Global Markets Overview – August 13, 2014

A Russian convoy of trucks carrying humanitarian aid for Ukraine drives along a road near the city of Yelets August 12, 2014. REUTERS/Nikita Paukov

It certainly seems to be a headline geopolitical risk driven market at the moment, as any news out of Russia, Ukraine or Iraq dictate sentiment. This time around the news wasn't too constructive with investors concerned about Russia using humanitarian efforts as an excuse to send troops across to Ukraine. Additionally, it doesn't seem like much progress has been made on the Gaza front ahead of the expiration of the ceasefire.

Geopolitical factors aside, disappointing ZEW economic sentiment readings for Germany and the region set the tone for weaker equities in Europe. The market was already expecting a sharp drop in these readings, but nothing quite as dire as the readings revealed. The German ZEW reading fell to the lowest since December 2012.

Europe's geopolitical issues are now starting to take a toll on the economy at a rapid pace and the longer this stretches out, the worse it will get. This in turn put pressure on commodities and other risk assets. EUR/USD came under pressure and retested August lows in the 1.333 region before a minor recovery. However, there is still a downtrend resistance in play which is likely to continue capping gains.

AUD in focus on local and China data

AUD/USD has seen limited moves all week and not even a strong set of local data yesterday could help spark a recovery. A jump in house prices and improvement in NAB business confidence and conditions were not enough to trigger a sustained recovery. On the calendar today we have Westpac consumer sentiment and wage price index due out. Wage inflation is expected to remain benign due to the weakness in the labour market. Any surprises in this number could have a sizeable impact on the AUD today.

Additionally we have data out of China at 15.30 AEST including industrial production, fixed asset investment and retail sales. There is also a possibility we'll receive China's new loans and M2 money supply data. Expectations are for continued steady growth in industrial production, fixed asset investment and retail sales. Any major variations could also sway the AUD. Elsewhere in the region we also have Japan's GDP and monetary policy meeting minutes.

CBA results strong, but is it enough?

Ahead of the open we are calling the ASX 200 relatively flat at 5529. Yesterday's gains were primarily driven by a rally in the banks ahead of CBA's FY results. Needless to say if the results are not well received, we are more likely to unwind today particularly with risk sentiment quite subdued. The bank has just reported this morning and at first blush the results seem broadly in-line with estimates, with a couple of beats in key metrics. Cash earnings came in at $8.68 billion, the market was expecting $8.6 billion, while the dividend was $2.18, also ahead of estimates of $2.13. Net interest margin was a smidge ahead of expectations at 2.14%. The question now will be whether this is enough to justify further gains in the share price.

It is a busy morning on the earnings front with CSL Limited, OZL, Suncorp and Computershare all reporting. I expect the reaction to all these results to dictate the market's performance today.

Asian markets opening call	Price at 8:00am AEDT	Change from the Offical market close	Percentage Change
Australia 200 cash (ASX 200)	5,529.20	-1	-0.02%
Japan 225 (Nikkei)	15,137.50	-24	-0.16%
Hong Kong HS 50 cash (Hang Seng)	24,710.60	65	0.26%
China H-shares cash	11,085.00	47	0.43%
Singapore Blue Chip cash (MSCI Singapore)	377.20	0	0.08%
US and Europe Market Calls	Price at 8:00am AEDT	Change Since Australian Market Close	Percentage Change
WALL STREET (cash) (Dow)	16,574.60	-16	-0.09%
US 500 (cash) (S&P)	1,936.21	-4	-0.19%
UK FTSE (cash)	6,621.40	-9	-0.13%
German DAX (cash)	9,092.50	-88	-0.96%
Futures Markets	Price at 8:00am AEDT	Change Since Australian Market Close	Percentage Change
Dow Jones Futures (September)	16,535.00	-5.50	-0.03%
S&P Futures (September)	1,932.38	-3.50	-0.18%
ASX SPI Futures (September)	5,473.00	3.50	0.06%
NKY 225 Futures (September)	15,137.50	-45.00	-0.30%
Key inputs for the upcoming Australian trading session (Change are from 16:00 AEDT)	Price at 8:00am AEDT	Change Since Australian Market Close	Percentage Change
AUD/USD	$0.9269	0.0015	0.16%
USD/JPY	¥102.280	-0.015	-0.01%
Rio Tinto Plc (London)	£34.98	-0.04	-0.11%
BHP Billiton Plc (London)	£20.25	-0.20	-0.95%
BHP Billiton Ltd. ADR (US) (AUD)	$38.56	-0.02	-0.06%
Gold (spot)	$1,308.70	-0.10	-0.01%
Brent Crude (September)	$102.88	-1.33	-1.27%
Aluminium (London)	2050.5	14.75	0.72%
Copper (London)	6955	-41.25	-0.59%
Nickel (London)	18806	86.00	0.46%
Zinc (London)	2328	19.75	0.86%
Iron Ore (62%Fe)	94	-1.70	-1.78%