The market is down 22 points. The Dow Jones finished down 50. It was up 15 at best and down 83 at worst.

The S&P 500 closed down eight to 1702.

The market is beginning to worry that the lack of tapering last week was a reflection of the Fed’s insight on the economic trend which may have deteriorated more than the market knows.

Debt ceiling negotiations are beginning to move into focus with the starting point being an impasse.

Risk off stocks up — Telecoms and utilities.

Apple up 5% on reports of strong sales for its new products.

Fedspeak — Lockhart says there will not be enough data between now and the next FOMC Meeting (Oct 29-30) to change the Fed’s mind on tapering. Dudley says there is little sign of a pick-up in economic momentum (tapering less likely) and the economic and labor market improvement tests (necessary for tapering) have not been met. Fisher said he voted to taper at the last meeting thinking a no taper decision would create uncertainty about future policy and call into question Fed communication with the market. Two more Fed Governor speeches tonight.

The HSBC Flash Chinese PMI number came in above expectations yesterday at 51.2 — a six month high and up from 50.1 in August and ahead of the consensus 50.9 expected.

Eurozone PMI number at 51.1 and German PMI at 51.3 are down on the prior month.

The Markit Flash PMI number for the US fell from 53.1 to 52.8 in September.

Angela Merkel won a landslide election victory at the weekend but her coalition partner the Free Democrats won less than 5% of the vote and cannot enter parliament meaning she needs to find a new coalition partner.

Blackberry up 1%, has been bid for by Canadian private equity (Canada’s “Warren Buffett”) and will be delisted from the NASDAQ.

The US 10 year bond yield was down three basis points at 2.704%.

BHP was up 0.16% in the US on Friday. The stock closed in the US down 29c on the close here on Friday. RIO up 0.43% in the US.

The oil price fell 0.89%.

The Gold price fell $5.50.

The A$ up to 94.23. It is down from a peak of 95.25c hit on the ‘no tapering’ decision last week.

 RESULTS & STORIES

  •  Kathmandu Holdings (KMD) — Financial year profit up 27% to $NZ44.2 million up from $NZ34.9 million due to stronger sales and lower costs. Result above expectations, consensus was for a profit of $NZ40.9 million. EBIT up 11.2% to $NZ63.4 million. Number of stores up by 16 which helped support total sales to reach $NZ384 million up 10.6%. Same store sales growth was up 5.6%. CEO Peter Halkett said “we were successful in reducing operating costs as a percentage of sales.” Final dividend of NZ9c.
  • Fortescue Metals Group (FMG) — Will assume management and supervision of 2 iron ore processing facilities at their Christmas Creek mine following the death of a worker at the site last month. FMG has exercised its step-in rights to take over the management and supervision of ore processing from contractors Crushing Services International. This was done to ensure the safety and hazard-free operation of the facilities. The move will disrupt production at Christmas Creek but they don’t expect it to affect production targets of 127-133 million tonnes this year.
  • Uncertainty drives selling — The lack of tapering conviction from the Fed has created a new uncertainty and with uncertainty comes risk. Investors prefer a quiet life and the possibility that some major market “event” could occur at any time, some Fed utterance or some new economic release, is a backdrop a lot of investors want to avoid . Combine that with the rally in the US markets to all-time highs in some markets and a five year high here and you have a pretty good excuse to take profits.
  • Merrill Lynch forecasts the market will hit 5400.
  • The Abbott government will appoint a temporary three person board and former Telstra CEO Ziggy Switkowski looks set to take immediate control of Australia’s biggest project, the NBN.
  • Shares with the word ‘Shanghai’ in their names have rallied hard since August 22nd. The explanation is that Chinese investors were buying anything with the name Shanghai in front of it.
  • BlackBerry has received a tentative $4.7 billion or $9 a share bid to go private.
  • Chrysler files for an IPO as Fiat seeks to merge.
  • Apple up 5% overnight — it says it sold 9 million units of its new iPhone 5S and iPhone 5C during the first three days on sale. Sales were higher than expected (consensus 8-9 million) and set a new record trumping the iPhone 5 which sold 5 million units in its opening weekend. Microsoft has unveiled a faster and more powerful Surface tablet yesterday to mount a stronger challenge to Apple’s iPad. 

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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