Morning Wrap: European markets rise, Natural gas prices rebound, ASX to drop

Amid thin trading, European stocks rose overnight to near-nine month highs. The milestones also keep coming for the MSCI global equity index, which is having its best start to a new year since 1988. Natural gas prices rebounded overnight after several days of losses. And we look ahead to a consequential day in Chinese data. 

Let's go.

MARKETS

• US equity and bond markets closed for Martin Luther King Jnr Holiday

• European markets inched higher, with the FTSE 100 up 0.28%

• German 10-year bund yields rose by 3 basis points to 2.175%

• Natural gas prices rebounded after several days of losses

• Dalian iron ore futures retreated from 17-month highs

EARNINGS CALENDAR

Given the US stock market is on holidays, we thought it'd be prudent to give you a look at the week ahead in quarterly earnings.

• Tuesday: Morgan Stanley, Goldman Sachs

• Wednesday: Charles Schwab, Kinder Morgan

• Thursday: Costco, Procter and Gamble, Netflix, Intuit

• Friday: Reliance Industries, State Street Corporation

WORLD NEWS

Bright Start to Year for Bonds Eases Market Pressures (WSJ)

China’s government to take ‘golden shares’ in Alibaba, Tencent to ensure influence over internet giants (SCMP)

LNG Was the Hot Commodity of 2022. This Year is Different. (Barrons)

Western banks struggle to exit Russia after Putin intervention (FT)

ECONOMY

Japanese PPI (producer price inflation) soared last month on a year-on-year basis, suggesting the country’s deflation crisis is turning quickly into an inflation crisis. PPI is now up 10.2% year-on-year, beating economists’ forecasts handily and keeping the trend of recent months intact.

In contrast, German wholesale prices ticked down month-on-month for a third straight month. But the numbers are still eye-watering with the year-on-year increase coming in at 12.8%. 

Today, we’ll get Australian consumer sentiment figures from Westpac and ANZ (monthly and weekly respectively). We’ll also get a massive dump of Chinese data including:

• GDP Growth 

• Industrial Production

• Retail Sales

• Unemployment

If you’re trading the Yuan, stay by your screens at 1pm AEDT.

QUICK BITES

We’ve heard lots about the big price rises in commodities which come out of the ground - crude oil, gas, iron ore, etc. When Russia invaded Ukraine, wheat prices also soared given how much of the global economy relies on that country’s exports. But there’s a new part of the commodities world making gains - food. Eggs and butter are up 60% and 30% year-on-year respectively while coffee prices are up 15% year-on-year. 

I think I’ll skip breakfast this morning…

Reported by Chris Conway at Livewire Markets.

The Aussie market continued its bull run yesterday, adding a further 60 points (+0.82%) to settle at 7388. It was the fourth winning session in a row and eighth of the last nine. The ASX 200 is up 5% over the first two weeks of the year. The last time that happened was in 2020, just before the pandemic hit.

With US markets closed overnight, for Marin Luther King Day, there is little in the way of leads this morning. It comes at an interesting time for markets. Will the circuit breaker derail the momentum with the market stalling at 7400, or is a bit of a breather exactly what the hard-running bulls need right now? Time will tell.

ASX 200: ASX not at levels since May last year

As noted above, US markets were closed overnight. The FTSE posted modest gains in the UK, pushing towards a record high. The index is now less than 1% below the record high it achieved in 2018. Financial stocks were the best performers.

FTSE 100: Modest gains for UK benchmark index overnight

Sectors to watch

• There is not much to go on today with US markets closed and US commodities futures subdued.

• The big miners might come under some pressure today, after iron ore futures tumbled 2.5% in Singapore yesterday. They were down mor than 5% during the session. The moves came after Chinese authorities warned steelmakers against publishing false market information to boost prices.

• Gold and oil were also weaker overnight, in electronic trade. Gold was down 0.2%, with WTI crude down 1.2%.

ASX corporate actions occurring today:

• Trading ex-div: Katana Capital, $0.005; Tower Limited, $0.031

• Dividends paid: Garda Property Group, $0.018

• Listings: Today - ACDC Metals Limited, 1pm.

Economic calendar:

• CNY – GDP @ 1pm

• UK – Claimant count change, average earnings @ 6 pm

• German ZEW economic sentiment – 9 pm

• US Empire State manufacturing – 12:30 am