Stocks Jump as Earnings Hit the Street – Nasdaq up 1.6%
US Stocks got a shot in the arm yesterday as Tesla kicked off the major earnings cycle with a strong move higher despite a Sales dip and investors loaded up on tech stocks again. The Dow jumped 0.69%, the S&P 1.20% and the Nasdaq recovered some much-needed ground to end up 1.59% on the day. US treasury yields dropped after worse-than-expected PMI data, the rate-sensitive 2-year losing 5 basis points to 4.925% and the 10-year falling 3 basis points to 4.596%. The dollar lost ground after the US data, the Dxy dropping 0.4% to hit a 2-week low of 105.66. Oil gained ground as the dollar fell, Brent up 1.6% and WTI up 1.8% to trade at $88.42 and $83.36 per barrel respectively. Gold was again volatile, hitting a fresh low down at $2,291 before bouncing later to close around the $2,320 mark.
Yen Remains in Focus for Traders and Japanese Authorities
The Yen hit more multi-year lows in trading yesterday with it reaching its lowest level against the Euro since 2008 and again hitting a 34-year low against the greenback. What will give the Japanese monetary authorities particular cause for concern is that when the other majors managed to gain decent ground against the dollar, after weaker US PMI prints, the Yen remained trading near those historic lows with the key psychological level of 155.00 within touching distance. Concern is escalating in some quarters as the Bank of Japan’s rate decision is due on Friday. If the BOJ holds firm as expected on Friday, this is likely to open the door for more downside for the Yen as they have said multiple times that they will not raise rates solely to boost the currency. Traders now feel that the chances of intervention before the BOJ or in tandem with the decision are increasing as we approach Friday and the Yen remains at historically low levels.
More Data and Earnings Ahead for Markets Today
Asian markets will open on a positive note today after a strong day on Wall St powered higher but resurgent tech stocks. One of the key data points of the week is due early in the day with the Australian CPI numbers set for release. The expectation is for a 0.8% increase in the headline quarterly number and any significant deviation from this will see volatility across Australian markets as RBA rate predictions change. The London session is set to be relatively quiet with the German Ifo data the only number of consequences due out. However, once again, the New York session looks to be the time zone that will deliver the most moves with Retail Sales numbers due out of Canada and Durable Goods from the US as well as earnings reports from the likes of Facebook, IBM, Bank of America and Goldman Sachs.
