The market is up 34 on low volumes. SFE Futures were up 18 this morning.
US markets up 69. The Dow was up 100 at best before drifting back to close at its highest level in almost five years. Gold was up slightly and a US$32bn government bond (yield of 0.337%) auction saw the strongest demand since November 2009. The markets rallied in anticipation of a positive German constitutional court decision tonight (due at 6pm our time today) and a potential QE3 announcement at the Federal Open Market Committee (FOMC) two day policy meeting starting tonight. S&P 500 was up 0.3% and the Nasdaq up 0.1%.
Worst Sectors — Utilities (-0.3%) and Consumer Goods (-0.2%). Best Sectors — Energy (+0.9%), Financials (+0.9%), Basic Materials (+0.5%) and Industrials (+0.5%).
Metals up as the US$ fell on QE3 prospects — Copper was up 0.25%, Nickel up 0.33%, Aluminium up 1.15% and Zinc up 0.10%. Precious metals rallied in early morning action as the dollar index fell following Moody’s warnings of a one notch downgrade of the US credit rating.
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Iron ore price up again — Up $4.20 to $100.20. The US$ was down ahead of the FOMC meeting and the warning from Moody’s Investors Service that the US’s AAA rating could be cut if it does not soon get its fiscal house in order.
- The WBC/Melbourne Institute index of consumer sentiment was up 1.6% to 98.2 in September from 96.6 in August. Although the index rose in September it remains historically weak, despite 125bps of rate cuts from the RBA.
- Commonwealth Bank (CBA) has raised $1.5bn after strong demand from institutional investors in their latest hybrid note issue. The margin set at 3.8%. CBA launched PERLS VI as a replacement for the Perls IV issue, which was due to convert into ordinary equity in late October. CBA is up 1.37% to 5491c.
- Origin Energy (ORG) — An exploration well offshore Kenya has been drilled to its total depth and no more natural gas has been found. Origin owns 20% of the project. Mbawa-1 is the 6th exploration well to be drilled offshore Kenya. ORG is down 0.68% to 1185c.
- Fisher & Paykel (FPA) has received a $545m takeover offer from the Chinese Haier Group. The offer is for NZ120c per share. FPA is up 12.88% to 92c.
- The German constitutional court decision is due 6pm tonight our time. It is almost certain that they will ratify the establishment of the €500bn ESM and the pact on budgetary measures — if they don’t it will shock the market.
- Coal miners threaten to close — BHP, RIO and other coal miners have threatened to pull new investment out of QLD and close coal producing mines after the QLD Government announced an increase in the coal royalty rate to help boost the states budget by $1.6bn over four years. Coal royalties are to increase from 10% to 12.5% for coal prices above $100 per tonne and to 15% above $150 per tonne.
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