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Market Essentials - Keeping Your Eyes on the Prize?

Last updated 6/28/2012 7:42 PM EST (GMT -5) 0 Comments - Add your comment

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Andrew Taylor

Market Strategist, GFT

Follow @ATaylor_GFT

Overnight markets were subjected to a wild night of moves as a mixed bag of rumours and fact drove markets at will. There was a distinct increase in volumes compared to the last few days suggesting that traders have been waiting for this very moment in trying to predict the next major trending move and be positioned for it first. This created plenty false starts where traders would pull the trigger first on a hint of news and then scramble for any real rationale to fit the trade.

EU Watch

European markets were weighted going into the Summit with the knowledge that fiscal integration will not occur and that the meetings will be more about what stimulatory measures can be agreed upon. High on today’s agenda was providing Spain and Italy with a sustainable action plan. EU Leaders agreed on a 120 Billion Euro growth pact but Italy would not sign off on receiving aid until Germany agrees to share debt liabilities. This seems like the tail is attempting to wag the dog. If markets had any hopes of progression then this game of chicken will see Spain and Italy jump first. What could Day Two possibly bring to calm fears of further EU deterioration?

US Watch

US equity markets saw a sell off as Obama-Care program was upheld in the Supreme Court. This will see Americans having to pay for health insurance or pay a penalty. With many Americans opposed to the insurance this will provide a main point of difference that may suit the Republicans come election time.

The US also had two data releases worth commenting on. We need to keep an eye on the world’s largest economy for when the noise of all that the EU crisis brings dies down we will be focused squarely on the US as an instigator of moves.

The all important labour market showed that it has not improved from its concerning levels with jobless claims remaining high. We also had the GDP figure for the first quarter of the year. This for me seems like such a long time ago, its print however was 1.9% and was what the market was expecting. Not flash but not disastrous either. Neither had any great real impact on moves but in keeping up to date of the overall picture we must remain current.

In the last hour of US trade equity markets spiked dramatically. With no clear reason on the headline front traders tracked it back to the buying of $3bn notional value in the S&P 500 e-mini futures market. This saw correlated markets join the move higher to close at much better levels than the day suggests.

Outlook

Safe haven trading was the clear theme overnight as money flowed from stocks, commodities and risk currencies into the safety of USD, JPY and US treasuries. Expect Asian markets to remain pressured as there has been nothing of substance to reverse the obvious lack of confidence in the markets.

Economic Events to watch:

2245 NZ           May Building Consents Issued

2315 JP            Jun Manufacturing PMI

2330 JP            May Household Spending

2330 JP            May Labour Force Survey

2330 JP            May CPI (Nation), CPI ex-food (Nation)

2350 JP            May Preliminary Industrial Production

0130 AU          May Private Sector Credit

0200 SG           May Money Supply

0200 SG           May Bank Loans

0500 JP            May Housing Starts

0500 JP            May Construction Orders

For more intraday analysis and trade ideas, follow me on twitter @ATaylor_GFT

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About The Author

Andrew Taylor's financial markets career started in 1991 in the interbank FX market,where he worked for one of the largest banks in Australia. Andrew then went on to trade on behalf of some of the biggest global banks, working across five of the world's major financial hubs: Sydney, New York, Singapore, Auckland, and Tokyo.

His more than 20 years of experience spans market borders and asset classes, covering global equities, commodities, options and futures. Andrew's wealth of trading experience and ability to communicate with traders of all levels has put him in demand as a first point of contact for clients and the media alike when seeking information and guidance.