Morning Market Wrap:
Good morning.
U.S Cash Markets: U.S cash markets closed flat to mixed in pretty directionless trade.
- Dow: +0.08%
- SPX: +0.01%
- Nas: -0.14%
There wasn't much news to note in the session, with no real economic data coming out. US 10-year yields came off highs, and US markets were trading around their June pricing. I think the China Evergrande news filing Chapter 14 for bankruptcy was something the markets took as more headwind (obviously), but managed to hold up the session. I guess you also need to consider this has been a while in the making, with Evergrande being in the news about this for (what feels like) a year or two.
Commodities and Macro: With yields coming off the boil (slightly), USD was also a little less strong, but mainly like equities, a bit of just directionless chop. Silver basically flat since Aus close, and Gold down a couple of bucks - let's call it flat. Also, no real macro direction Friday or news other than the Evergrande story. Lithium Futures had some green for once, closing at 212, off that 202 area range for the last couple of days, after briefly dropping to that 200-level intra-session. Interestingly, it didn't get that China stimmy boost like Iron ore and the other base metals did on Thursday afternoon (Aus time). Iron ore came off 1.1% overnight, from a high of 776CNY, closing at 761CNY in the evening session. It will be interesting to see if it holds or the recent bid in Iron ore was a "buy the rumor, sell the news" vibe, as Iron ore was the tell that the China stimmy news was coming (it always is). FMG is lagging the benchmark, so there's potential opportunity there if we get Iron ore continuation along with a bounce in markets.
Base Metals: Base metals, again like equities, chopped a bit. With Ni -0.72%, Cu +0.29%, Al back to lows (erasing the China stimmy news), back to 2,138USD/t, -0.33%. Tin also slightly in the red, -0.22%.
Energy: While NG (Natural Gas) futures came off some more in the session, down about 2.6%, NEWC coal price almost touched 150, closing at 149.5 for the most active month. Oil (WTI) was up about 1.45% on the session. The energy sector was also the best-performing sector in the US equities session, with XOP up 1.18%.
Local Markets: SPI with another negative lead-in, sitting -23 pts. With choppy markets overnight, not too sure where the direction for Aus equities will come from today. Possibly looking across for valuation plays (the likes of FMG and other sold-off energy against the grain of recent flows in their relative underlaying). Uraniums, as we saw another good night in Uranium, up with the bid sitting at 58.25. Decent continuation across uranium pricing for a good week or two now, with Aus names all pretty laggy against the likes of the solid CN and US-listed producers CO (US CCJ) EFR (US UUUU). Should be an interesting sector today. Hard with ours being early developers BOE/PDN (moving into production next year) and explorers, but be aware of ETF names as the flows should come with them, as ETFs are up over 2% :) Will be watching Iron ore on China open at 11 am Sydney time to see if we get any upward continuation out of that.
Data: Some China data out at 11:15 am - Loan Prime Rates 1yr and 5yr. I wouldn't normally care about these numbers, but with China's economy in focus, especially the property development and anything related, I'll be making sure I am on top of it, as the market has zoned in on anything negative there and watching for stimulus from them or anything easing. Then US Home sales out at midnight Sydney time - that's about it.
That's all I have today. Have a great day.