The Overnight Report: All Quiet

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By Greg Peel

Yesterday’s Australian private sector capital expenditure data for the September quarter indicate a somewhat overwrought fear of the “end of the mining boom”. Capex grew by 3.6% in the quarter, up from June’s 1.6% and in defiance of expectations of a 1.2% fall. Mining capex rose by 4.0% and non-mining capex by 3.0%.

“The data show that mining investment is hovering around its peak,” say the Commonwealth Bank economists, “while there are tentative signs that the desired lift in non-mining investment is beginning to occur. Despite picking up, manufacturing investment is weak as the prolonged effects of a strong domestic currency continue to bite”. 

Mining represented just under 8% of GDP in FY13 and rather than collapse, as the doomsayers have wound us up to believe, CBA suggests this figure will plateau from here. “The real drag on GDP growth from falling mining capex looks to be some time away,” says CBA. “By this time, growth in the non-mining economy is expected to have picked up noticeably”

Cold comfort for the unfortunate shareholders of Forge Group ((FGE)). The company’s spectacular fall from grace yesterday cast rather a pall across what had begun as a relatively positive day on Bridge Street. But aside from the impact of the US holiday this week, the local market appears unable to justify a meaningful push to new highs at this time.

All US markets were closed last night for Thanksgiving. European stock markets had a positive session in the wake of some surprisingly good consumer and business confidence data.

Quiet trading in currencies saw the US dollar index down 0.2% to 80.55 while gold rose US$3.10 to US$1443.60/oz and the Aussie has seen a slight bounce, up 0.4% to US$0.9114.

Base metals were unsurprisingly little moved in London while Brent crude fell US77c to US$110.81/bbl and West Texas was as good as unchanged in electronic trading at US$92.25/bbl.

Spot iron ore rose US40c to US$136.40/t.

The SPI Overnight rose 2 points.

October private sector credit numbers will be released locally today while Japan will offer up a data dump of inflation, manufacturing, industrial production and jobs numbers. Today’s raft of AGMs includes ASX ((ASX)) and Lynas Corp ((LYC)).

It’s Black Friday in the US tonight – the biggest shopping day of the year and a bellwether for Christmas retail spending. Banks and the bond markets are closed and stock and commodities markets will be open for a morning session only.
 

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