The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR TUESDAY 18/05/21 (as at 7:15am AEST)

  • SPI200 (Jun) overnight futures up 11 pts to 7030
  • SP500 down 10.56 pts to 4163.29
  • NASDAQ Composite down 50.93 pts to 13379.05
  • Dow Jones down 54.34 pts to 34327.79
  • FTSE100 down 10.76 pts to 7032.85
  • DAX30 down 20.02 pts to 15396.62
  • GOLD futures US session (June) up $29.50 to $1867.60 an ounce
  • COPPER futures US session (Comex July) up $0.0632 to $4.7177 a pound
  • OIL futures US Session (Nymex Jun) up $0.90 to $66.27 a barrel
  • CRB Index up 2.65 pts to 205.94
  • AUDUSD trading at 0.7763
  • EURUSD trading at 1.2153
  • GBPUSD trading at 1.4136
  • USDJPY trading at 109.2200
  • USD Index US Session (ICE Jun) down 0.115 to 90.203

US indexes hit the pause button overnight as some traders locked in gains from the rally into the end of last week. Tech stocks again saw pressure from inflation concerns as the Nasdaq edged lower on the open although rejected intraday lows to rally into the close. Traders continue to battle with the idea of inflation and rate rises as they are happy to buy on pullbacks but then question the state of play after a rally. We expect to see more of the same going forward as underlying price pressures from rising commodities and increasing demand support the inflation narrative while the Fed will not change its course just yet to warrant a selloff. Traders will be awaiting the minutes from the Feds policy meeting last month, out on Wednesday, to shed more light on the their outlook and where that may steer markets. Bonds edged lower to give back a rally from the Asian session as indexes were held down. The DOW closed down 0.16% while the broader SP500 ended down 0.25% and the Nasdaq closed down 0.38% for the session. In Europe, major Indexes were weighed down as traders were cautious on covid concerns and mixed Chinese data. Travel and Leisure stocks took a hit as fresh restrictions across Asia, due to the fast spreading Indian variant, lead to a pause from bulls.

The USD Index continued its way lower to extend on Fridays selling and target the 90.000 area. Lower highs continue to hold showing the strength from bears which may continue into the Fed minutes on Wednesday. For now, sellers remain in control and we expect that bias to remain until the Fed starts to change its tune on the bond buying program. The EURUSD managed to hold the 1.2130 level after a minor flush to clear out some sellers. Price then rallied to test into new short term highs being supported by the move down into the USD. The Euro is directly linked to the fortunes of the USD at this stage and we expect that to continue in the near term. Watching for the 1.2130 level to again hold today and for price to edge higher. The GBPUSD played out nicely on the back of the dollar weakness. Price did flush lower in the European session and into the open of US trade before ramping up into recent highs. We still expect the bulls to extend the move up into highs around 1.4160 before potentially seeing a reaction from sellers. The AUDUSD remains linked to the risk on and risk off of the share markets as price was pressured lower in Asian and European trade before bouncing in the US session. The Aussie looks set to hold a key higher low at 0.7730 and push up as long as buyers can hold a flush of 0.7755. The USDJPY continued the grind lower as expected and added to previous sessions losses as the USD moved down. Price did not break down through 109.000 but the level may come under pressure today. We will be watching for a flush of the level that may trigger more sellers into action. If buyers manage to hold the level, expect a squeeze on sellers ahead of the Feds minutes.

SPOT GOLD traded nicely higher to ramp up and into the 1865 zone as expected and looks set to extend on the gains into the 1872 level. We see now that buyers will now have a decision to make…remain with their foot on the gas to break 1872 and start a decent trend up…or be cautious and lock in some gains for a squeeze lower. Price was a little more bullish than we expected overnight so buyers may be starting to stack up looking for the break. Crude Oil was finding some sellers through Asian and European trade before spiking higher at 11pm to take out the intraday highs and ramp into previous highs around 66.50. Bulls were well and truly in charge finding support from the USD weakness and positive data on demand from China, the worlds second biggest consumer. Copper also managed to rally higher and clean out earlier sellers into the metal and brush aside minor weakness. The move has now confirmed support around 4.6250 so we expect to see more interest from bulls in the near term and for price to hold higher levels.

Cryptocurrencies remained under pressure after previous comments by Elon Musk sent prices lower and bulls diving for the exit. Prices generally continue to be weighed down with buyers not being able to reverse the moves as they have been in the past. Bitcoin is currently trading $44160.2 down 2.29% while Ethereum is at $3332.93 down 4.10% and Ripple is at $1.51837 up 7.24%.

The ASX200 started the session on a positive note yesterday but bulls just could not get any traction and early gains were given back into the close. The index ended the day up only 9.4 points to 7023.6 with Gold stocks having a good day as the sector ended up 4.28% while IT and Energy also performed well. Asian markets were under pressure as COVID-19 was front and center in the region with Singapore and Taiwan dealing with their latest outbreaks.

The ASX200 is expected to open up 10 points after the SPI200 flushed the days lows in European trade into support before bouncing back into the US close.

ECONOMIC DATA OUT TODAY (AEDT)

JPY Prelim GDP 9:50am

AUD Monetary Policy Meeting Minutes 11:30am

GBP Claimant Count and Unemployment Rate 4pm

EUR Trade Balance 7pm

USD Housing Starts and Building Permits 10:30pm

USD FOMC Member Bostic Speaks 2:30am

SPI200 INTRADAY LEVELS TO WATCH