Daily Market Reports | Sep 20 2010
By Greg Peel
It was options expiry day on Wall Street on Friday, which meant volumes were artificially pumped up to twice their recent average. This was misleading in an otherwise very quiet session.
The indices finished in the green, with the Dow adding 13 points and the S&P not quite one point to 1125, but it was the Nasdaq leading the charge with a 0.5% gain. Tech stocks were driven by Thursday's after-market results from Oracle and Research in Motion, with Oracle leading the way with an 8% gain on Friday.
It was an otherwise muted session. Economists had expected the first Michigan Uni consumer confidence measure for the month to show a slight gain, but instead it fell to 66.6 from 68.9 previously. The excuse was nevertheless made that it is a lagged release, such that consumers would have been watching stock markets fall towards the end of August and responded accordingly.
Economists had expected the August consumer price index to rise by 0.2% at the headline and 0.1% on the core, but the results came in at 0.3% and 0.0%. Food and energy prices continue to rise, but the underlying rate of inflation is dead flat. This simply exacerbates the neither-here-nor-there problem facing Wall Street at the moment. The CPI was not enough strong to engender any positive response, but not weak enough to expect a reaction from the Fed.
There were also concerns out of Europe when a Barclays Capital report suggested Ireland may need to seek outside help to prop up its struggling banking sector – a claim quickly denied by both Ireland and the IMF. The US dollar index nevertheless strengthened slightly to 81.42. The Aussie was flat at US$0.9367.
Flat was pretty much the go all round, with gold barely moved at US$1274.70/oz and base metals also little moved in London. Oil fell US91c to US$73.54/bbl however, on confirmation the damaged Canada-US pipeline had reopened. The US ten-year bond rate was little changed at 2.74%.
The SPI Overnight was a bit more emphatic, falling 22 points or 0.5%.
A weak Shanghai market has been troubling the local market these last few days, but analysts point to the approaching Chinese holiday season as an impetus for book-squaring. This week Chinese markets are closed from Wednesday through Friday, and they will also close for four days at the beginning of October.
Having spent all last week sitting at the 200-day moving average on the S&P 500, this week will be a test for Wall Street as a raft of monthly housing data are released. We have housing sentiment tonight, starts on Tuesday, prices on Wednesday, existing sales on Thursday and new sales on Friday. The Conference Board will also release its latest leading economic index on Thursday and durable goods orders are revealed on Friday.
The Fed will meet on Tuesday night for its latest discussion on monetary policy. There's little point in referring to these now as “rate decisions” given the Fed funds rate will remain unchanged for likely another year. Indeed, with recent US economic data being more flat than disastrous, there is unlikely to be any change to the Fed's “we stand ready” call on quantitative easing. Most of the housing data will be released after that meeting however.
On the local front it's a quiet week economically. The RBA will release the minutes of its September meeting on Tuesday with no surprises likely. ABARE also releases its commodity forecasts on Friday (the bureau has a pretty bad track record) while Westpac will offer its leading economic index on Wednesday.
Not one to be rushed, New Zealand will report its second quarter GDP on Thursday in the lengthening shadows of the third quarter.
On the local stock front, today sees quite a few stocks going ex-dividend and there will be a handful more across the week. There will also be a smattering of AGMs and the odd profit result, the highlight of which will be the David Jones ((DJS)) result on Wednesday.
For further global economic release dates and local company events please refer to the FNArena Calendar.
