– The Aussie dollar and iron ore rallied overnight as both markets recovered from what looks like oversold conditions at the moment. Iron ore’s rally, if it has legs, will help the Aussie in the short term but traders can hardly rely on it given they ignored the iron ore crash over recent months when the Aussie was strong. RBA today and FOMC later this week are the key events for the Aussie which sits at 0.9030 this morning.
– On stocks, in the US, trade was mixed with Dow up 0.2% to 17,026 the S&P down 0.1% to 1,983 and the Nasdaq fell 1.05%. What drove the sell-off seems more speculative than real, with some market watchers suggesting it is traders and fund managers making room for the Alibaba IPO in their portfolios. Perhaps?
– On the data front, mixed results as well with industrial production falling 0.1% against an expected 0.3% rise in August. But the New York Empire manufacturing index was a counter balance to this, with a surge from 14.70 in August to 27.54 in September. That is good news but the competing data highlights the difficultly the FOMC will have when it sits down for a two-day meeting tonight in handling what is a clearly recovering but not surging economy.
– In Europe, the DAX managed to eke out a small gain of 0.09% to 9,660 while the FTSE dipped a little bit, down 0.04% to 6,804. In Paris, the CAC fell 0.29% while stocks in Milan and Madrid fell 1.04% and 0.44% respectively.
– Locally, the impact was that after a really poor day on the physical ASX market, September SPI futures are up 2 points to 5,474 while December contract rose 3 points to 5473.
– In Asia yesterday, the maelstrom surrounding the elections seems to be weighing on investor sentiment in Hong Kong with the Hang Seng down 0.97% to 24,357. The Nikkei was up 0.24% to 15,948 and in Shanghai, stocks rose 0.3% to 2,339.
– Bonds continued their incredible volatility, with Spanish 10s rallying 7 points down to 2.34% for a capital gain of 2.99%. Bunds were 2 points lower at 1.02%, US 10-year treasuries were lower by 2 points as well at 2.59% and Gilts rose 1 to 2.54%.
– Turning back to Currencies, and when looking at the Aussie dollar’s rally, there is evidence the strength was a little bit of commodity bloc buying with the Kiwi and Looney also stronger against the US dollar overnight. Sterling sits at 1.6231 this morning while USDJPY might have topped and is at 107.17 while euro is at 1.2934.
– On Commodities, Iron Ore rallied 65 cents to $84.71 a tonne for September delivery while Newcastle Coal rose 0.25% to $66.15 a tonne. Crude rallied 0.61% to $92.83, Gold rallied a few dollars to $1,233, Silver closed at $18.67 and Copper dipped to $3.09 a pound. On the Ags, Wheat dipped 0.4%, Soybeans were largely unchanged and Corn rose 1.36%.
On the data front today, we see the RBA minutes from this month’s board meting at 11.30am, BoJ governor Kuroda will speak and Chinese FDI data is out. Tonight, the CPI in the UK will be a big event for sterling and the expectations on rates. In Germany, the ZEW survey of economic sentiment is important while the US will release PPI, TIC flow data and Producer Prices.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
Retailer, Premier Investments, will unveil its full year results tomorrow. Premier’s retail operations are headed up by former DJ’s supremo Mark McInnes. It operates a number of brands including Smiggle, Peter Alexander, Just Jeans and Jay Jays.
As it heads into tomorrow’s release, sellers have been testing the neckline of a head and shoulder pattern on the Premier chart. Trading on a multiple of around 17.7 times next year’s earnings, Premier will need to please the market tomorrow to hold this support, especially once it goes ex its dividend, which is expected to be around 20c per share. Market focus will be on comments about sales over the last couple of months as well as on the results themselves.
If the head and shoulder neckline is broken then, from a chart point of view, a deeper correction towards the 50 or 61.8% Fibonacci retracement levels looks a possibility
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.