Your morning market update includes a slight Dow disaster and all eyes on NAB’s Business Survey.
– A sea of red ink across global equity markets as traders start to contemplate a US default and the fact that no one on either side of the aisle in Washington is actually going to call “uncle” anytime soon. I remember the day the GFC really kicked off – it wasn’t the collapse of Lehman, it was Congress’s failure to pass Hank Paulson’s first TARP bill. We have all been warned!
– A bit of a disaster into the close with the Dow down 137 points for a loss of 0.91%, the Nasdaq off 0.99% and the S&P falling 15 points to 1676 for a loss of 0.75%. Six more points and the S&P breaks its latest uptrend.
– Europe didn’t feel the pressure as much as the US, nor the lead from Asia, which saw the Nikkei down 1.22%. At the close, the FTSE was 0.26% lower, the DAX fell 0.36% the CAC was largely unchanged and just in the black. Milanese stocks rose 0.67% and Spanish stocks fell 0.41%. Look for Europe to lose some ground at the open this afternoon.
– Closer to home, the SPI 200 futures on the ASX lost 13 points overnight while the 3- and 10-year bond contracts are up 4 and 4.5 points respectively, implying a similar move down in rates today. Expect rates to head lower if the equity sell-off accelerates.
– Speaking of rates, US Treasuries are at 2.63%, Bunds are at 1.81% and Gilts 2.53%. Expect Gilts and Bunds to outperform if the US shenanigans get worse.
– On Forex markets, the Aussie dollar rallied back to 0.9427 this morning after falling back to 0.9387 last night. Euro is at 1.3573, GBP 1.6087 and the Yen continues to rally with USDJPY falling to 96.87 and will come under further pressure as traders take the Yen as a safe haven from US dysfunction. The Nikkei will suffer as a result.
Data-wise today, we see ANZ job ads and the NAB’s Business Survey, the latter of which is a huge release for the economy and we will see if it supports the recent recovery in the AiG indices. In China, the HSBC services PMI is released and then tonight the German trade data is out as well as French trade.
And of course, we will continue to watch the heat rise on Capitol Hill in the US – potentially the biggest market mover for the next week.
Follow Greg McKenna on Twitter.