US Equities Little Changed On Mixed Data, Oil Trades Above US$50 While Iron Ore Drops Below, ASX SPI200 Futures Up 5 Points

US equities were relatively unchanged on Thursday as the market examined mixed data. The headline figure for durable goods orders (MoM Apr) exceeded expectations of 0.5% with a gain of 3.40% however when assessing business investment by examining non-defence capital goods excluding aircraft there was an 0.8% drop suggesting providers of business equipment continue to face headwinds amongst weak global demand. Elsewhere jobless claims for the week ending May 21st dropped to 268,000 vs expectations of 275,000, claims below 300,000 is generally viewed by most economists as consistent with a healthy labour market. Pending home sales data for April continued to show the recovery in the US housing market increasing 5.1% from a month prior and 2.9% from a year earlier. The S&P500 finished 0.02% weaker while the Nasdaq100 closed 0.26% higher, S&P500 index which is now trading modestly below the key technical resistance level of 2,100 where previous rallies have stalled shown on the chart below. European equities were higher on Thursday as UK GDP data was roughly in line with expectation, growing 0.4% (QoQ Q1) as expected however modestly missing expectations of 2.1% (YoY Q1) with a reading of 2.0%, both the FTSE100 & DAC30 closed 0.04% & 0.66% higher.

WTI & Crude oil closed 0.16% & 0.30% weaker after both reaching intra-day highs above US$50 for the first time since November 2011. Not only is $50 a key technical and psychological level for the market, it is also a major fundamental level that suggests significant production capacity may come back online with prices in the mid US$50’s per barrel shown on the second chart below. The price has recently been supported by larger than usual supply disruptions thanks to wildfires in Canada and militant attacks in Nigeria, however we may see prices struggle to break above US$55 as production in Canada begins to resume and higher prices make it profitable for US shale producers to restarted idle rigs. Elsewhere commodities were also generally weaker, Iron Ore finished 1.85% weaker as it traded below US$50 for the first time since February, Natural Gas dropped 1.46% while Copper was little changed, up 0.07%. Despite a weaker US Dollar down 0.19% against a basket of its peers, spot gold declined for the seventh consecutive session finishing 0.38% weaker while spot silver was up 0.05%.

Locally the ASX200 finished 0.29% higher on Thursday and we can expect a slightly stronger open with ASX SPI200 futures up 5 points in overnight trading. If you’re interested in trading global markets but aren’t ready for the risk, click here to open a free $100,000 Rivkin Trader account.

Data releases:

·         Japanese CPI (YoY Apr) 9:30am AEST

·         Chinese Industrial Profits (YoY Apr) 11:30am AEST

·         US GDP (Q1) 10:30pm AEST

·         US Personal Consumption (QoQ Q1) 10:30pm AEST

·         University of Michigan Consumer Confidence Survey (May) 12:00am

·         Janet Yellen speaks at Harvard University 12:30am AEST

·         US Baker Hughes Rig Count (May 27th) 3:00am AEST

 


Source: Rivkin, E-Signal, Amibroker, Goldman Sachs Investment

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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.

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