The pending US government shutdown keeps markets subdued across the globe.
The market is down 5 points. Dow Jones down 129 on US and Italian political uncertainty. It was down 172 at worst. It closed up 4.7% for the quarter.
The US Government is due to shut down at midnight their time (2pm our time).
The US 10-year bond yield continues to fall, down two basis points to 2.610% overnight (bonds up again).
The only economic number out last night was the Chicago PMI which came in ahead of expectations at 55.7 against consensus of 53.7 and last month’s 53.0.
China’s HSBC’s PMI number came in at 50.2 yesterday which was below an expected 51.2. Official PMI numbers are due today.
BHP and RIO down 0.97% and 1.46% with BHP closing at the equivalent of 8c down on the close here last night.
The Aussie dollar held up at 93.24c as the US dollar slipped on concerns about a government shutdown. The US dollar is at an eight-week low with the euro at its highest since February despite the possibility of a snap election in Italy and a consequent Italian credit rating downgrade. The GBP hit its highest level this year.
Japanese market down 2.06% yesterday as Japan’s ruling coalition agreed to a ¥1 trillion tax break. Lots of economic data out of Japan today including household spending and the Tankan manufacturing and non-manufacturing indices.
Chinese market up 0.68%. Chinese banks are closed for Golden Week although official PMI numbers are due out today.
Metal prices mostly up small. Nickel slightly down.
Gold down $11.20.
US economics last night — Chicago PMI: Actual 55.7, consensus 53.7, prior 53.0.
The market is obviously focusing on the RBA meeting today. Whilst no change is expected to the cash rate of 2.5% the RBA are expected to reiterate their dovish/easing bias that would naturally send the A$ lower. There is a 7% chance of a rate cut today, a 14% chance of a rate cut on Cup Day next month and a 50% chance of a rate cut by the middle of next year.
Retail sales numbers also due out today.
The US Government is due to shut down at midnight their time (2pm our time) for the first time in 17 years. A partial government shutdown involves up to 1 million government employees being sent home and could well mean the employment numbers on Friday are postponed. Congress voted on a stopgap bill this morning our time, but nothing seems to have come of it. The House of Representatives and the Senate have been playing a game of political “ping-pong” overnight as they exchanged bill proposals with the Senate (Obama camp) refusing to barge on health care funding and the House of Representatives looking to change the “Obamacare” timing and funding. Obama has spoken this morningand rather than broker a deal put the responsibility for any shutdown on Congress.
Chinese official PMI numbers are due out today. The HSBC final PMI number came in at 50.2 yesterday which was below an expected 51.2 ending a run of better-than-expected numbers and exacerbating yesterday’s fall in our market. BHP fell 1.71%, RIO fell 2.5%. It will be interesting to see if the official numbers have also peaked out. Chinese banks are closed for Golden Week.
MacquarieGroup (MQG) has bid for Lloyds Banking Group’s Australian assets. ANZ has dropped out of the race.
Elders (ELD) — Seven senior employees at the company have resigned following reports that the company had discrepancies and issues relating to the reporting of livestock values in their live cattle export division. Share price hasn’t moved.
ANZ has backed down on their ambitions to buy a stake in Hong Kong’s Wing Hang Bank.
Qantas (QAN) — Is believed to be in discussions with Brisbane Airport to sell the lease on their terminal back to the airport for roughly $100 million.
G8Education (GEM) — The company’s $60 million capital raising was six times oversubscribed. The offer was at 310c per share (7% discount to the pre-offer price). Funds to be used to buy 29 childcare centres.
ANZ — Has offloaded their exposure to Gunns (GNS). The sale has improved their bad debt provisions.
Ex Telstra boss Ziggy Switkowski is expected to be appointed as the new chairman of the NBN this Thursday.
MacquarieGroup (MQG) — Has topped the mergers and acquisitions and IPO’s rankings for the first nine months of the year.