Your morning markets update features hope abounding as the US Senate stitches a deal together.
– Harry Reid and Mitch McConnell and their Senate colleagues have managed to stitch together a deal that will liift the debt ceiling and reopen the US Government. The next big question is will it pass the House? Apparently someone has put Ted Cruz in a headlock and he has said he won’t block the vote, which is super news for the Americans affected by this, the economy and of course, global markets which positively loved the news of the deal overnight.
– The deal extends the US debt ceiling until February 7 and gives the Government funding till January 15, which now become the big dates to watch. But while newswires and TV business shows might want to focus on the can-kicking, traders are unlikely to get caught in the hand-wringing about having to do this again. They’ll face it if it happens.
– So at the close the Dow is up 206 points to 1.36%, the Nasdaq rose 1.19% and the S&P 500 was up an enormous 24 points to sit not far from the all-time highs for a rally of 1.41%. Europe didn’t rise as much but that was because they had performed better the previous day and the US bounce pulled them out of their swan dive. The FTSE closed up 23 points at 6572 but it had been down at 6504 before US markets opened, so it really is a strong day. The DAX rose 0.47%, the CAC – somehow – managed to fall 0.28% while in Madrid and Milan, stocks rose 0.75% and 1.45% respectively.
– On the Sydney Futures Exchange, the SPI 200 rose 17 points to 5268 bid, while the 3- and 10-year bonds also rose 4 and 4.5 points respectively, implying a fall in rates of the same magnitude. This was largely the result of the rally in US interest rate markets as the threat of default receded. At the close, US 10’s are down 6 points at 2.67%.
– On Forex markets, the Aussie dollar just keeps keeping on and is the standout against the US dollar. It’s back at 0.9550ish this morning and up against the crosses. The Euro (1.3531) is hardly changed, GBP (1.5949) lost 0.31% while the US Dollar gained against the Yen (USDJPY 98.74, +0.6%) as the safe haven bid disappeared from the Yen.
– On commodity markets, just when it looked like Nymex crude was going to break below important support, it rallied 0.97% to $102.19. Gold was 0.71% higher to $1281 and Copper sits at $3.30 lb. On the Ags, Corn was 0.28% lower, Wheat fell 0.62% and Soybeans rose 0.83%.
On the data front, there could be a raft of data from the US once the Government reopens as it tries to catch up. This could cause volatility but equally the closure is going to impact on the results of economic data in the weeks and months ahead as we all try to recalibrate released data for the impact on it from the shutdown.
So the Taper is probabaly further away than it otherwise would have been; perhaps not till next year at the earliest now.
Today we also have NAB Business Confidence, the RBA’s FX transactions, retail sales in the UK and initial jobless claims in the US.