Saxo Bank | May 28, 2015 05:26AM ET
Overnight and early trading
It's a mixed start on the local markets, although largely a positive one. The ASX 200 was up 8 points to 5733 in the first 20 minutes of trading. Mining shares are choppy while banks and healthcare stocks are up.
Stocks bounced back overnight with the Nasdaq Composite rising to a new record close, as technology companies led major benchmarks higher one day after their biggest losses in weeks.
The Nasdaq Composite Index closed up 73.84 points, or 1.5%, at 5106.59. So far this year the Nasdaq Composite is up 7.8%.
The Dow Jones Industrial Average gained 121.45 points, or 0.7%, to 18162.99, rebounding from a tumble of 1% on Tuesday, its biggest one-day rout since April 30. The S&P 500 added 19.28 points, or 0.9%, to 2123.48.
Technology stocks in the S&P 500 rose 1.8%, making information technology the best-performing sector in the index. Broadcom (NASDAQ:BRCM)’s shares ended up 22%, while Avago added 7.8%.
Developments in Greece also calmed investors with news that Greece and its creditors started to draft a final agreement on Wednesday, sending European stocks higher. Germany’s DAX gained 1.3% and France’s CAC 40 added 2%. UK’s FTSE rose 1.21%.
As trading for the month of May winds down this week, investors will have even more data to focus on, including Friday’s revised reading of first-quarter gross domestic product in the US. The initial reading of first-quarter GDP showed the US economy slowed dramatically, growing at a sluggish 0.2%. Economists surveyed by The Wall Street Journal expect that to be revised downward to a 1% contraction.
Volatility, which has been muted throughout the past week, could pick up heading into the summer months in the US. Volumes have dried up already this month and with fewer investors expected to be buying and selling shares in the US, swings in the market could be more exaggerated.
In commodity markets, gold futures slipped 0.1% to $1185.90/oz. Crude-oil futures fell 0.9% to $57.51 a barrel.
Local Markets
Data points
Thursday
Friday
Current ASX trades
Broker Upgrades
Broker Downgrades
ASXSP200.I
E-mini S&P 500 futures made a solid rebound making back the majority of the losses from the previous session on optimistic comments by Greek Prime Minister Tsipras that an agreement is being drafted to avoid defaulting on its debt.
ASXSP200 rose back up towards the pivot level 5,749 following this positive reaction from the overnight markets. This week’s price actions of ASXSP200 suggest that the upside momentum remains and we expect this resilience to continue with the support level at 5,725 for today. Break below this support level would trigger further fall towards 5,681.
AUDUSD
We finally saw a turnaround of the recent rally in the US dollar on the back of the positive headlines of the Greece bailout negotiations.
EURUSD failed to test 1.0800, while AUDUSD briefly broke 0.7700 and bounced back up. USDJPY broke through 124.00 but fell short of the pre-GFC 2007 high of 124.13. The second-profit target (123.73) of our buy stop trade (122.18) on USDJPY was reached and we are moving up the stop loss to 123.18. USDJPY needs a clear breakout above the key resistance level 124.13 in order to achieve the third target at 125.33.
The private capital expenditure numbers are released at 11:30am, and this will have a significant impact on the near-term direction of AUDUSD. We expect another soft figure as investment in non-mining companies remains low, but if it comes out better than the previous number (-2.2%), then AUDUSD is likely to rebound as US dollar strength is starting to fade and AUDUSD has been sold off more than 400 pips in the past two weeks.
The support level is at 0.7690 and the resistance level is at 0.7765.
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