Here’s the morning market update, with some cautiously good news on the global front and the ASX.
– US equities bolted out of the gates early doors as they played a bit of catch-up to the positive moves in Europe on Monday and reasonably good manufacturing PMI data from around the globe released while they were on their Labour Day break.
– At its peak the Dow hit 14,837 before plummeting to 14,777, then rallying back to close at 14,834 for a gain of just 0.16%. The S&P (1640) had similar fortunes as did the Nasdaq (3613) although they finished stronger posting rises of 0.43% and 0.64% respectively.
– The catalyst for the sell-off seems to be tough talk from Republicans in support of a strike on Syria, although the data flow and rise in US 10-year rates back to 2.86% seems to suggest there is quite a bit of “Taper Talk” in last night’s reversal of fortune from the day’s highs. In the UK, Gilts rose to 2.7% and Bunds closed at 1.94%. These are not missile/safe haven flows; these are taper moves.
– Having said that, Gold is up around $25 from the lows at $1413 this morning and it certainly did catch a missile bid. In other commodities, Nymex Crude rose 0.89% to $108.61 Bbl, Dr Copper bounced back to $3.30 lb for a gain of more than 2% while Silver rose almost 4%. Soybeans rose another 0.81% to a six week high.
– On FX markets, the USD caught a lift from the better-than-expected ISM data, which showed manufacturing to be stronger than the pundits thought. This drove the Dollar Index higher and the Euro (1.3176) – as the dollar indexes best proxy – is down a little. In the end the USD gave back most of its gains and was under pressure against the Aussie, which is benefiting both from the better global data but also the decision by the RBA to stand pat. This morning the Aussie is up 0.86% at 0.9055.
– On the local share market, the ASX confounded the bulls yesterday and had a down day and it could come under pressure again today as it looks a little vulnerable short-term.
– On the data front today, it’s another big day locally with GDP in Australia. The Kouk is right, we really need to either move the data releases or the RBA meeting as it is ridiculous that this data is released after the RBA meeting. In China we see HSBC Services PMI and then the raft of European and Global services PMI’s. Challenger jobs in the US along with NYC ISM, Fed Beige Book, total vehicle sales in the US and a BoC decision on interest rates.
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