On Wall Street overnight, US stocks recovered from early falls after upbeat housing data boosted home builder stocks and investors speculated that Goldman Sachs will prevail, while concerns about financial regulation eased.
The NASDAQ was the best performer, up 0.6% after technology stocks found momentum late in the session, with Amazon posting its highest-ever closing price. The broad-based S&P 500 could only add 0.2% while the Dow Jones Industrial Average eked out a gain of 0.1%.
Scepticism is developing regarding the SEC’s case against Goldman Sachs. It’s starting to look shakier as more evidence begins to emerge. Participants are willing to take positions in Goldman, betting that the outcome won’t be detrimental no matter what happens. Elsewhere, markets received a boost from a softer-than-expected speech from President Obama about financial reform.
In Asia, regional markets are all lower this Friday as renewed concerns over Greece’s deficit weighed on the euro and added to pressure on the Group of 20 finance ministers meeting in Washington. As at 06:00, the Hang Seng is the weakest performer, down 0.8% while the Nikkei, Shanghai and Kospi are all lower between 0.3% and 0.6% respectively.
In Australia, the ASX 200 is seeing further weakness to be currently 0.5% lower at 4885. Leading the declines today are the index heavyweights; the financial, materials and energy sectors, while the biggest percentage decliner is healthcare (-4.2%), due to a 7% fall for CSL after its competitor, Baxter, reported weakness in the blood plasma market.
Turning to Europe, Wall Street’s momentum into the close should prove sufficient to help European markets – which took something of a beating yesterday – to rebound at the open.
There’s also some high profile economic news due in the early part of the day that could deliver further momentum and arguably determine whether any rally here has legs going into the weekend break – German IFO data is forecast to show some improvement once again, whilst the first GDP reading from the UK for Q1 will also be hotly awaited.
The UK may have pulled away from economic contraction but the growth remains embryonic and any reversion here could have important ramifications both politically as the election draws closer and for this latest confidence we’re seeing in equity markets.
Earnings news is set to be thin on the ground in London although numbers continue to pour out of the US. Therefore ahead of the open we’re calling the FTSE up 32 at 5697, the DAX up 34 at 6203 and the CAC up 12 at 3937.
