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Big Miss – Durable Goods, USA30 at 200 DMA

Market Analysis

GBPUSD, Daily         

U.S. durable goods orders dropped 2.2% in May after a 3.3% surge in April (revised down from 3.4%). March orders were bumped up slightly to 2.0% from 1.9%. Negative signs predominated. Transportation orders slipped 0.5% from prior gains of 8.5% in April (revised from 8.9%) and 5.3% in March. Excluding transportation, orders were down 0.3% compared to the prior 0.5% gain. Nondefense capital goods orders excluding aircraft declined 0.7% from -0.4% previously (revised from -0.8%). Shipments dipped 0.2% versus the 0.4% April gain (revised from 0.5%). And nondefense capital goods shipments slid 0.2%. Inventories fell 0.3% from -0.4% (revised from -0.1%). The inventory-shipment ratio was steady at 1.65. Data are much weaker than expected.

US equities are decisively lower in pre-open trade after the Brexit vote, in line with the haircut on equities around the globe, though that cut has been a bit shorter on some exchanges than others. The Dow is 4933-points in the hole the Daily, collapsed through the 20, 50 DMA’s  and only found support at the 200 DMA.  S&P is off 69-points and NASDAQ has tumbled 153-points. The S&P 500 sank a maximum of 5% limit-down overnight and were halted at 1,999, after a big hit on U.S. financials. Across the Pond the reaction has been intriguing as the dust has settled, with the Euro Stoxx 50 some 8.8% lower, but the UK FTSE less than half of that at -4.0% thanks to the weak pound (after tanking over 7% initially), while Spain’s IBEX is off 12.5% as this empowers a potential “Spanxit.” The German DAX is about 7.0% lower. In Asia, the Nikkei went limit down near -8.5% before the circuit breakers halted that move at -7.9%, the Shanghai Comp sank just 1.3% and the HK Hang Seng dove 2.5%. Gold rallied over $1,358 before pulling back to $1,324, while WTI crude is just 1% lower near $48.85 after deeper losses. Russell rebalancing could get interesting amid a burst of trading volumes. The VIX equity vol index is 40% firmer near 24.20 off highs of 26.24.

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Stuart Cowell

Market Analyst 


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