Ahead of the open, (05-04)
Wednesday, April 4, 2012 at 07:13PM As European (particularly UK) traders began preparations to head out for a 4 day holiday, a sea of red was being left behind for U.S markets premarket. By the time they exited the offices at close, Europe’s leading blue chip index, DJ EURO Stoxx had dropped ~2.5%. Believe me, these guys take their holidays seriously and nothing will stand in their way to get on the road (or pub), even on a day where UK ‘green shoots’ appeared as the economy expanded nicely. Not to say the ‘holiday’ week was responsible for the markets falling, but it did play a part overseas and in N.A markets.
The facts were : Eurozone service PMI’s pointed towards a recession..again(widely held view its been stagnating), Draghi cutting taps off post LTRO, a poor Spanish bond auction (yields now up to 5.7%) was a test gone bad on their budget proposal and we were back to Eurozone blow up fears. None of these are surprises or something we haven’t been through the past year. One thing to ask is if these ‘here we go again ‘ fears are major, what’s up with Gold or rather ‘down’ with Gold?. (low of $1,613)
If the European sour lead wasn’t enough, the US markets were dwelling on the FOMC minutes, services ISM came in a touch light, an IBM d/g and a SNDK pre-announcement took a technically vulnerable SOX/ tech for a ride down, while almost every other 'right' group also played a part in the broad market decline. Financials, the beneficiary of stable credit markets overseas felt the poor ‘Spanish’ auction. CRX, which we’ve highlighted with weekly <1% losses in March had its worst day of ’12 falling just under 2% on the stronger USD.
All in, negative slanted pieces abound, but selling didn’t seem panicked in a thinning liquidity atmosphere. It felt like some of the profits out of the crowded longs were being taken and nothing else. A SP1398 (-1%) close isn’t that bad considering the news flows encountered today. It’s doubtful any investors will come out Thursday in an already thin market, so traders will dictate market direction.
China might be interesting overnight as they come off the Tomb sweeping festival. Will the Shang’ feel the healthy PMI or follow Global markets? SSS retail #’s for March out Thursday. NFP# now at 205k consensus for Friday.
Happy Easter Holiday and Happy 'Opening day' MLB