– Shanghai stocks and Greek politics really roiled markets after the Australian close last night but US traders found the strength to reverse off their lows in what is a remarkable recovery given the bearishness of the early part of their trading day.
– The carnage in Shanghai, which was around 1.25% up at 3,058 at 4.30pm AEDT happened after regulators banned the use of low-grade debt to borrow cash. This significantly tightened conditions in the bond and cash markets drove the USDCNY up 0.32% and saw the Shangahai stock market swing from up 1.25% to end the day down 5.43% at 2,856. As I noted yesterday morning when I said “that will do for now”, you don’t fight the PBoC and we’ve seen a huge and ugly bubble pop by the authorities. For the moment at least.
– In Greece, the news was all of political instability after the announcement of a snap Presidential vote – next week instead of next year! This saw Athens’ stock market lose 12.8% with Greek bonds moving sharply higher also. The impact of the Greek rout was to hit European stocks hard and give a really poor lead into US markets. But they have recovered their poise after an early swoon, suggesting some catch-up tonight in Europe.
– So with 30 minutes to go before the close US stock markets were mixed this morning.
- Dow Jones down 0.46% to 17,772
- Nasdaq up 0.39% to 4,760
- S&P 500 down just 4 points now at 2,056 well off the 2034 low for a loss of 0.21%
– European Markets had a shocker as noted above but will likely recover some tonight.
So, at the close.
- London(FTSE 100) down 2.15% to 6,529.
- Frankfurt (DAX) down 2.21% to 9,794.
- Paris (CAC) off 2.55% to 4,264.
- Milan (FTSEMIB) down 2.81% to 19,390. 1
- Madrid (IBEX) down 3.18% to 10,462
– Locally the market was off yesterday and March SPI 200 futures fell 18 points to 5,226. This suggests another weak open for the local market but the reality is that the Australian market has a bearish bias as traders adjust to the reality of weak growth for Australia on top of the commodity outlook.
We’v discussed what happened in Chinese stocks yesterday and the Shanghai sell-off hit Hong Kong while the yen’s rally hit the Nikkei.
Anyway, at the close:
- Tokyo (Nikkei Average) down 0.68% to 17,813.
- Hong Kong (Hang Seng Index) down 2.34% to 23,486.
- Shanghai (Shanghai Composite Index) POP, down 5.43% 2,856.
– On bond markets, Spanish bonds rose 5 points to a still ridiculous 1.84%, Italian 10s rose 9 to 2.01% while US 10s closed at 2.22% and German 10s hit 0.65% – HUGE! UK 10s dipped 7 pips to 1.89%.
– Currencies saw a lot of action over the past 24 hours as the yen kicked things off by forcing the US dollar down. It sits at 119.30 this morning, off the high of 120.99 yesterday but well above the 117.93 low overnight. So that three big figures in a day! Euro and GBP are doing better as well with euro at 1.2382 this morning and GBP at 1.5662. To the Aussie, and what a wild ride it was in the past 24 hours. Against the US dollar, it is back at 0.8308 off a low of 0.8221 but against the yen it has been on one heck of a ride. At 99.25 now, it’s down from 100.18 yesterday and off a low of 98.53 overnight. The big moves just keep coming.
– On commodities, a weaker US dollar has taken the weight off quite a few markets with crude up 1.17%, gold up 3% to $1,230 and copper blipping all the way to $2.94 a pound. The Ags were mixed, with corn up 1.46%, wheat down 1.53% and soybeans up 0.53%. On Australia’s bulks, iron ore for March fell 86 cents to $67.77 a tonne while Newcastle coal for the same month rose 30 cents to $62.65 a tonne.
On the data front today we get the Westpac consumer sentiment data which will be of great interest as a gauge of the economy heading into Christmas. Home loans are also out and Chinese CPI is going to be massive. Tonight, we get UK trade and in the US, mortgage applications.