Market movement dependent on upcoming US data

Market Review

Equity markets had a sharp sell off during yesterday’s session which was attributed to re-allocation of assets into bonds, as large institutional players are closing their books of about 200 different stocks. The Apple share price have been under pressure after hitting a new all time high as the iPhone 6 Plus is reported to be prone to bending and the new software update being put on hold – in yet another couple of cases against the company who’s image relies on immaculate quality. The launch of the previous iPhone saw problems with the signal, as well as the maps software being flawed. In terms of the data; durable goods orders were unsurprisingly negative due to last months orders at Boeing which were record breaking. The initial jobless claims were below 300k which is reflecting the continuously improvement of the labour market. In terms of strategies both the S&P and the Nasdaq were stopped, although crude oil hit first target and made the day profitable.

Today's Fundamental View

This morning have seen news coming out of a Russian news agency stating that that Brussels does not intend to impose new sanctions against Russia. The interesting part is that this is coming from a Russian agency, which may only be issuing propaganda to its population. Should it be correct and confirmed by official sources in the EU, chances are we will see a further lift off in stocks from the levels we have already met resistance. The session ahead is full of backward looking and dated data, with the third and Final GDP reading for quarter two in the US, as well as the Revised University of Michigan Consumer Sentiment number, which is the second and final reading. With this we are dependent on news to get the markets moving. As voices in eastern Europe has intensified this morning we believe there is room for escalation on this front with Ukraine stating the rebels have broken the foundation for the ceasefire. In terms of currencies, it is worth noting large investment banks have either sold or issued sell recommendations for the EURUSD, targeting the 1.20 handle. The strategy will go short with yesterdays sell off in equities as well as the EURUSD, while crude oil and US10Y will have a buy recommendation.

Alternative View

Any geo-political risk should be carefully analysed, with continued focus on Ukraine as well as US data being a key catalyst for movement today. Monetary policy comments from the US will carry weight.