The market is down 19 points.Dow Jones closed up 26 points — US stocks rose overnight. While there was little progress with debt ceiling negotiations, markets were preoccupied with Obama’s nomination of Janet Yellen as the next Fed Chair. This is perceived as positive — she is expected to continue with the current Fed policy stance, treading very cautiously with any pull-back to quantitative easing.
House Republican and Senate Democratic leaders are understood to be open to a short-term increase in the debt limit. This involves Republicans choosing President Barack Obama’s proposal, offering to accept a short-term debt limit increase before entering broader fiscal negotiations.
Hewlett-Packard was up 8.9% after saying they expect revenue to stabilise following a multi-year decline. Alcoa was up 2% after yesterday’s better-than-expected earnings announcement, while Yum! Brands was down 6.7% after third quarter income fell 68% on lower Chinese sales.
FOMC Meeting minutes were released showing the decision to hold off from tapering was a close call. The factors behind the decision were disappointing economic data, the debate about the debt ceiling and concern about the effect tapering would have on markets.
Treasury will run out of cash to pay all of its bills at some point between Oct 22-31.
VIX volatility index down 3.6% to 19.6, reflecting the stability in markets.
European bond yields were generally higher, with Italian 10 year bond yields rising 18 basis points to 4.365% and Spanish 10 year yields up four basis points to 4.34% following bond sales.
European equity markets were mixed. England, Germany and France were weaker but Italy and Spain rose following the successful issues of debt.
US Treasuries were weaker — focus remained on budget negotiations and the 10 year yield rose three basis points to 2.663%, closing on the upper bound of the range it’s held over the last two weeks.
The US was mixed against major currencies. The Aussie dollar held in a tight range and ended US trading at US94.45, up slightly from yesterday.
Oil prices fell as data showed the biggest increase US crude inventories in more than a year.
Base metal prices were generally weaker, with copper and nickel -1.9 and -1.7% respectively. Zinc managed a slight increase.
Gold was down US$17.40 to US$1307.20 per ounce, reflecting reduced uncertainty following Yellen’s nomination as the US Fed Chair.
- Bank of Queensland (BOQ) — Stock up 5.7% on a better than expected result. Underlying Profit was $477.4 million up 8% from $443.5 million Cash profit was $248.2 million up from $20.9 million in the previous year. They have urged for the government’s financial services inquiry to address regulatory system inequities that favour the big four banks. The driver of the improved profit was a reduction in bad debts. Fully-franked final dividend of 30c.
- WorleyParsons (WOR) have seized on Leighton Holdings’ (LEI) bribery allegations to emphasis their stance against any form of corrupt practices. WOR yesterday announced a profit warning at their AGM.
- The AFR talks about increasing costs of LNG projects raising questions over Australia’s economic prospects. But there are a few projects that will go ahead which will help support some of the country’s top engineering firms. The $29 billion Chevron-led Wheatstone project will soon look to award engineering work. Downer EDI (DOW) tipped as the most likely winner. Citi says Downer stands to win as much as $650 million of the work.
- Cash Converters (CCV) — Faces a $40 million class action law suit which claims that they forced customers to pay loan charges that exceed a legal cap on interest rates. The class action alleges thousands of customers were caught out by the high charges.
- Newcrest Mining (NCM) — New board, Chairman and CEO announced. The new generation of leaders carrying no baggage from this year’s market disclosure scandal.
- Warnambool Cheese & Butter (WCB) — Canadian analysts say Saputo will have to increase their $390 million takeover offer as Bega Cheese (BGA) doesn’t look like they have given up. A bidding war could erupt. WCB’s share price is trading at 726c well above the 700c Saputo bid.
- iSelect (ISU) — Have rigorously defended a misleading announcement they made to the stock exchange. ASIC have asked them to explain the assumptions underpinning their earnings forecast for the year to December of $30 million.
- Singtel (SGT) — Optus has secured a $60 million telecommunication services contract from Virgin Australia (VAH).
- President Barack Obama has officially nominated Janet Yellen as the new chair of the Federal Reserve. This will make her the most world’s most powerful banker in the world and the first female leader in its 100-year history. US markets rallied on the back of this announcement. News of Yellen becoming the new Fed leader helped reduce investor uncertainty. The assumption is that she will continue with Bernanke’s dovish stance, treading carefully with any pull-back to quantitative easing.
- Australians are the richest people in the world according to Credit Suisse 2013 Global Wealth report. The median wealth of adult Aussie stands at $US219,505. This figure is the median wealth or midpoint between richest and poorest. Australia came 2nd in the measure of average wealth, behind the Swiss who were the world’s richest. Australian also had the best distribution of wealth of the developed nations.
- NAB says the US non-farm payrolls report that was delivered on September 6 was the beginning of a fall in the US dollar. The jobs data came in weaker than expected.
- Credit Suisse says the mining investment boom is coming to an end. They forecasts a sharp fall in GDP.
- GM Holden has rejected a demand by the Abbott government that they should increase exports in return for more subsidies. This puts the ball back in the government’s court.
- Melbourne petrol stations restock after running out of fuel when 60 Cootes Transport delivery trucks were taken off the road.