Dave Lutz, head of ETFs at JonesTrading, has an overview of today’s markets.
- US stocks are starting in the red on Wednesday, but are in rally mode.
- The US dollar is rising.
- Oil is shrugging off surprise draw data.
Morning! US Futures are starting under pressure, with the Spoos down 40bp, but I’ve been watching a steady rally over the last 2 hours from -1%. It’s all Green in Europe, where the DAX is up 75bp led by 1.5% jump in Discretionary shares – Healthcare shrugging off rough headers from Sanofi and Novozymes, and the Banks are adding 60bp. London up 85bp as Banks jump 1.2%, and the Miners are adding small. Energy shares stronger behind Tullow and Statoil numbers, despite a drop in the price of Brent. Sloppy sessions in Asia, as Initial Sharp bids were hit as trade wore on – Nikkei up 20bp, surrendering the bulk of a 2%+ bid – Hang Seng lost 1% despite a rebound in Tencent – Shanghais lost 2.4%, with heavy focus on the absence of the “National Team” (Their PPT) and PBoC not injecting funds for 10days straight – KOSPI lost 2.2% led by a 3% drop in the KOSDAQ as Samsung dropped 3.5% – Aussie popped 75bp behind Consumer and Material shares, but Banks didn’t like Commonwealth #s – India off small as RBI stands pat on Rates.
Some selling in Bunds has Germany’s 10YY testing yesterday’s highs, and we are seeing a Nice rally in Italian, Spanish and Portuguese debt. The US 10YY has bounced from the 2.75% level, but sees decent resistance at overnight highs near 2.8%. The Dollar is enjoying a broad rally, with Euro weaker despite a formal deal to set up a governing coalition in Germany, while Weaker UK House Prices her Sterling back under $139. Ore closes 1% higher in Dalian, but Industrial Metals are taking a breather – While Gold is up small despite the stronger Greenback. Oil is shrugging off Surprise Draws in Crude and Gasoline, with WTI testing $63 in the overnight as we await DOE later today. Softs are mostly bid, led by a 1% pop in Wheat