US housing market remains stable, but is Australia currently in over-supply?

Good Morning,

US Stocks rallied last night (Dow + 175 points), as crude oil rallied on the back of stronger retail sales (released Friday), while Apple finally broke through its recent downtrend, following Warren Buffet’s move to potentially buy the stock…

Every time Buffet opens his mouth, he impacts the market in some shape or form.… incredible…

However, analysts believe that the rally is “short-lived” as US earnings are now out of the way, paving way for focus to turn to macro-data, including whether central banks will continue to stimulate the economy…

Housing data released last night showed that the US housing market, is holding up well…

What about oz?

Roger Montgomery this morning came out stating that there is a large over-supply in inner city dwellings, especially in Melbourne and Sydney and that this “backlog” may drive house prices lower…..  

We feel that even though AUS interest rates may fall yet again, consumer and business confidence is still fragile and the over-supply will impact prices to the downside….

So what can we expect today?

Local shares are poised to open higher, bolstered by Apple's rally on Wall Street.

What you need2know

·         SPI futures up 42 points or 0.8% to 5388 at about 6.30am Sydney time

·         AUD at 72.82 US cents, 79.41 Japanese yen, 64.39 Euro cents and 50.64 British pence 

·         On Wall St, Dow +1%, S&P 500 +1%, Nasdaq +1.2%

·         In Europe, Stoxx 50 -0.2%, FTSE +0.2%, CAC -0.2%

·         Germany's DAX was closed for a holiday

·         In London, BHP +2.1%, Rio +1%

·         Spot gold flat at $US1272.97 ounce at 3.12pm New York time

·         Brent crude +2.4% to $US48.96 barrel at 2.46pm New York time

·         Iron ore -0.4% to $US54.34 tonne

What's on today?

Local data: RBA board minutes, Weekly consumer confidence, New motor vehicle sales (April); RBNZ inflation expectations

Local earnings: OzForex, Dulux Group, Orion Metals

The annual Latin America Downunder Conference is held in Perth, Australia. Mining ministers and executives from Ecuador, Colombia, Chile, Cuba, Mexico, Argentina and Australia will attend. Through May 18.

UK inflation (April), Italian trade balance (March), Portugal industrial production price index (April), US consumer prices (April), US housing starts (April), US industrial output (April).

Fed speakers: John Williams, Dennis Lockhart

Overseas earnings: Home Depot, TJX Cos, Vodaphone Group, Premier Foods, Eurobank Ergasias, United Internet.

The International Gold and Silver Symposium in Lima; Mayer Brown Global Energy Conference in Houston.

The SPI is up 42 points this morning.


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