Chinese data signals risk on, commodity prices continue gains, ASX SPI200 futures 38 points higher

European equity markets closed higher overnight, despite Euro-Zone industrial production missing analyst estimates of 1.30% with a reading of 0.80%. Data from China showed that trade activity beat expectations, with Chinese exports increasing 11.50% year on year for the month of March, while imports declined only 7.6% from a year earlier vs a prior 13.80% decline, as we continue to see signs the world’s second largest economy is stabilizing on the back of stimulus measures. European indexes were up across the board, with the DAX30 gaining 2.71%, FTSE100 +1.93% and Italy’s FTSEMIB index +4.13%. To currencies, and the British Pound and Euro were both weaker against the US Dollar, down 0.40% and 0.80% respectively.

Looking to the U.S. advance retail sales, which gives insight into consumer demand and confidence, the numbers missed expectations coming in at -0.30% vs expectations of 0.10%. The S&P500 index closed 1% up at 2082, the highest level since December 7th, while the Nasdaq100 gained 1.31%. Sticking with North America, the Bank of Canada left interest rates unchanged at 0.50% as widely expected. The chart below highlights the Canada dollar (USD/CAD) which has been strengthening since late January on the back of the increase in oil prices.

Oil prices closed lower overnight following data from the U.S. Department of Energy that showed US inventories for April rose more than anticipated, with Brent & WTI Crude futures down 1.14% & 0.97% respectively. Copper futures and the iron ore price increased following positive Chinese data, up 0.75% and 2.13%. The second chart below highlights the correlation between the iron ore price and Fortescue Metals since January, and I expect to see continued strength in FMG today following a positive production update out on Wednesday.

A ‘risk on’ mentality seems to be returning to the market, signaled by a weaker spot gold price which closed 1.05% lower, while the USDJPY appears to have put in a near term low, up 0.50%, both asset prices are generally correlated with risk appetite.  Australian equities are set to open stronger this morning with ASX SPI200 futures up 38 points in overnight trading.

Data releases:

·         Australia Consumer Inflation Expectations (Apr) 11:00am AEST

·         Australian Unemployment Rate (Mar) 11:30am AEST

·         Euro-Zone CPI (Mar YoY & MoM) 7:00pm AEST

·         Bank of England Rate Decision (Apr) 9:00pm AEST

·         U.S. Initial & Continuing Jobless Claims (Apr) 10:30pm

·         U.S. CPI (Mar YoY & MoM) 10:30pm AEST

·         U.S. CPI excluding Food & Energy (Mar YoY & MoM) 10:30pm AEST


Source: Rivkin, Bloomberg, Updata

To view the Rivkin economic calendar and Global Markets matrix, members can click here.

This article was written by James Woods - Global Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3600.

Complex product warning

This article contains information about foreign exchange contracts, which are considered complex financial products. Please click here to read ASIC's foreign exchange trading article before considering an investment in foreign exchange contracts. 

This article contains information about CFDs, which are considered complex financial products. Please click here to read ASIC's "Thinking of trading contracts for difference?" document before considering an investment in CFDs.
comments powered by Disqus

DISCLAIMER: Rivkin aims to provide clear and simple information to those visiting our website. If any part of this disclaimer does not make sense, please phone Rivkin and ask to speak with a member of our Dealing and Relationship Management Team. Rivkin provides general advice and dealing services on securities, derivatives and superannuation (SMSF). Rivkin also provide SMSF administration and accounting services. Rivkin does not provide advice that takes into account your, or anybody else's, investment objectives, financial situation or needs. We strongly suggest that you consult an independent, licenced financial advisor before acting upon any information contained on this website. Investing in and trading securities (such as shares listed on the ASX) and/or derivatives (such as Contracts for Difference or 'CFDs') carry financial risks. CFDs carry with them various additional risks that differ from more simple securities such as fully-paid company shares. Some of these risks include not owning the underlying instrument from which a price is being derived, settling trades 'over the counter' with a financial institution rather than on a stock exchange, and using leverage to gain access to trades that may have a higher face value than your initial deposit. This risk of leverage means that it is possible to lose more than your initial investment. Our aim is to create more life choices for our clients, which means improving the wealth of clients throughout many market cycles by nurturing a relationship spanning many years. If you are not comfortable with your understanding of the risks involved before using a Rivkin product and service, please contact our office to seek further information or a Product Disclosure Statement, or make an appointment to sit with one of our friendly financial experts. It is in our interest for your Rivkin experience to be a rewarding and comfortable one. Rivkin is a trading name of Rivkin Securities ABN 87123290602, which holds Australian Financial Services Licence No. 332 802.