Morning Market Report

The market is down 19 points. Dow Jones was down 40. It was up 19 at best and down 52 at worst. S&P 500 was down 3 to 1726. The market failed to follow through on yesterday’s spike with some criticism of the Fed for failing to communicate clearly and creating market confusion when its job is to provide the opposite. A good set of economic numbers in the US overnight failed to save the day. They included better-than-expected jobless numbers (still being flattered by last week’s computer problems in some districts), better-than-expected existing home sales numbers and a better-than-expected read on the Philadelphia Fed index.

A$ down — Having spiked over 95c yesterday the A$ has drifted to 94.42c despite the US$ continuing to fall against most other currencies. The Gold price jumped — up almost 5% or $61.70 to US$1369. A lot of that was taken into account  in our trade yesterday with the gold price reacting to the FOMC decision intra-day yesterday –$1400 is seen as the next resistance level.

The US bond market came off (interest rates up) — the 10-year bond yield rose 7bp to 2.756%. Commodities jumped as a function of the fall in the US$ — oil price the exception, down 1.5%. Metal prices took into account the “no tapering” decision for the first time, with most metals up 2-3%. Much of that was discounted in our market yesterday. BHP was down 2.36% in the US overnight. The stock closed in the US down 47c on our close yesterday. RIO was down 2.47% in the US. Iron ore price up 10c to $131.80.

European markets jumped on the FOMC statement. Germany up 0.67% and Greece up 2.19%. 

RESULTS & STORIES 

  • There is some criticism of the Fed for not passing clear messages to the market and in so doing creating unnecessary confusion and volatility that leaves the market not trusting what it says. The suggestion is that the tapering flip-flop has been driven by factors beyond the economic data including the decision to leave tapering to the new Fed chairman who takes over in December. Ben Bernanke has one meeting left. That has led to speculation that the Fed will start tapering in December after all and that all we have seen this week is a delay rather than a genuine economic policy change. Chinese business sentiment for September is due out today.
  • US jobless numbers were better than expected overnight and at a six-year low again.
  • US existing home sales numbers were ahead of expectations but its a volatile series.
  • Gold hit its highest level since Sept 10 at $US1369 (+4.72%).
  • Apple released its new operating system iOS 7 overnight. School internet connections overloaded countrywide yesterday.
  • Twitter is looking to add more banks to its underwriting syndicate for their IPO. Twitter’s valuation is estimated at around $US15 billion by analysts.
  • A report in the AFR says the ASX top 100 companies gave their CEOs an average cash pay cut of $74,000 last year. One of the biggest earners was Boss Mark Clark at Regis Resources (RRL), who earned $540,000 in statutory pay and another $15.9 million in options.
  • Gold stocks not up today — the 5% jump in the gold price overnight was reflected in our market yesterday.
  • Boral, Bradken and UXC have all published their annual reports today.
  • NAB ceased to be a substantial shareholder in AIO.
  • Virgin Australia (VAH) — Etihad Airways has purchased another 3% of VAH in two lots yesterday. Likely to raise their total to 17.5%. Some 77 million shares were traded at 48c. Patersons behind the $37 million deal. Air New Zealand has 22.9%, and Singapore Airlines has 19.9%.

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Peter Fray
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