Daily Market Reports | Sep 14 2011
By Greg Peel
The Dow closed up 44 points or 0.4% while the S&P gained 0.9% to 1172 and the Nasdaq starred with a 1.5% gain.
And now to everyone's favourite show, In Europe Tonight:
A spokesman for French president Nicholas Sarkozy stated last night that nothing would happen. The same can't be said for tonight however, when Sarkozy and German chancellor Angela Merkel will make a joint statement with respect to the Greek situation. Whatever it is Sarkozy and Merkel are going to say, no one was letting on last night.
The statement will come ahead of Friday night's scheduled meeting of EU finance ministers in Warsaw, at which US Treasury secretary Timothy Geithner will be a guest attendee.
Last night the Italian government auctioned E6.5bn of sovereign bonds. Within the package were E3.9bn of five-years which settled at a yield of 5.6%, up from 4.9% at the last similar auction in July. While markets were soothed by the fact there were any buyers at all, rising yields are not comforting and the line in the sand is considered to be 6%, beyond which debt becomes too expensive to service vis-a-vis GDP.
Tonight the Italian lower house will vote on the latest budget austerity package, previously passed by the upper house.
A Reuters report last night suggested Greece would miss its end-September privatisation target, for which it must sell of state-owned assets to a total of E50bn by 2015 in order to reduce debt and qualify for its next bail-out tranche.
Unsubstantiated rumours also circulated, in the wake of talks between Italy and a Chinese sovereign wealth fund regarding debt purchases, that the BRICs in general were now talking to Greece in the same capacity.
Not one of your more exciting episodes. But things may well hot up tonight.
On Wall Street last night the Dow crossed over the flatline no less than six times as it bounced around in a vacuum of no new news from across the Atlantic. Its high-low range of 150 points was the tightest since July 26 and compares with an average range since July of 320 points. Europe aside, things may hot up on Wall Street as the week unfolds given scheduled releases of retail sales, industrial production, inflation and manufacturing activity data.
The US Treasury auctioned US$21bn of benchmark ten-year bonds last night which settled at a record low 2.00%. This was nevertheless a higher yield than had been anticipated given rather muted demand. Foreign central banks bought 48.5%, up from the running average of 47%. The surplus economies are not abandoning US debt for stressed euro-debt just yet. The ten-year closed the session at 1.98%.
The euro was able to tick up a bit last night, sending the US dollar index down slightly to 77.05. The Aussie is also off a bit at US$1.0319. Buyers returned to gold last night now that the sellers-for-cash have gone quiet again, pushing the resilient currency up US$19.80 to US$1834.20/oz.
Base metals in London were mostly weaker but not materially so, while West Texas crude stole the spotlight in rallying US$1.60 to US$89.79/bbl when Brent fell US36c to US$111.89/bbl. Having peaked at over US$26, the Brent-WTI spread has fallen 16% recently as momentum builds in the unwinding of spread trades.
The SPI Overnight rose 3 points.
After the weak but hardly surprising loss of business confidence in Australia in August noted by yesterday's NAB survey, today we see just how many consumers ran to hide under the bed last month when Westpac releases its equivalent report.
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