– No major data releases in the US or Europe overnight, so the market seemed to focus on what appear to be mutually exclusive moves – stock market weakness on the back of Taper talk for next week and a euro rally. The former makes sense because a taper might be bad for stocks if it comes through, but why the euro is rallying in this environment (with the US looking stronger economically than the euro zone) is hard to fathom. But the market is the market.
– So at the close, the Dow has collapsed into the close and finished 129 points or 0.81% lower at 15,844, the Nasdaq is 1.39% lower and the S&P 500 has lost 21 points or 1.14%% to 1,782. The deal in the US on the budget which was released yesterday has gained some traction in the minds of traders as a potential catalyst for a taper next week, given the risk of another government shutdown is now materially reduced.
– In Europe, stocks finished in the red with a late afternoon sell-off ending what had been a positive day until about 1pm London time. That was pretty much when the US came in and started falling. At the end of play, the FTSE was 0.23% lower, the DAX had fallen 0.41% and the CAC dropped 0.1%. In Milan and Madrid, the FTSEMIB was 1.44% lower and the IBEX fell 0.85%.
– On the ASX overnight, the Australian market continued to be pressured with the Dec contract, off 26 to 5089 bid while the March contract of the SPI200 is down 30 points to 5055 bid at 8am AEDT.
– ON Global FX markets, the euro sits at 1.3792 up 0.24% but off a high of 1.3810. Sterling is down 0.37% to 1.6384 and USDJPY has backed off 103 again and is down 0.31% at 102.53.
– The Aussie is the big loser though, getting hammered on the crosses and down 0.94% at 0.9064 this morning. Traders clearly took the Holden news as an excuse to sell, particularly with employment coming out today at 11.30am AEDT with not much growth in employment expected by the market.
– On commodity markets, Gold made a high around $1265 yesterday and is back at $1258 oz for a small loss of 0.31%. Silver was 0.19% higher and Nymex crude fell 1.08% to $97.45, even though there was a massive 10 million barrel draw according to EIA data overnight. Dr Copper managed to rally 3 cents a lb to $3.33 while in the Ags, Corn was 0.88% higher, Wheat rose 0.12% and Soybeans rose 0.39%.
– Bitcoin continues to take the cake when it comes to volatility and is off 14% over the past 24 hours, sitting at $885 this morning.
On the data front, there is important data in Australia today with the release of the employment report. The punditry is expecting a rise in employment of 1,000 jobs which is highly unlikely to be correct given the volatility and big standard deviation of this release relative to forecasts. So watch out for a reaction at 11.30am AEDT this morning from traders.
It’s a fairly light day otherwise, with CPI in France and Italy out tonight along with the ECB monthly report and EU industrial production. In the US, jobless claims will be the key release.