Your morning market update includes Sugar in Surge Shocker!
– More bad news for Stocks as the US Federal Government seems to be just hours from shutting down, with the two sides of American politics squaring off over Obamacare and the debt ceiling. The timing is midnight East Coast US time which is about 2pm AEST.
– So at the close, the Dow was down 0.84% with a fall of 128 points, the Nasdaq will fall 0.28% and the S&P 500 was off 10 points or 0.58% at 1682. Strangely though – and important for Australian and Asian markets today – is that it was actually an up day for the S&P 500. That is, while it opened weak, very weak with a low of 1675, it rallied from that point. Most likely that was on the back of strong Chicago PMI, which at 55.7 was pretty strong relative to expectations of a print of 54 and 53 last time. Equally the Dallas Fed manufacturing index printed 12.8 versus 5 expected.
– In Europe, stocks felt the weakness of Asian markets and the concern about the US shutdown, along with the tremors that continue to reverberate through Italian politics and weaker-than-expected German retail sales (0.5% versus 0.8% expected). The FTSE and DAX fell 0.78%, the CAC was 1.05% lower, Spanish stocks fell 0.46%, while stocks in Milan were 1.20% lower.
– On FX markets there was a bit of a reversal of fortune for the Yen and the US dollar, with USDJPY up 0.37% to 98.28 while Euro (1.3528) rallied 0.37%. The Pound (1.6190) was 0.46% higher and the Aussie dollar (0.9324) came back from a low of 0.9278 yesterday. These moves make no sense unless you consider that it was actually an “up” day for the S&P 500, so less worrying for the “risk on or off” trade.
– On Commodity markets there was less fear, with Nymex Crude down 0.52% to $102.33, Gold falling 0.75% to $1328, and copper dropping a cent to $3.31 lb. The Ags were at it again, with Corn down 2.75%, Wheat off 0.66% and Soybeans down 2.94%. Sugar rose more than 4%!
– On rates markets it was fairly quiet all things considered, with US 10-year treasuries down a point at 2.61%, but intraday trade mapped the moves on the S&P. 10-year Bunds are at 1.78% and Gilts are 2.54%.
– Closer to home, the better-than-expected performance of the S&P saw the SPI 200 contract on the Sydney Futures exchange rally 10 points overnight to 5231 on the December contract. On interest rate markets, the 3-year bond contract was down 2 points and the 10-year was off just 1.5 points. It just reflects the fact that Asian Mondays overreact sometimes as we saw last night with the US recovery.
On the data front of course, the RBA is out at 2.30pm this afternoon. But before that we see Korean export data, the AIG performance of Manufacturing index in Australia – which has been a shocker for so long the hope is it might start to recover – and then Tankan in Japan and NBS Manufacturing PMI in China (even though it’s a holiday). Tonight is Markit manufacturing PMI in Europe and across the rest of the globe, with the ISM also out in the US.
A big day beckons.
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