Your morning market update, coming to you just nine hours before the last Friday knock-off drinks of the year.
– The day after the taper and the focus shifted a little with European stocks playing catch-up to the big US rally the day before and Gold getting hammered. The notion that the free money era is ending hurt the yellow metal, which is trading down toward the low of the year. The euro continues to be pressured but the Aussie might be finding some support down here.
– There were some interesting economic developments overnight with the data in the US falling heavily on the weak side. Jobless claims were up another 10,000 from last week’s aberrant print (at least that’s what the market thought) with 379,000 new claims filed last week. Existing home sales also printed weaker, down 4.2% in November against the 1.5% fall that the market had expected and weaker than last month’s fall of 3.2%. The Philly Fed survey was also weaker at 7 which is below the 10 that was expected. Westpac wrote yesterday that they thought the Fed had erred by tapering before the US economy had found its escape velocity – time will tell.
– At the close, the Dow is up 0.07% at 16.179, the Nasdaq is down 0.30% and the S&P 500 is off just 1 point to 1810.
– In Europe however it was “catch-up day” with the FTSE up 1.43% after its boring performance the day before, while the DAX, CAC, FTSE MIB and IBEX all building strongly on their more than 1% gains the previous day rising 1.68%, 1.64%, 1.78% and 2.33% respectively.
– In Asia yesterday, yen weakness dragged the Nikkei up 1.74% and our own ASX was up more than 2% on the back of both US stocks and the tumbling Aussie dollar. Overnight on the ASX Futures, the SPI 200 has fallen 5 points for the Dec contract to 5233 bid but March is up 10 points to 5193 bid.
– On the bond markets, US 10’s are getting dangerously close the 3% mark, rising 3 points to 2.93%. German 10’s are up 2 points to 1.87% while UK Gilts are up 4 to 2.97%. Here at home on the SFE, the 3’s lost 2 points to 96.99 while the 10’s mirrored the US fall losing 3 points to 95.75.
– On FX markets the Aussie has held up okay off the low of 0.8818 yesterday which followed the Taper announcement. It sits at 0.8855 this morning. Elsewhere USDJPY is at 104.16, the euro is on its way back down at 1.3656 and even sterling couldn’t rally overnight, falling back to a still elevated 1.6370. Aussie NZD has finally bounced and sits at 1.0821 while EuroAussie looks like it might have topped too. It sits at 1.5413 off the more than 1.55 high yesterday.
– But Gold was the big news overnight, breaking a very important level around the $1220 region. It sits at $1192 this morning, just a few dollars above the low of the year. The loss of 3.24%, or $40, is a big one. Nymex crude is up 0.99% to $98.63 while Copper is off a few cents at $3.34 lb. The Ags were mixed with Corn up 1.29%, Wheat fell 0.33% and Soybeans rose 0.23%.
– Strangely Bitcoin rallied, around the same time Gold sold off, it seems. It sits at $708 this morning, up from a $522 low.
On the data front, no one really cares. The taper is done, Christmas is next week, so for many traders this is it for the year. But before they head off we have a few little gems to get through in the next 24 hours. The BoJ is out today with a monetary policy decision and press conference, German Gfk consumer confidence is out along with UK GDP, as is the third read of US GDP and personal consumption data. So we might get a bit of thin trading position squaring both today/tonight and into year end a large number of traders and investors will be absent for the next two weeks.