Daily Market Update 15 April 2014 - ASX 200 swoon set to be reversed
US retail sales surged<http://www.census.gov/retail/marts/www/marts_current.pdf> in March, rising 1.1% against expectations for an increase of 0.9%. The figure was an improvement on the 0.7% increase of February, revised up from 0.3%, with the month-on-month gain the largest recorded since September 2012. Showing that the improvement was broad-based, core sales, that which excludes volatile auto and gas sales, rose by 1.0%, a figure that more than doubled estimates for an increase of 0.4%.
US business inventories continued to grow in February with an increase of 0.4% reported<http://www.census.gov/mtis/www/data/pdf/mtis_current.pdf>. While below forecasts for a rise of 0.5%, the increase was the ninth-consecutive month that an expansion had been recorded. Based on the current pace of sales, there is now 1.31 months supply on hand, the highest level seen since October 2009.
Eurozone industrial production rose fractionally in February with an increase of 0.2% reported<http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/4-14042014-AP/EN/4-14042014-AP-EN.PDF>. The figure was in line with market expectations but above the upwardly-revised flat reading of January with the year-on-year rate, adjusted for work days, rising 0.1% to 1.7%. Overall improvements in output of non-durable consumer and intermediate goods, +0.5% and +0.6% respectively, were able to offset weakness in energy (-1.7%) and durable consumer goods production (-1.2%).
Italian CPI was confirmed<http://www.istat.it/en/archive/118559> at +0.3% in the year to March, the lowest annual increase seen since October 2009.
The Day Ahead (All times AEST)
The ASX 200 looks set to rebound today after yesterday’s market swoon with SPI futures pointing to a rise of 33pts on the open. Having been the biggest drag on market Monday, gains are likely to be led by financials with Citigroup’s strong earnings report overnight, coupled with the lure of upcoming dividend payments, something that tends to see the sector bid up before the onset of reporting season, likely to help underpin the index over the course of today’s trading session. Elsewhere there’ll also be plenty of interest in Rio Tinto’s Q1 production report, particularly given the ramp up in iron ore exports seen in recent months.
Preferring to follow the movements in US equities rather than focus on the strength in US retail sales, the AUDUSD has continued to grind higher overnight with the pair touching a high of .9426 late in North American trade. While that was the focus overnight, today will be all about the release of the RBA’s April 1 monetary policy minutes at 11.30am with the document, particularly the language on the Dollar and domestic housing market, likely to create moderate levels of volatility, albeit temporarily. Beyond that event, expect it to be ‘business as usual’ with the Aussie likely to be well supported on dips over the course of today’s trading session. Support is located ahead of .9405, .9380 and again at .9363 with resistance located at the overnight high, .9440 and at .9461.
The minutes of the RBA’s April 1 monetary policy meeting will be released this morning at 11.30am. As usual, most market emphasis will be directed to the wording on the level of the Australian Dollar. In particular, how much its recent rebound will impact on economic rebalancing in the period ahead.
Regional data releases today include CPI and WPI figures from India along with Japanese machine tool orders for March.
Economic releases out this evening include CPI, Empire State manufacturing survey and NAHB homebuilder confidence in the States, CPI, PPI and house price index from the UK, German investor confidence, Eurozone trade along with existing home sales in Canada. On the policy front, FOMC Chair Janet Yellen speaks this evening at 10.45pm.
Coca-Cola, Intel, Johnson & Johnson and Yahoo headline the US Q1 earnings calendar this evening.