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Morning Market Report

Bad news out of China, with commodity prices crashing all round.

The market is up four pointsThe Dow Jones was down 34 at 16,419 — the market opened lower and was down as much as 119 points at one stage before strengthening in the afternoon.

There was little economic and company news to drive markets and initial weakness was largely a result of concerns about growth in China following disappointing trade data and escalating tensions in the Ukraine.

The S&P fell one point to 1877.

Oil fell 1.56%toUS$100.98.

Gold rose US$1.70 to US$1339.90 per ounce.

The US$ was stronger against most major currencies. The Australian dollar was weaker and is currently trading at US90.20c.

VIX Index rose 0.64% to 14.20.

US treasury markets were stronger  —  The yield on the 10 year bond fell two basis points at 2.774%.

European shares were mixed  — The UK FTSE fell 0.35% and the German DAX fell 0.91% but the French CAC was 0.10% higher.

European bonds were weaker  —  The yield on the Euro 10 year bond yield rose one basis points to 1.625% and the UK 10 year bond yield was three basis points higher at 2.797%.

Base metal prices were mixed  —  Nickel rose 1.01% and aluminium was 0.525 higher but copper fell 2.11% and zinc fell 1.25%.

Iron ore fell US$9.50 to US$104.70 a tonne.

STORIES

  • Chinese exports fell 18.1% in a month. Chinese inflation came in below expectations.
  • The Chinese Finance Minister re-defined the GDP growth forecast saying 7.2% would still meet their target.
  • The Chinese have lowered the yuan reference rate interpreted as a sign they are trying to boost exports — interpreted as the Chinese government having concerns about growth.
  • The iron ore price fell over $9 overnight to $104.70 with talk of it going below $100.
  • BHP and RIO down 4.14% and 5.76% yesterday and FMG and AGO down 9.39% and 10.14%.
  • RIO has broken the uptrend on the charts.
  • The iron ore price fell $2.70 on Friday to $114.20 but is down $9.60 overnight or 9.1% to $104.70 a tonne. Biggest one day fall in four years, lowest since 2012. It is down 22% this year.
  • BHP was down 2.67% and RIO down 1.95% in the US overnight. They were down 3.50% and 5.15% overnight in London. There is talk of the iron ore price falling below $100 a tonne as buyers hold off in the current downside momentum.
  • Chinese Trade data over the weekend saw a swing from a $31.86 billion surplus to a $22.98 billion deficit and the inflation numbers came in below expectations with PPI down 2.0% YonY and CPI up 2.0% as expected. The trade number saw the biggest monthly fall in exports since the GFC (-18.1% versus expectations of +7.5%) raising doubts they will hit their 7.5% growth target this year. They also saw new bank loans halve since January.
  • Going ex-div today  —  HIL (3.4c), SFH (2c)
  • Results  —  OrotonGroup (ORL)
  • Bank of Japan  —  policy meeting today.

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