Indices rebound from heavy selling at the open

Discussion in 'Trading' started by TradeTheNews, Mar 1, 2007.

  1. TradeTheNews

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    US Mid-Morning Recap
    by TradeTheNews Staff

    - Sentiment was pretty weak heading into the US open. Equity markets were lower around the world with the Shanghai Index giving up nearly all of yesterday’s bounce and European markets down another 2%. Money was again flowing out of equity and into government bonds. Just after the NY open, what looked to be a large asset allocation trade pushed equity futures, indices and treasury yields below Tuesday’s worst levels. The Dow traded down 200 points while the Banking Index (BKX), Broker/Dealer Index (XBD) and the Oil Service Index (OSX) all tested their 200-day exponential moving averages. Equity markets finally found some real traction heading into Feb ISM Manufacturing data that was reported ahead expectations at 52.3. The 50+ reading indicates growth but more importantly the prices paid component rose to its highest level since September pressuring treasuries. Bond markets are well off of opening levels while US indices have stabilized down around 0.5% or less. 10-year +3/32 at 4.55% Drug, managed care, and semiconductor stocks have been exhibiting some relative strength throughout today’s session.

    - The focus in the currency markets remains the carry trade. A well-timed early morning rumor of a US prime lender entering bankruptcy fanned the flames sending the USD/JPY briefly below the 117 level. Unable to test a key 1-year uptrend line around 116.70, the ISM data has helped the USD/JPY rebound to 117.60. Regardless, the unwind theme has held with the Yen up 1% against the Euro, Swiss Franc, Australian Dollar and Pound. The EUR/USD is at session lows down 0.5%. April crude moved lower earlier but has also rebounded back above the $62 mark since the stronger US data. Metal futures are fairly quiet with Gold, Silver, and Copper up 1% or less.