Here’s the morning market update, with everyone waiting for an Abbott-led rally.
– Markets in Australia are going to like the Abbott victory, it seems, as hope turns to expectation. The Australian dollar is already rallying and should get a lift and the ASX – particularly those sectors affected by Coalition promises – will get a fillip this morning as well. Interest rate markets might even like it if Austerity Abbott-style reduces the chances of the RBA rate hikes which are currently being priced into markets.
– Looking back on Friday, the non-farm payrolls data in the US missed by 11,000, printing 169,000 versus the 180,000 expected. Revisions to the last 2 months shaved more than 70,000 jobs from the data. Unemployment ticked down to 7.3% from 7.4% as people left the workforce. Disappointing data on the face of it, but an 11,000 miss in an economy the size of the US is just statistical noise.
– Balancing this small miss though is the better-than-expected Chinese export data released yesterday that showed an increase in August of 7.2% year on year versus 6% expected. The ANZ said in a note to clients that, “China’s August trade sustained the upward trend seen since July, in line with accelerating growth momentum and improving market sentiment, pointing to an upside bias in Q3 GDP growth.”
– In the US, stocks reacted badly to the jobs data falling right out of bed, but recovered to finish largely unchanged with the Dow up 0.10% and the S&P flat at 1655. The Nasdaq was 0.03% higher.
– In Europe, it was green across the board with the FTSE up 0.22%, the DAX in Germany up 0.5%, the CAC rose 1.05% while stocks in Milan and Madrid were 1.21% and 1.23% respectively higher. On the Sydney Futures Exchange (SFE), the SPI200 contract closed at 5157 on Saturday morning, up 12 on Friday’s close.
– Likely the rally in US bonds to 2.94% helped the stock market recover a little and this took rates across the globe in the 10-year space down to 1.95% in Germany and 2.76% in the UK. In Australia, 10-year bond futures in overnight trade on the SFE rallied 7 points off the low of 95.86 (4.14%) to close at 95.93 (4.07%).
– ON FX markets, the weaker-than-expected US jobless data knocked the US dollar heavily against the Yen, with huge reversals from above 100 to a low of 88.46 before finishing at 99.07. The Euro (1.3174) and GBP (1.5625) were both higher as well, while the Aussie’s rally continued, finishing the week at 0.9181.
– On Commodity markets, Crude was up 1.99% to $110.23. Gold bounced off an incredibly weak period which drove it into the $1360’s, after Russian President Vladimir Putin said that while he didn’t want to be dragged into a bigger conflict, Russia would continue to support the Syrian regime. News is breaking this morning that Assad has denied using chemical weapons in an interview with Charlie Rose and the pressure is building on President Obama as he continues to lose ground in Congress if reports are accurate.
On the data front today we get Kiwi manufacturing sales, Japanese GDP, ANZ job ads and home loans in Australia, as well as Chinese CPI data. Sentix Investor confidence in the EU but nothing of note in the US.
It is going to be an interesting week with US lawmakers back from the Summer Break and likely to vote Wednesday on the Syrian issue. The Fed’s next FOMC meeting with the taper attached is less than two weeks away now, so it might be a week for traders to don the tinfoil hats. But first, here in Australia, it is likely to be a good day for stocks.
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