fter a rough start, US stocks tried to claw back their losses through the day but then faded in the last hour, leaving stocks on their back foot heading into today’s Asia Pacific trading session.
News flow was light to start the week and with nothing scheduled in Asia or Australia today focus appears likely to remain squarely on China and its banking crisis. Chinese indices
officially entered bear market territory yesterday, completing a 20% drop off their high. Since completing a similar drop, Japanese stocks have been starting to stabilize so today could see a battle between bears and bargain hunters that could keep trading choppy through the day.
Trading in copper, which is particularly China-sensitive, could set the tone for trading as it tests the key $3.00 level. If it continues to hold that level, it would suggests that fears may be easing while a further breakdown would suggest growing troubles.
Resource currencies have been trying to rebound in US trading, particularly AUD and NZD while SEK and NOK continued to underperform. Commodities were mixed today with crude oil rallying but metals and grains remaining under pressure. While defensive plays like USD, CHF and JPY have continued to strengthen into this week, gold and silver remain under pressure with gold under $1,300 and €1,000 while silver languishes under $20.00, suggesting that they are trading more in their role as inflation hedges in a time when falling commodities suggests low inflation expectations.
Highlights of overnight announcements include:
US Chicago Fed (0.30) vs street (0.10)
US Dallas Fed 6.5 vs street (1.5)
Germany IFO business climate 105.9 as expected
Germany IFO current 109.4 vs street 109.6
Germany IFO expectations 102.5 vs street 102.0
consumer confidence 95.7 vs street 86.2
This week’s crop report suggests this year’s harvest has been impacted a bit by the slow start to planting but are being compared with conditions before last summer’s drought, so we appear to be on track for a better harvest so far.
Corn 65% good/excellent vs 56% on average
Soybeans 65% good/excellent vs 53% last year
Cotton 43% good excellent vs 50% last year
Winter Wheat 32% good/excellent vs 54% last year
Spring Wheat 70% good/excellent vs 77% last year
Upcoming significant announcements include:
9:00 am BST Italy retail sales street (2.6%)
10:00 am BST Hungary interest rate decision 0.25% cut expected
8:30 am EDT US durable goods orders street 3.0%
9:00 am EDT US house price index street 1.1%
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