The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR FRIDAY 14/05/21 (as at 7:15am AEST)

  • SPI200 (Jun) overnight futures down 28 pts to 6993
  • SP500 up 49.46 pts to 4112.50
  • NASDAQ Composite up 93.31 pts to 13124.99
  • Dow Jones up 433.79 pts to 34021.45
  • FTSE100 down 41.30 pts to 6963.33
  • DAX30 up 49.46 pts to 15199.68
  • GOLD futures US session (June) up $4.00 to $1826.80 an ounce
  • COPPER futures US session (Comex July) down $0.0562 to $4.6798 a pound
  • OIL futures US Session (Nymex Jun) down $2.26 to $63.82 a barrel
  • CRB Index down 5.01 pts to 202.95
  • AUDUSD trading at 0.7729
  • EURUSD trading at 1.2081
  • GBPUSD trading at 1.4054
  • USDJPY trading at 109.4400
  • USD Index US Session (ICE Jun) up 0.039 to 90.725

US indexes found some bargain hunters come out a play overnight to lift prices from the open and make back some of the losses from the previous sessions. Traders continue to wrestle with the idea that the recent inflation reading is only transitory as money from retail savings and stimulus flows into the market in the short term…it is still yet to be seen that inflation may be here to stay to pressure bonds lower (which rallied from the US open) and push the Fed Reserve into a corner. We know that the Fed will keep Bond support in place until employment lifts which showed to take a backward step in the payroll numbers out last Friday. With the big hit to the CRB Index and underlying commodity and agriculture prices, the heat may be coming out of inflation concerns in the near term. The DOW closed up 1.29% while the broader SP500 ended up 1.22% and the Nasdaq closed up 0.72% for the session. In Europe, major Indexes had an interesting session to open weaker and then turn on a dime to charge higher into the close. The DAX reversed losses in a 400 point rally off its lows and end with gains while the FTSE rallied 150 points off its lows to end with minor losses. The move was a good sign for bulls that they are fending off a fear based selloff for now on the back of inflation concerns. Basic resource stocks took a hit early while the Energy sector also came under pressure.

The USD Index chopped around below some key resistance to keep the downtrend in tact. It has been a good fight between bulls and bears lately as both sides have a strong case. At this stage, until inflation really starts to kick into gear, we expect to see the USD remain under pressure so will be watching for a move down through 90.580 in coming sessions. If price pushes higher through 91.000 then expect to be seeing a selloff brewing into shares. The EURUSD was also choppy and failed to find any directional move that could stick. The action held above 1.2060 area to remain in the up-trending channel so we expect that bulls will build a base to make another push higher. We will need to see the 1.2060 level hold first and confirm the idea but it does match nicely to further weakness into the USD. The GBPUSD did test the 1.4000 level as expected and buyers showed some strength to reject the level. Bulls are not out of the woods yet as we expect that price will need to break up through 1.4062 to convince more buyers to come in off the sidelines for a move back to test above 1.4100. The AUDUSD was torn by the risk on sentiment back into the major Indexes and commodity prices heading south. Price held up off the 0.7700 level but is yet to confirm that bulls are taking control. We will want to see the 0.7709 level hold as a minor higher low for a buying opportunity and squeeze on recent sellers. The USDJPY edged its way lower off the resistance around 109.660 which proved to be a weight on recent buyers. We expect that there may be further contraction lower to squeeze out more buyers before a base can be built. The move lower does show traders expectation for further weakness into the USD so we will be watching the action closely.

SPOT GOLD initially flushed lows through 1813 to 1808 before finding a bid and buyers to lift price up through recent lower highs around 1822. We expect the move will trigger more gold bugs into action for a retest and potential push up through highs around 1842 in the near term. Buyers still have some work to do first so we will be watching for a minor higher low to be put in to trigger the buying interest. Crude Oil bears it seems were waiting to make their move lower as price worked its way down off highs on a break below 65.60. Sellers were in control all session until the US close where buyers reacted off support around 63.00. We will be watching for this level to provide further support today but expect that it will need to hold up under further pressure from sellers. Copper tested the 4.6710 support area in European trade before holding the zone into the US close to confirm the level. Price is still holding minor lower highs so bulls may have their work cut out for them today but we do expect that the level will hold and the uptrend will remain in tact.

Cryptocurrencies were hit hard early in Asian trade and continued to find pressure overnight as holders are slowing re-assessing their risk and exposures. Ethereum is showing some cracks to the recent uptrend while Bitcoin is holding below 50K and is very vulnerable on the daily timeframe. Bitcoin is currently trading at $49271.3 down 9.62% while Ethereum is at $3731.26 down 9.50% and Ripple is at $1.30444 down 8.54%.

The ASX200 continued its way lower yesterday as sellers were persistent right into the close. In the end the index ended down 62.2 points back below the 7000 level to 6982.7. The IT sector was the hardest hit down 4.72% while Metals and Mining and Materials were the next worst performers. Falling stocks outnumbered advancing ones by 942 to 412 and 390 ended unchanged.

The ASX200 is expected to open up 50 points after a bargain hunting led bounce into European and US indexes overnight. We will see today if the recent selloff was just the market flushing out some weak hands before another push for new all time highs.

ECONOMIC DATA OUT TODAY (AEDT)

EUR ECB Monetary Policy Meeting Accounts 9:30pm

USD Retail Sales Data 10:30pm

USD Industrial Production 11:15am

USD Consumer Sentiment 12am

SPI200 INTRADAY LEVELS TO WATCH