Your morning market update includes some rare good news for Spain.
– It’s still all about the US but there was a bit of good news in the past 24 hours. First, news that Janet Yellen – the best candidate – was going to be nominated by President Obama helped markets in our time zone. This was followed by signs that the Republicans and Democrats are moving closer to talking properly even if a resolution is a little way off yet.
– Some weakness into the close on US markets and the Dow is only up 26 points or 0.18%. The Nasdaq is down 0.46% as tech shares came under attack earlier in the day (actually up 28 from the low) and the S&P 500 is up 1 point or 0.03% but 10 points off the low.
– Even though it was a weak close, this is still good performance in the context of the release of the FOMC minutes from the last meeting, which showed that even though the Fed didn’t Taper, most participants still thought they would be doing so before the year is over.
– As a consequence, the US Dollar is a little stronger against the Euro, which fell from a high of 1.3604 to sit at 1.3525 this morning. GBP was crushed by weaker-than-expected industrial production data which fell 1.1% mom against an expectation in the market of a rise in 0.4%. It is off 0.73% at 1.5965 from a high of 1.6121! The Yen lost a little ground and is back at 97.32 but the Aussie Dollar has been immune to US Dollar strength and is up 0.28% to 0.9448.
– Turning back to European equities and it is worth noting they were closing when US stocks were lower. At the close, the FTSE was down 0.44%, the DAX lost 0.45% and the CAC fell 0.16%. Milan and Madrid rose strongly up 0.98% and 1.29% respectively. Perhaps it was the Spanish announcement that they had overstated their debt position that helped the periphery.
– On commodity markets, Nymex Crude fell 1.96% to $101.46, Gold dropped 1.31% to $1306 and Copper dropped 1.84%. Doubtful it was about the IMF’s downgrading of global growth and more likely this is about US Dollar strength and the Taper. The Ags were positively boring by recent standards overnight, with Corn up 0.57%, Wheat falling 0.50% and Soybeans down just 0.1%
– On rates markets, US 10-year rates have climbed 6 points off the low of the day to 2.67%, Bunds are at 1.82% and Gilts are 2.51%.
– Closer to home, on the Sydney Futures Exchange the SPI 200 futures for December are down 14 points to 5125. On interest rate markets, 3-year bonds are unchanged while the 10-year contract is up 1.5 basis points.
On the data front, in Japan we get foreign investment and machinery orders and in Korea, the BoK will announce its interest rate decision. But it is the Australian employment data today which is the big release. The market is expecting around 15,000 new jobs to be created.
Tonight in Europe we get the ECB monthly report, industrial output in Italy and the BoE interest rate decision. In the US, it’s jobless claims.
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