Daily Market Reports | Mar 14 2017
By Greg Peel
The Dow closed down -21 points or -0.1% while the S&P was flat at 2373 and the Nasdaq gained 0.2%.
Laboured
It was a quiet session on the ASX yesterday with Victoria enjoying a Labour Day long weekend along with South Australia, Tasmania and the ACT. If their absence wasn’t enough to ensure a lack of conviction in trading, the fact we’re playing the waiting game at present was.
Bank buying that had supported the market on Friday was missing yesterday and while the materials sector did finally manage to post a gain, against the general trend, at 0.3% it was neither here nor there. On the other hand, energy, which had held up against the tide of lower oil prices on Friday, finally broke for a market-leading -1.1% fall.
We must also remain cognisant of the fact we are in a busy period of stocks going ex-dividend this month, which collectively weigh on the index and provide for some misleading individual stock moves. Each day the ASX200 starts with a handicap and at the moment there’s not a lot happening to overcome the drag.
That influence will begin to wane from next week, and next week we may find some new direction post-Fed.
Three or Four?
Aside from the Fed meeting tomorrow night, the Dutch go to the polls at the same time, the UK prime minster could trigger Article 50 at any moment, and now the Scots want to hold another independence vote. The Bank of Japan and Bank of England both hold policy meetings on Thursday.
There’s a lot going on but potentially not a lot going on. We knew the Brexit trigger was coming, and the Bank of England will hold fire on that basis. The Japanese need to know whether Trump really can deliver a border adjustment tax. The Dutch election looks like going to incumbents and as for Scotland, well that will be a way off. And we know the Fed is going to hike.
The only real question is as to whether the Fed is now looking at three rate hikes this year, as suggested in December when the last hike was delivered, or four.
Does anyone remember when the Fed was at absolute pains to ensure just how gradual the process of normalising rates would be? Yes, that was about five minutes ago, and implied perhaps only one rate hike this year to match 2016 and 2015. How quickly things have changed. Trump exuberance aside, the US economy does seem to be improving steadily. Suddenly it looks like the Fed is behind the curve.
And it is unlikely any of Trump’s policies, however they turn out, will be restrictive rather than stimulatory. So if the Fed is already concerned it may have let things go a bit long, they had better get in fast ahead of a potential fiscal tidal wave.
The oil price steadied last night, falling only slightly. As we wait for Wednesday, Wall Street saw no real incentive to do anything last night.
And there’s still another session to go.
Commodities
West Texas crude is down -US10c at US$48.37/bbl.
South Americans are revolting. Hot on the heels of a strike by workers at BHP Billiton’s Escondida copper mine in Chile, workers have now downed tools at Freeport MacMoRan’s mine in Peru.
Copper is up over 1% in a session in which all base metals gained, including a 2.5% bounce for nickel.
Just when it looked like the iron ore price might be set for a tumble, it’s on the move back up again, by US$2.20 to US$87.90/t.
The US dollar index is 0.1% higher at 101.37 and gold is dead flat at US$1203.70/oz. The Aussie is up 0.3% at US$0.7573.
Today
The SPI Overnight, for reasons known only to itself, closed up 17 points or 0.3%.
China will be back in the spotlight today with a monthly data dump of industrial production, retail sales and fixed asset investment numbers.
Locally, NAB will publish its monthly business confidence survey.
Rudi will link-up with Sky Business today, at around 11.15am, via Skype to discuss broker calls.
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