Overnight
US and European stocks retreated last night in the absence of fresh catalysts for buyers. European stocks closed lower Tuesday, as investors favoured a cautious approach ahead of a European Central Bank monetary policy meeting this week.
The Euro Stoxx 600 index closed 0.9% lower, reversing earlier gains of about 0.2%, which came on the back of figures showing German retail sales rose much faster than expected in January. The UK's FTSE 100 index closed down 0.74%, Germany’s DAX and the French CAC closed down 1.14% and 0.98% respectively.
US stocks pulled back in light volume trade, as investors weighed soft auto sales and looked ahead to domestic data.
The Nasdaq closed down 28.2 points, or 0.56%, at 4,979.90. The Dow Jones Industrial Average briefly fell more than 150 points in early afternoon trade on Tuesday before recovering to close down 85.2 points, or 0.47%, at 18,203.37. The S&P 500 closed down 9.61 points, or 0.45%, at 2,107.78, with healthcare the greatest laggard and utilities and energy the only sectors advancing.
Brent oil rose 1% overnight as Saudi Arabia increased its official price for buyers.
Local Markets
- S&P/ASX 200 Index futures contract fell 0.1% to 5,915 with futures relative to estimated fair value suggest an early decline of 0.1%
- Bank of New York Australia ADR Index down 0.2% with BHP Billiton ADR off 0.7% and Rio Tinto (LONDON:RIO) ADR matching, also down 0.7%
- Spot gold drifted down 0.2% to $1,204 with no major news to influence its direction. Gold stocks: Newcrest Mining Ltd (ASX:NCM), NST, Alacer Gold Corp. (ASX:AQG), Evolution Mining Ltd (ASX:EVN), Kingsgate Consolidated Ltd. (ASX:KCN), Ramelius Resources Ltd (ASX:RMS), SLR
- Brent oil rose 1% to $61.03 as Saudi Arabia increased its official price for buyers in the US, Europe and Asia. Oil stocks: Woodside Petroleum Ltd (ASX:WPL), Statoil ASA (NYSE:STO), Sundance Energy Australia Ltd (ASX:SEA), Beach Energy Ltd (ASX:BPT), Oil Search Ltd (ASX:OSH), Horizon Oil Ltd (ASX:HZN), Drillsearch Energy Ltd (ASX:DLS), AWE Ltd (ASX:AWE), Karoon Gas Australia Ltd (ASX:KAR), ORG, SXY
- Iron ore fell 0.9% to $62.24. The World Bank came forward and stated that history dictates a glut in resources, takes approximately two years to clear and forecast an average price of $75 a metric ton for 2015. Iron ore stocks: AGO, FMG, BHP Billiton Ltd (NYSE:BHP), GBG, GRR, MGX, Rio Tinto (NYSE:RIO), ARI, BCI, SDL
- Copper saw profit taking following the Chinese rate cut, down 1.4% to $5,836. Copper stocks: PNA, OZL, SFR
- Nickel followed copper's lead, shedding 1.3% to US$13,675 Nickel stocks: WSA, SIR
- BHP (BHP), Rio Tinto (RIO): Glencore sees iron ore supply, oil, food commodities running above demand in 2015
- Cromwell Property Group (ASX:CMW): May bid for Investa (IOF) assets
- GPT Group (GPT): Security purchase plan heavily oversubscribed
- Companies trading ex-dividend today: ASX (ASX), Beach Energy (BPT), Independence Group (IGO), QBE Insurance (QBE), Rio Tinto (RIO), SAI Global (SAI)
Data points
Wednesday:
- Australia: GDP q/q (11:30am)
- Fed Chair Janet Yellen Speaks (12:15pm): Due to speak about bank regulation and supervision at the Citizens Budget Commission's Annual Awards Dinner in New York
- China: HSBC Services PMI (12:45pm)
- Europe: Spanish Services PMI, Italian Services PMI, Final Services PMI, Retail Sales m/m
- UK: Services PMI
- US: ADP Non-Farm Employment Change, FOMC Member Charles Evans speaks: Due to speak about the economic outlook and monetary policy at the Lake Forest-Lake Bluff Rotary Club 2015 Economic Breakfast in Lake Forest. Audience questions expected, ISM Non-Manufacturing PMI, Crude Oil Inventories, Beige Book
Thursday:
- Australia: Retail Sales m/m, Trade Balance, RBA Deputy Governor Philip Lowe speaks: Due to speak at the Goldman Sachs (NYSE:GS) Annual Global Macroeconomics Conference in Sydney
- Europe: German Factory Orders m/m, Retail PMI, French 10-year Bond Auction, Minimum Bid Rate and ECB Press Conference
- UK: Official Bank Rate, Asset Purchase Facility, MPC Rate Statement
- US: Unemployment Claims, Revised Nonfarm Productivity q/q, Revised Unit Labor Costs q/q, FOMC Member John Williams speaks: Due to speak about the economic outlook at the Chartered Financial Analysts Society Hawaii 10th Annual Economic Forecast Dinner in Honolulu. Audience questions expected, Factory Orders m/m
Friday:
- Europe: German Industrial Production m/m, French Goverment Budget Balance, French Trade Balance
- US: Non-Farm Employment Change, Trade Balance, Unemployment Rate, Average Hourly Earnings m/m
Current Trades
- Woolworths (Ticker: WOW:xasx): Entered long position on March 4 at AUD 29.30. Stop loss set at AUD 27.90 (-4.8%)
- AMP Limited (Ticker: AMP:xasx): Entered long position on February 6 at AUD 6.10. First profit target was reached on February 18 at AUD 6.49 (+6.4%) and second profit target AUD $7.12 (+16.7%). Third and final profit target at AUD 8.00 (+31%) remains in place. Stop loss trailed to entry price of AUD 6.10.
- (January 21) Accumulation of the big four banks. Buying is coming back in the past couple of days and it appears as if our dividend-yielding banks are back on investor radars: ANZ, CBA, NAB, WBC.
Broker Downgrades:
- Carsales.com (CRZ): Cut to underweight vs neutral at Commonwealth Bank
AUD/USD
Unfortunately we were wrong about the rate cut call yesterday, however RBA continued to indicate easing bias in the statement hence we remain bearish on AUDUSD despite its 90 pips rally following the rates decision. Since then the AUDUSD found strong resistance yet again at 0.7850 and if positive GDP figures come out today (11:30am), then this resistance would be broken through, although we expect a soft outcome as the last three quarters indicated declining trends.
Sell AUD/USD
Entry: Limit 0.7841 Target: 0.7778 Stop loss: 0.7853 
S&P/ASX200
It was unfortunate that yesterday’s trade set-up missed both entry and profit targets by only a few points. (2 points on entry and 3 points on profit target). The S&P/ASX200 looked like they were going to touch the 6,000 level but after the rate announcement, the it dropped 75 points in a matter of minutes. This shows how important another rate cut is to further gains to break through 6,000.
Unless today’s GDP comes out surprisingly strong, we may see some more weakness with the resistance level at 5,944.
Buy S&P/ASX200
Entry: Limit 5,943 Target: 5,909 Stop loss: 5,958
