To the scoreboard:
Dow: 22,997.44 +40.48 (+0.18%)
S&P 500: 2,559.36 +1.72 (+0.07%)
AUD/USD: 0.7845 -0.0006 (-0.08%)
ASX200 SPI futures (December contracts): 5,865 (-6)
1. Dow hits 23,000: The US Dow Jones index briefly hit 23,000 overnight for the first time ever, before closing just below as earnings season gets under way. Goldman Sachs easily beat expectations but its stock fell more than 2% as CFO Marty Chavez shed some light on the struggling commodities division. Futures traders expect a quiet open this morning for the ASX200, which is enjoying a strong rally in October.
2. USD the main mover: The US dollar index rose to a one-week high on some solid data, as industrial production figures showed the economy largely absorbed the impact of last month’s hurricanes. With the US Fed on track to hike rates in December, there was also some speculation that Stanford economist John Taylor — an advocate of stricter monetary policy — was firming as a likely successor to US Fed chair Janet Yellen in February.
3. The global economy is all good: Steady growth with low inflation — also known as “Goldilocks” conditions — have been a central theme in the global economy this year, and the number of large investors who think the current trend will continue just rose to a record high:
4. Commodities mixed: Iron ore was steady overnight ahead of China’s National Congress which starts today, and key Chinese data tomorrow including Q3 GDP. Base metals were sold off — copper fell after gaining for six straight sessions, nickel was down and zinc was almost 4% lower. Oil prices dipped after an outbreak of fighting in northern Iraq had supported prices in recent days.
5. Data today: China’s congress is scheduled to kick off around midday AEST. Domestically, the Westpac-Melbourne Institute leading indicator index for September is due at 10:30am AEST and NAB’s cashless retail sales data comes out at 11:30am AEST. Later tonight, the UK has average weekly earnings and the unemployment rate for the three months to August.
6. Trouble ahead in earnings season: Morgan Stanley analysts see a near-term risk of a 5% market correction as US earnings season gets under way. Stocks typically get bid up ahead of earnings and sold when they miss expectations, and MS thinks that selling could be exacerbated given stock prices are already elevated.
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