Markets rallied overnight on the back of negotiations on the US debt ceiling.
The market is up 72 points. Dow Jones closed up 323 points — US stocks rose 2.2% overnight, the biggest increase since January, after encouraging developments in the US debt negotiations, as Republicans overnight are believed to have agreed (they haven’t yet) a temporary six week hike in the debt ceiling with no policy strings attached. In return they want further talks on the budget to take place.
Treasury will be unable to pay its bills after October 17 unless an increase in the ceiling is agreed.
Gold was down US$20.30 to US$1286.90 per ounce, extending recent falls as greater certainty in the US reduces the attractiveness of safe haven assets.
VIX volatility index down 15.9% (good news)to 16.5, as certainty and stability returned to markets. This compares with a high of 21 reached last Wednesday.
US Initial Jobless Claims rose 66,000 to 374,000 reflecting the continued impact of computer glitches in California which are expected to take several more weeks to flow through.
European bond yields were mixed. French and German bonds were weaker, with yields up four basis points to 2.385% in France and up 5bp in Germany to 1.867%. However Greek bonds were stronger, yields falling 14 basis points to 9.08%.
European equity markets staged strong increases on optimism for an end to the US budget impasse.
US Treasuries were weaker — the 10 year yield rose two basis points to 2.684% despite political progress with the debt ceiling, as investors switched from bonds to equities. Shorter dated securities fared better however with two year yields falling two basis points to 0.35%.
The US$ was mixed against major currencies,falling against the Euro and other commodity currencies but stronger against the yen.
The Aussie dollarwas stronger, trading as high as US94.70c before ending trade at US94.56c, up from 94.46c yesterday morning.
Oil prices rose — WTI rose 1.2% to US$102.86 a barrel
Base metal prices were stronger, led by aluminium up 1.4%. Tin fell slightly, down 0.3%.
VirginAustralia (VAH) — Etihad have increased their stake in the company. Previously they held 17.4%. Now at 19.9%.
SiriusResources (SIR) — May look to buy the remaining 30% it doesn’t already own of their nickel mine at Fraser Range in WA to simplify the ownership structure over the next few years.
CashConverters (CCV) — A $40 million class action will be launched today against the company, accusing them of charging interest as high as 633%.
Bank of Queensland (BOQ) — Shares closed up 6.7% yesterday after the regional bank delivered a better than expected profit result.
OriginEnergy (ORG) — Says earnings will go up from 2015 due to rising gas prices and its LNG projects coming online.
Transurban (TCL) — Say they have made good progress in talks with the NSW government on a $2.65 billion tunnel proposal for Sydney’s north.
WhitehavenCoal (WHC) — Have contracted Leighton Holdings (LEI) to build a rail loop for their $766 million Maules Creek project in NSW.
WarrnamboolCheeseandButter(WCB) — Patersons have initiated coverage on WCB and released a note covering the recent takeover. They have a Hold recommendation with a target price of724c.
Bega Cheese(BGA) — Chairman Barry Irvin says the choice is simple for Warrnambool Cheese and Butter (WCB) shareholders. “We can look to buy our home and have the benefit of ownership or we can sell our home and rent forever.” He says shareholders should look to keep the company Australian instead of accepting an overseas offer.