– A better night for stocks in the US with the early swoon giving way to a mid-morning recovery. The data in the US was solid. Jobless claims fell to 264,000 which is apparently the lowest in 14 years. The industrial production data also beat with a rise of 1% against 0.4% expected and -0.2% last while the Philly Fed manufacturing survey printed 20.7 versus 20 expected.
– All around a better night, even it if wasn’t super strong, but there is a sense that the bounce off the 3-year trendline in the S&P that occurred yesterday might have legs for now. Certainly comments from Fed President James Bullard that there could be a delay to the end of QE, which is expected this month, is also helpful.
– At the close, the Dow was flat down 0.1% to 16,118.9, the Nasdaq was up 0.1% to 4,220.9 and the S&P 500 rose 0.1% to 1,864.2.
– Europe managed to close down again, which is very interesting given the recovery in the US the night before. The FTSE was 0.25% lower at 6,196, the CAC fell 0.53% to 3,919 but the DAX managed to eke out a 0.13% gain to 8,583. In Milan and Madrid, with Greece back in the news, it was another ugly day with stocks falling 1.21% and 1.71% respectively.
– Locally the support of futures traders – implying a general level of buying for the index rather than just specific stocks – off the multi-year trendline in our day yesterday hasn’t helped overnight traders, who once again have taken the SPI 200 futures substantially lower. The December contract is down 38 points to 5,193 bid. Perhaps it’s the continued fall in coal and iron ore which has them worried? We’ll have coverage of how the physical does throughout the day.
– In Asia yesterday, the Chinese new loans data looked solid, printing 857 billion yuan against expectations of just 730 billion. But it was nonetheless a down day for the region, with the Shanghai exchange off 0.74% to 2,356, the Hang Seng off 1.03% and the Nikkei, which hates USDJPY at 106 and change, falling 2.23%.
– Rates markets were higher overnight, with European markets selling off heavily to catch up with the rise in US yields in the last two hours of Wednesday’s trade. German 10s rose 7 points to 0.78% – a loss of 9.18% in the value of the bond on the day! In the UK, rates rose 14 points to 2.10% and in the US they were up 2 points to 2.16%. But volatility was high with another big range and a low of 1.97% on US bonds – Danger Will Robinson.
– Currencies consolidated the lows of this week, with USDJPY making a low overnight of 105.49 but it is back above 106 now. Likewise, euro fell to 1.2704 but is back at 1.2814 and the Aussie dollar tested 0.8684 but has recovered solidly to 0.8764 this morning. GBP is at 1.6059.
– On Commodity markets, iron ore’s reversal continued, suggesting a bit of a dead cat bounce so far from the lows. The December 62% Fe futures were down 98 cents a tonne to $79.58 while Newcastle coal has now dipped below $64 a tonne, losing 65 cents to $63.90. Elsewhere, copper slid below $3 a pound to close at $2.98 in what seems a bit of delayed catch-up to renewed concerns about global growth. Crude did better, with Nymex up 2.61% to $83.91 a barrel and gold is at $1,242 an ounce. On the Ags, wheat surged 1.86%, corn rose 0.75% and soybeans were up 2.17%.
On the data front, there is little to rival price action itself as the key driver into the week’s close. It’s a big one with some important levels tested this week and just below the market. A weak weekly close would be an ugly sign for the rest of October but clever traders will respect levels until they break.
Having said that though, housing start data in the US will be important tonight and the Chinese MNI sentiment indicator today is a big one for Asia.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
It’s been enough to make you feel patriotic. Three days where the Aussie stock market has rallied while international markets have been in turmoil. Nowhere has this plucky defiance been more evident than in the energy sector where Aussie energy stocks have made decent gains despite a bloodbath in the oil market.
What’s going on? One explanation may be that most of these companies are mainly about gas, not oil. Woodside gets only about 17% of its sales revenue from oil. The rest is mainly from LNG, much of which is subject to long-term contracts. Production reports have also helped. Woodside’s was particularly good with full-year guidance lifted.
This has seen Woodside bounce off the 78.6% Fibonacci retracement level and move to quickly fill the gap created by the oil sell-off last week. The first test for the bulls may be the 200-day moving average around $40.40. While I’ve left it off the chart to cut down clutter, the 38.2% Fibonacci retracement of the decline from $44.24 also cuts in around this level.
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC