A slowdown in Chinese exports and tensions between Russia and Ukraine look to have put a damper on bullish sentiment in equity markets this morning. China’s CSI 300 Index dropped to a five-year low after customs data from March 8 showed exports from China fell 18.1% in February from a year earlier.
Equities: The E-mini S&P 500 (CME:ESM14) is down in morning trading; it is down about 8 points to 1870 thus far. It looks to us as though the bullish sentiment may be changing, at least in the short term. Volume was light near recent highs, and we put in a potentially bearish doji star candlestick on the daily chart. Now, we look for a big volume day to the downside for further confirmation. Our next target lower is 1862. We believe the China export news, combined with the belief that the taper will consistently continue, may put a damper on the bullishness of the market. The next key chart level we look at as a potential support or target is 1845.
Bonds: The U.S. 30-yr Treasury Bonds are up 5 ticks, likely aided by equity weakness. The recent trend in bonds still looks to be down, but today is a light volume, higher day thus far. The bonds are trading right around their daily pivot level of 131’09, and the next key resistance level is 131’30. We could see stocks and bonds start to head lower soon, as the jobs report on Friday may have further confirmed the Fed will continue their taper without pause over the next several meetings.
Currencies: The British Pound (CME:B6) is down 94 ticks to 166.31, after putting in a fairly bearish day on Friday. We look at 165.40 as a potential next target below here. The EUR/GBP spread has strengthened today, with the Euro (CME:ECM14) down only 3 ticks to 138.69 vs. the Pound which is down much more. The Franc is down 9 ticks to 113.90, putting in today a potentially bearish doji candlestick formation, especially since it is showing up after a multi-month rally in 2014.
Commodities: Coffee (NYBOT:KCK14) is still strong today, up around 2.5% to $201.75. Even with coffee’s recent strength, there does seem to be some sellers emerging at pricees just above the $2.00 level. However, we do not detect any major reversal signals just yet. Gold (COMEX:GCJ14) is up $6, likely on equity weakness, to $1,343. Gold doesn’t look incredibly bullish to us at these levels. Grain markets are down today, likely on the China export news. Corn is down $0.025 to $4.865, while soybeans are down $0.09 to $14.15. WTI crude oil (NYMEX:CLJ14) is down $1.32 to $101.26, after having what can now be called a short covering rally at the end of last week. We believe the China news is negatively effecting commodity prices today, and we would not be surprised to see crude head below $100 from here.