Your morning market update includes falling gold and rising Royal Mail:
– It is still all about the US and with the Republican Leadership in the House having exhausted their efforts, the negotiations seem to have moved into the Senate and onto Harry Reid and Mitch McConnell’s laps. President Obama has been conspicuous by his absence over the weekend, although the White House has released a statement saying that he spoke with the Democrat Leader in the House, Nancy Pelosi, and they agreed to negotiate longer terms once the shutdown was ended and the debt ceiling raised. Cheers! With the (pseudo) deadline this Friday, we all remain on tenterhooks.
– On Friday last however, the rally in stocks continued, with the Dow up another 111 points to make a two-day rally of 444 points. The S&P 500 managed to climb and close above 1700, rising 10 points or 0.62% to 1703. The Nasdaq was 0.83% higher.
– Stocks in Europe were stronger as well. The debut of Royal Mail in the UK saw the stock close more than 30% higher and drag other, similar, stocks with it. At the close, the FTSE was up 0.88%, the DAX rose 0.45%, the CAC was flat – as was the IBEX in Spain – while Milanese stocks rose one quarter of one per cent.
– Closer to home, the reactions in the US and Europe saw the SPI200 contract on the Sydney Futures Exchange (SFE) rise 33 points, but the mini-crash in gold and the Chinese data print might put the market under a little pressure. Note that while the Chinese trade surplus was roughly cut in half in September, Iron Ore imports hit an all-time high.
– Also at home, as I noted in our 5 Things You Need To Know About Markets piece on Saturday, the volume of trade on the SFE interest rate futures market in the 90-day bills, 3-year bond and 10-year bond contracts was phenomenal, given there was not appreciable move in price. It speaks of some sort of large hedged transaction, but the volume was huge nonetheless.
– On Forex markets, the USD gained ground against the Yen – which will please Nikkei traders today – and it sits around 98.11 after finding support at the 200-day moving average last week. The Euro continues to knock on the door of 1.36 at 1.3564 this morning but can’t seem to hold above it just yet because traders reckon the US politicians will get their act together. Sterling is at 1.5977, looking wobbly, and the Aussie dollar at 94.18 is still in the top half of its trading box.
– On commodity markets, the big news was the fall in Gold back to $1269/72 and the fact that the technical outlook now looks like Gold is going to do a round trip to this year’s lows below $1200. While this is initially expected to hold, a break would see Gold with a $900 handle on it, according to the technicians. Crude fell 0.96% to $101.74 Bbl, Copper closed at $3.27 and our friends the Ags wobbled around as per usual with Corn down 1.14%, Wheat up 0.98%, and Soybeans falling 1.65%.
On the data front it is worth remembering it is Columbus Day in the US, so it’s a holiday, although stock markets will be open tonight. It also means many lawmakers will be back home with their families.
In Australia we get Home Loan data and from China we’ll see very important inflation data before European Industrial production data is released.
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