FTSE 6093 -3
DAX 7763 -13
CAC 3725 -5
IBEX 8423 -13
DOW 13398 -37
NAS 2715 -10
S 1461 -6
Oil 92.93
Gold 1660
Asian markets got off to a good start, but have since given up early gains perhaps on some profit taking after recent
advances. Risk was well bid on Friday on the back of non-farm payrolls data which hit a sweet spot. While the data
showed that the US labour market is improving, it certainly isn’t doing this fast enough for the Fed to withdraw QE much
earlier than anticipated. The non-farm payrolls print showed a 155,000 increase (mildly better than 150,000 expected),
while the unemployment rate ticked higher to 7.8%. This saw the US dollar pare gains and gave risk currencies some much
needed relief. Unfortunately the recovery in risk currencies has hit a wall in Asian trade, with EUR/USD dropping back
to 1.304 and AUD/USD back below 1.05 after having popped higher at the beginning of the Asian session. USD/JPY has
remained relatively steady above 88 with sellers spooked by comments from new Prime Minister Shinzo Abe. With USD/JPY
retreating from its Friday high, the Nikkei has also lost a bit of ground and is currently down 0.2%. However, with Abe
continuing to mount pressure on the BoJ to act, buying the dips is likely to be the preferred strategy. The rest of the
region is mixed with mild gains for the Hang Seng and Shanghai Composite, while the ASX 200 has lost a touch.
It just seems like markets are entering a consolidation phase after recent gains and with most markets trading at fresh
highs 12-month highs. Ahead of the European open, we are calling the major bourses relatively flat to modestly lower.
There is nothing significant to look out for on the economic front until later in the week. The ECB is set to meet and
this is one of the highlights of the week. Although no change is expected in policy, there are reports suggesting the
ECB might consider some form of easing. The ECB press conference is likely to carry even more weight as investors grow
increasingly impatient about the OMT. Following recent comments from Christine Lagarde and Angela Merkel about European
growth concerns, the ECB will be under pressure to act and prevent a deep contractionary period for the region. 1.3 will
remain the key level to watch for EUR/USD with momentum at the moment seemingly to the downside.
After having responded well to the leads from US trade and pushing to a fresh high of 4750.7 earlier, the local market
has given up all its early gains and is currently down 0.1%. Many were expecting the leap in iron ore prices to help
underpin the iron ore miners and in turn the materials sector today, but this wasn’t the case as some of the big iron
ore names actually lost ground. BHP is down 0.6%, Rio Tinto has shed 1.3% but Fortescue Metals has climbed 1.5%. Lynas
has jumped 9% after saying it will ramp up production over the next three months and its rare earths will be ready for
sale within weeks. Atlas iron is now only marginally higher after having surged earlier following an announcement that
it is on track to achieve a 12 million tonne annual output rate by December. Some of the defensive sectors have held up
well with gains for the healthcare and consumer staples. Financials have continued to edge higher with most of the big
banks rising around half a per cent. Commonwealth Bank has shed 0.5% and retreated from its recent highs.
ENDS