Equity markets around the globe are seeing a bit of pressure heading into the morning. Most major benchmarks, including the DAX and Nikkei, have lost about 0.5%. The Hang Seng is down 1.7% and emerging markets continue to weigh on global sentiment.
Major U.S. benchmarks grinded forward in the second half yesterday and added gains overnight. Buzz that China offered to add $25 billion in purchases of U.S. goods this year turned a potentially dulling tape back north before the close. The offer comes days after Commerce Secretary Wilbur Ross left Beijing but also surfaces question marks to the $70 billion in purchases spoken of weeks ago.
Despite a slower start, the S&P 500 followed trading up to resistance at 2744-2745.25 and the highest level since March 19. Here, Friday morning, we discussed the increasing likeliness that Nonfarm Payroll would be beneficial to stocks and that is exactly how a strong report played out; Average Hourly earnings and job growth both topped expectations at +0.3% and 223k respectively. Benchmarks around the globe are higher this morning with Asia leading the way; the Nikkei is +1.37% and the Hang Seng +1.66%.
Ahead of today’s May Nonfarm Payroll Report, there is one word that can describe the U.S. equity market this week; resilience. This market has digested every fear mongering event inching forward and awaiting the next. Tuesday morning, Italy was going break off into the Mediterranean Sea, the market battled back.
Major U.S. benchmarks are bouncing back this morning after the Italian crisis rolled fear across the globe. Though the picture is still very unclear, both anti-establishment parties are supposedly back to the drawing board and willing to pick another name to become Finance Minister. Remember, the major issue was that their previous choice, an 81-year old hard-lining Eurosceptic, was vetoed by the President.
Yesterday’s roller coaster ride in the S&P 500 ended very favorably for the bull camp. What began as a solid open at 2730 quickly became a retest to Wednesday’s session low of 2704.50 after the White House announced the cancellation of the North Korea Summit. For us, the key to being a buyer on that pullback was that Treasury prices barely budged.
The S&P 500 finished yesterday on very soft footing after again failing to hold ground above 2740 in what was the lowest volume session since the week of Christmas. Major benchmarks from across the globe are all lower this morning; the DAX is -1.5% and the Nikkei -1%.