The Morning Jumpstart Macro view

OVERNIGHT MARKET SNAPSHOT FOR TUESDAY 4/05/21 (as at 7:15am AEST)

  • SPI200 (Jun) overnight futures up14 pts to 7018
  • SP500 up 11.49 pts to 4192.66
  • NASDAQ Composite down 67.56 pts to 13895.12
  • Dow Jones up 238.38 pts to 34113.23
  • FTSE100 closed
  • DAX30 up 100.56 pts to 15236.47
  • GOLD futures US session (June) up $25.40 to $1793.10 an ounce
  • COPPER futures US session (Comex July) up $0.0583 to $4.5263 a pound
  • OIL futures US Session (Nymex Jun) up $0.91 to $64.49 a barrel
  • CRB Index up 1.09 pts to 200.85
  • AUDUSD trading at 0.7760
  • EURUSD trading at 1.2063
  • GBPUSD trading at 1.3907
  • USDJPY trading at 109.0700
  • USD Index US Session (ICE Jun) down 0.330 to 90.940

US indexes started the new month and week on a positive note with value stocks in focus over growth. Optimism over economic reopening as people get out of the house and start to spend their pent up savings, saw traders lock in gains into the high flying tech and jump into cyclical stocks. Economic sensitive sectors such as consumer staples, energy, and materials outperformed sectors including tech and communication services. ISM Manufacturing data showed activity grew at a slower pace in April as supply chain bottlenecks constrained output although it also showed increasing rates of demand. US bond prices moved higher after Yellens comments on spending and inflation over the weekend which in turn saw the USD come under pressure to support commodity prices. The DOW closed up 0.70% while the broader SP500 ended up 0.27% and the Nasdaq closed down 0.48% for the session. In Europe, major Indexes were also supported by strong data from factory and retail sales. Optimism for the reopening was also stoked by the European Commission outlining plans to loosen COVID-19 restrictions on tourism and let foreign travelers from more countries enter the bloc to boost the stricken tourism industry as vaccinations gather pace and infections stabilize. Bond prices also bounced back strong from an earlier selloff to support prices.

The USD Index reversed a lot of its gains from Friday after an early flush higher in the Asian session. Price moved straight down as sellers dived back into the action. We expect that comments from Yellen saw traders re-establish some short positions once the market opened as the Fed continues to re-iterate lower rates for longer….don’t fight the trend or the Fed is the theme. It will be interesting to see if price can continue the move down in the short term to break below the 90.440 area as bond prices look set for a good move up. The EURUSD lifted, as the dollar fell, and did rally but with less conviction than would have been expected from the USD move although prices were weighed down by the move up into bonds. The EURO may need to squeeze out more buyers and test the 1.2000 area or lower before building for another leg up. With that said, if the USD continues lower, expect to see another push higher into the EURO. The GBPUSD rallied hard after an initial test and flush of the 1.3805 support area. Sellers were squeezed back out of the action ahead of the BOEs statement on QE Thursday. We expect to see more chop today and bulls capped into the 1.3935 zone. The AUDUSD moved up strong off the 0.7700 support area and we expect the move to extend up to 0.7780 today as local bulls play catchup. Longer term, we expect price to be contained between the 0.7700 support area and 0.7810 resistance. The USDJPY did fall over but not before price extended higher early in the Asian session. Price moved up to the 109.600 area before falling hard to retest into 108.970 which we expect to see break today for a squeeze on buyers.

SPOT GOLD ramped higher as bulls took control with US bond prices rallying. The move down in the USD also stoked bulls who earlier supported spikes into support around 1767. It will be interesting to see if buyers can keep the pressure on for a break up and through 1800 today or whether there is some minor profit taking on the cards. Expecting to see more support come in and Aussie gold miners benefit as US bond prices look supported in the near term. Crude Oil held a higher low as buyers stepped back into the action around 63.00 to support price. We will be watching to see if all the positive data overnight both in the US and Europe will provide further support to Oil and for price to hold above 64.04 lows today for another push up. Copper initially flushed through support before bulls ramped price back up to previous highs around 4.5310. The positive sentiment in Europe and the US for re-openings should continue to provide support into Copper so we will be watching for any pullback to be soaked up by new buyers.

Cryptocurrencies were again mixed with Ethereum adding to gains and extending up through the $3000 level while others lagged. Bitcoin is currently trading at $56929 up 0.47% while Ethereum is at $3337.43 up 12.27% and Ripple is at $1.55104 down 1.42%.

The ASX200 rallied from the open yesterday but it was not long until the bears stepped back into the action and pressed price back down to close up 3 points to 7028.8 giving up 40 points from the days highs. The index was lucky to end with gains and was only supported by a 1.42% rally in Financials and 1.21% in Telecom Services. IT, Energy and Resources were the biggest drag on the index along with most other sectors being not far behind. Falling stocks outnumbered advancing ones by 908 to 490 and 345 ended unchanged.

The ASX200 is expected to open up 10 points as the SPI200 managed to grind out some gains in a positive overnight session.

ECONOMIC DATA OUT TODAY (AEDT)

JPY Bank Holiday

AUD Trade Balance 11:30am

AUD RBA Rate Statement and Cash Rate 2:30pm

GBP Mortgage Approvals and Final Manufacturing PMI 6:30pm

USD Trade Balance 10:30pm

USD Factory Orders 12am

SPI200 INTRADAY LEVELS TO WATCH