Your morning market update, with a raft of PMI data on its way.
– Stocks and the US dollar reversed on Friday as the market apparently focused on comments from St Louis Fed President James Bullard that the decision by the FOMC last week was a “close decision” and that “October is a live meeting”. But the focus seems less on the fact that Bullard is a bull on the QE program, thinks inflation is too low and said that the data had disappointed so the Fed decided not to Taper as a result. It was a continuation of the transparent policy process rather than a bearish shot across the bow – the market is the market but my reading of it is Bullard has been thin-sliced and misinterpreted.
– Not that it mattered though, with the reporting focusing on “close” and “live” more than the realistic dovishness and open mind that Bullard showed, so at the close Stocks in the US were under pressure with the Dow losing 186 points or 1.19%. The Nasdaq lost only 0.38% and the S&P 500 lost 0.72% or 12 points. It did, however, close the week above 1700!.
– In Europe the FTSE was lower by 0.44%, the DAX off 0.21% and the CAC hardly changed at -0.05%. Milanese stocks lost 0.49% while stocks in Madrid rose 0.20%. It will be interesting to see how the peripheral equity markets go tonight and how the Euro goes this week after what looks like a resounding Yes vote for German Chancellor Merkel’s handling of the Euro Crisis at the German election on the weekend. It seems she has swept all before her.
– Rates in the US, Germany and UK were all 2 points either side of the previous close, so Bullards comments didn’t seem to have much resonance here with rates at 2.74%, 1.94% and 2.74% respectively.
– On Forex markets, though, the US dollar got some of its mojo back knocking the Aussie dollar (0.9391) back under trendline support, GBP (1.6003) lower while the Euro (1.3516) and Yen (99.21) proved more resilient after some early weakness. The US dollar starts the week a little stronger and the Aussie looks a little vulnerable.
– On commodity markets, gold had a shocker, falling more than $40 oz in what seemed like an awful and relentless last 12 hours of trade for the week when the sellers just kept coming. Nymex crude fell 1.11% to $104.70, Copper was at $3.31 lb while the Ags all lost around 1.80% repectively.
– Here at home, the SPI200 contract on the Sydney Futures exchange lost 23 points with the last trade at 5246, suggesting a weak open this morning. On the bond futures market, the 3-year and 10-year contracts lost 4 and 2.5 points respectively, suggesting slightly higher yields today in trade.
– On the data front today, we get the start of the next round of global Markit PMI data with the HSBC Chinese PMI at 11.45am EST. We also have Singaporean, French, German, EU, US and a raft of other manufacturing PMI over the next 24 hours as well as the Chicago Fed’s national Activity index in the US.
Japan is out today, so it could be thin early.
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