Your morning market update, where the taper countdown finally begins.
– Less than 24 hours now till traders find out whether or not the Fed is going to taper, and if so, by how much. There is a press conference after that meeting so Ben Bernanke will have the ability to clarify the statement that is released, which is one reason many are now expecting a small taper. It will be the focus of the next day’s trade across stock, bond and currency markets.
– Overnight trade in New York has seen stocks back off ever so slightly and with 45 minutes to go before the close, the Dow is up 0.05% to 15,892, the Nasdaq is up 0.01% and the S&P 500 is off 0.20% at 1,784.
– In Europe though, it was a weak night with the strength in the German Zew sentiment survey (62 versus 55 expected) and even strength in the EU ZEW (68.3 v 60.2 last) unable to lift the spirits of traders. Stocks were down across the board. Perhaps it’s the case that current conditions in the German survey are still very weak at just 32.4, but either way the FTSE closed down 0.56%, the DAX fell 0.86%, the CAC slipped 1.23% while stocks in Milan and Madrid fell 1.63% and 0.92% respectively.
– In overnight trade on the ASX, the SPI 200 futures are up 8 points for both the Dec and March contracts, with Dec finishing at 5105 bid. On the bond boards the 3’s are up 3 to 97.07 and the 10’s are up 1.5 points to 95.825.
– On FX markets, the Aussie dollar has suffered at the hands, it seems, of the MYEFO black hole announced yesterday by the Treasurer. Traders in Australia didn’t get too excited by the release but offshore overnight the selling came, knocking the Aussie under 89 cents to a low of 0.8879 – it sits at 89 cents now.
– Elsewhere, the euro is largely unchanged at 1.3769 and sterling is down a little but not as much as might be expected given inflation continues to fall (2.1% v 2.2% expected). GBP sits at 1.6258 this morning, while USDJPY is down 0.37% to 102.62.
– On commodity markets, Gold was hit hard falling $14 to $1231, Nymex crude was a little lower at $97.15 but Dr Copper is still quite high at $3.37 lb. Corn was up 0.83%, Wheat fell 0.40% while Soybeans rallied 0.50%.
– Bitcoin has been under pressure with fear of more restrictions out of China and it sits at $744 this morning.
On the data front, nothing really matters except the FOMC decision that will be released tomorrow morning Australian time. But that doesn’t mean there is nothing to watch as RBA Governor Stevens is appearing before the Parliamentary Economics committee at 9.30am AEDT this morning. We also see the Westpac Leading Index but that is not often, if ever, market-moving.
China and Germany have some important data as well with Chinese house prices, business sentiment, leading economic index and FDI all released. IFO is out in Germany and the BoE minutes are also to be released in the UK.
And in the US mortgage applications, building permits and housing starts will all be released prior to the Fed announcement and press conference.
The Christmas wind-down can start in a day or two – but not yet.