The sell-off in global bond and sharemarkets eased this morning in the US as investors positioned themselves ahead of the release of the vital April jobs report.
The report will go someway to framing investor views of the timing of the US economy and the first rate rise since 2006, as well as inflationary expectations, which have been a big driver of the sell off, especially in bonds and especially in eurozone bonds.
The reversal in markets saw Wall Street end with gains, the US dollar rise, oil prices and gold sell off sharply, and the Aussie dollar dip closer to 79 US cents.
The S&P 50 closed 7.85 points, or 0.4%, higher at 2,088.00, the Nasdaq rose 25.90 points, or 0.5%, to 4,945.54 and the the Dow finished 82.08 points, or 0.5% higher at 17,924.06.
Our market will start with a small loss, which could quite easily become early gains as investors recover their confidence here about the banks – judging by the modest rebound in Commonwealth Bank shares yesterday afternoon.
The All Ords dropped 0.8% to 5645.1 and the ASX 200 also fell 08% to 5645.7, following Wednesday’s 2.3% slide.
Commonwealth Bank shares rose 0.15% to $83.11 following Wednesday’s 5% plus sell off. ANZ shares fell 0.6% to $US33.01 and Westpac shares eased 0.2% to $33.90. NAB shares remained suspended to allow the bulk of the $5.5 billion rights issue to be completed.
The best indication of the sharp change in sentiment came in the eurozone binds markets where yields on 10 year German bonds leapt in early trading to more than 0.80%, then started retracing to end the day unchanged on 0.59% – still up sharply from the low of 0.05% early last month.
The Financial Times reported that yields on 10 year bonds in Spain and Italy both briefly rose above 2 per cent before ending the session down 12 basis points and 18 points at 1.76% and 1.75 respectively.
US bonds sold off at the start of trading with the 10-year yield touching a five-month high of 2.31% before reversing to end the day down 6 points at 2.18%.
Brent oil futures dropped 3.3% on the day to end at $US65.54, after eyeing $US70 a barrel in early trading. And US oil futures fell 3.2% to end the day just under $US59 a barrel – down almost $US2 a barrel.
Gold prices were down around $US8 an ounce at $US1,182 on Comex in New York.
Australian government 10 year bonds rose above 3% overnight in early trading, but eased to finish at 2.98%, still up on the day.
Chinese trade data for April will be released later today and the market could go either way as investors remain nervous about curbs on margin trading.
The Shanghai market lost another 2.8% in value yesterday after losses of more than 6% in the two previous days of trading.
