some buyers step in to provide some support at the zone. If not then a deeper corrective move lower is on the cards before bulls get active. The GBPUSD also took a hit and buyers stayed out of the action as USD short covering triggered selling pressure into the Pound. Traders were also happy to lock in some gains ahead of the Bank of England’s policy meeting this week. With the BOE expected to leave QE in place, we would expect any serious selling to be contained with price currently holding above support around 1.3805. If price breaks the support zone then expect an extended move down to the bottom end of the range around 1.3670 in coming sessions. The AUDUSD was triggered lower after the open of the US session as indexes went risk off and the USD rallied. Price was hit hard down into support around 0.7700. Many bulls will be watching the level today and for evidence that the USD will see a squeeze lower to support a bounce off 0.7700 in the Aussie. The USDJPY did consolidate below the 109.000 area before bulls kicked into action to spike price higher. Watching now to see if sellers are happy to step back in to cap any further buying pressure as price is extended around current levels at 109.300.

SPOT GOLD spent the European and US sessions chopping around support with any dip into the 1767 area being rejected. Even as the USD rallied, buyers were happy to soak up any selling into the precious metal so we will be watching to see if the same sentiment can continue today. Bulls will be watching the Bond price after Yellens ‘soothing’ comments towards inflation over the weekend. Any further recovery in Bond yields ahead of employment data Friday will see Gold pressured lower. Crude Oil took a hit on the dollar rally to push down below the 64.50 area as buyers were quick to lock in gains. Pressure on demand from Indias covid issues continues to weigh on the Oil price in the near term so we expect that the move lower may continue potentially down to 62.25 although any fall in the USD will limit the selling pressure. Copper was better contained under the weight of the Dollar rally as price held up above support levels around 4.4475. We expect that there will be further contraction off the highs and minor lower highs to hold in the near term if the 4.4475 level breaks.

Cryptocurrencies were stronger Friday and over the weekend as Ethereum led the way higher and continued its bullish charge. Other Pairs such as Ripple, EOS and Bitcoin were less enthusiastic but did edge up. Bitcoin is currently trading at $56708.5 down 1.27% while Ethereum is at $2977.68 up 1.95% and Ripple is at $1.57885 down 2.52%.

The ASX200 opened weaker as expected Friday but just kept going lower into the close. Bears kept the pressure on to give back most of the gains from the previous three sessions as the index ended the week on a low note down 56.5 points to 7025.8. We may have seen some end of month re-balancing up at the highs as most sectors ended in the red with Gold and Energy hit hardest. Falling stocks outnumbered advancing ones by 773 to 582 and 374 ended unchanged.

The ASX200 is expected to open down 10 points and target a flush of the 7000 level. The SPI200 held above support in a comforting move for bulls but buyers still have some work to do before the ASX200 is free to test into new all time highs.

ECONOMIC DATA OUT TODAY (AEDT)

JPY Bank Holiday

CNY Bank Holiday

AUD ANZ Job Adverts 11:30am

EUR German Final Manufacturing PMI 5:55pm

EUR Final Manufacturing PMI 6pm

GBP Bank Holiday

USD ISM Manufacturing PMI 12am

USD Fed Chair Powell Speaks 4:20am

SPI200 INTRADAY LEVELS TO WATCH