Here’s the morning market update from Greg McKenna at GlobalFX.
– Interesting first 24 hours of trade with a very long period of virtually no activity interspersed with a couple of signs of life in traders first after the weaker than expected US Durable Goods Orders (-7.3% v -3% expected) and then late in the trading day when a big sell order hit the stock market and gold went bid simultaneously. Apparently it was synchronous with Secretary of State Kerry upping the rhetoric about Syria but now proof of cause and effect really.
– Stocks kind of crashed from that point with the Dow finishing down 65 points but more than 100 points off the high for a fall of 0.43%. The Nasdaq fell just 0.01% and the S&P 500 fell 7 points to 0.39%. In Europe the FTSE and Dax were up 0.70% and 0.21% respectively but the action was in Milan where stocks fell 2.10% as Silvio Berlusconi’s party threatened to wreck the coalition and force a new election if he is voted out of Parliament.
– The ASX is going to be under pressure in our timezone today based on the above and you have to think that the 5050 level is now pretty solid and the focus is likely to return to 4950ish.
– Rates in the US liked the weaker-than-expected durable goods with 10-year Treasuries heading under 2.80% closing at 2.79%. Bunds closed at 1.94% and Gilts at 2.71%.
– On FX markets there was no momentum and I noted to colleagues yesterday afternoon that durable goods would see the market a bit gappy if it deviated from expectations which is exactly what we saw. The US dollar lost ground initially with euro (1.3367) trading up to 1.3394, USDJPY(98.44) trading down to 98.19, GBP (1.5575) trading up to 1.5611 and the Aussie (0.9023) trading up to 0.9069. The recovery in the US dollar is hard to pinpoint but it seemed to happen around the time that gold went bid.
– Indeed on commodity markets, gold went very bid at the same time that stocks got hit late in US trade, rallying from $1392 to around $1404 this morning. Nymex Crude was 0.46% lower to $106.13 Bbl and Copper sits at $3.33 lb. On the Ags it was again proof that Mandelbrot was right and volatility begets volatility with Corn up 4%, Wheat up 3.23% and Soybeans rose 4.58%.
– In other news, the Taper is all the talk but the annual US Budgetary impasse is looming once again with the Treasury releasing a report saying October is the key date – again. Watch this space very closely in the weeks ahead.
– Today we have Consumer Sentiment in Korea, IFO business Climate , Expectations and Current assessment in Germany which will be huge, Case Shiller house prices, consumer confidence and Richmond Fed index in the US.
Follow Greg McKenna on Twitter