Daily Market Reports | Sep 26 2013
By Greg Peel
The Dow closed down 61 points or 0.4% while the S&P lost 0.3% to 1692 and the Nasdaq dropped 0.3%.
What on earth happened on Bridge Street yesterday? Every commentator and his dog was calling a yawn of a day before the opening bell and then bang – up 0.8%. The general feeling is that apart from short-covering in David Jones ((DJS)), which wasn’t in itself enough to move the index dial, US custodial funds were in buying and local players just got out of the way. There was upside for all sectors bar telcos, which implies non-specific index purchases. “Buy Australia”.
Well thanks guys, but unless you’re back in again today we’re likely to follow Wall Street down after that blip with the US indices continuing to drift on low volume and fiscal uncertainty. Last night Treasury Secretary Jack Lew warned the government is set to hit the debt ceiling on October 17 unless Congress agrees to raise it. Meanwhile, the Senate has passed a funding bill which will prevent a government shutdown next week but before it goes to the House, the Democrats plan to take out a clause that suggests the removal of funding from Obamacare.
Let the games begin.
Speaking of games, I’d love to be able to stick it to the Kiwis at this point (up 8-1, lost 9-8) but apparently the skipper is one of our lot. So, commiserations.
In US economic news last night, new home sales rose 7.9% in August to mark the fastest rate since the beginning of the year, although the result matched economist expectations. This is a volatile series, and August represented a rebound from a surprise fall in July.
New durable goods orders rose 0.1% when economists had expected a fall of 1.5% on lower aircraft orders in August, with a 2.4% jump in autos turning the tables. That’s the fastest month of auto growth since December 2007. Take out the lumpy transport segment altogether, and durable goods orders fell 0.1%.
Not really “quick let’s taper” stuff.
Over in Germany, a monthly survey of consumer confidence showed the highest reading since September 2007. The survey was conducted ahead of last weekend’s election, and in a turn of the tables compared to Australia, pundits assume Merkel’s win might actually dent confidence. Seems strange given such a landslide, but Merkel is all about austerity, wage restraint and increased taxes.
The US broad market S&P 500 has now fallen for five sessions in a row, marking the longest losing streak since last December. Yet aside from one sharp down-day, this “pullback” has lacked any real volatility. From the previous all-time high set Wednesday night last (no taper day), the index has only fallen 1.9%, on low volume. More disinterest than selling pressure.
The US dollar index fell 0.3% to 80.33 last night on strength in both the pound and the euro, leaving the Aussie to also drift lower by 0.2% to US$0.9371. Gold rebounded US$10.50 to US$1333.00/oz, with all this US shutdown talk no doubt stirring some fresh interest. US bonds similarly continue to draw interest, with the ten-year yield falling another 4bps to 2.61%.
Base metals all rose but barely troubled the scorer, while the oils fell again on a “surprise” (they always are) increase in weekly US inventories. Brent lost US75c to US$107.89/bbl and West Texas lost US91c to US$102.22bbl.
Spot iron ore rose US$1.10 to US$133.80/t.
The SPI Overnight fell 11 points or 0.2%, but wasn’t much use as an indicator yesterday. Today is September stock option expiry on the ASX, which may or may not add a little volatility.
Tonight both the UK and US offer revisions of their initial June quarter GDP estimates.
Rudi will appear on Sky Business today at noon and later between 7-8pm on Switzer TV.
On a final note, I challenge anyone to tell me that the Sydney Morning Herald delivered to my door this morning was not the smallest edition Fairfax ((FXJ)) has ever printed. How was The Age? Do you think Fairfax is trying to tell us something?
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