The market is up 14 points. The Dow Jones was up 70 points to 15,616. The market opened up strongly before coming back to previous close levels. It strengthened throughout the day and closed near the highs in a 100 point range.

The ISM manufacturing index rose to 56.4 in October from 56.2, compared to expectations of 55.0. The data corroborated the stronger Chicago PMI from last week which was initially seen as a bit of an outlier.

The S&P was up 5 to 1762.

Oil fell 1.84% to US$94.61.

Gold was down US$10.50 to US$1313.20 per ounce.

The US$ rose against most major currencies and the Aussie dollar was slightly weaker, currently trading at US$0.9445.

VIX volatility index fell 3.42% to 13.28.

US treasuries were weaker — The 10 year yield rose six basis points to 2.620%.

European share were weaker — with the exception of the UK FTSE which rose 0.05%. The French CAC fell 0.62% and the German DAX fell 0.29%. The peripheral markets were weaker.

European bonds were mixed. French and German bonds were little changed but the peripheral markets rallied on weaker Eurozone inflation data.

Base metal prices fell — Led by Aluminium down 2.6% and Zinc down 1.46%.

Iron ore rose US$3.40 a tonne to US$135.30 a tonne.

STORIES

  • Westpac (WBC) results are good and include a special dividend of 10c despite the guidance from APRA last week not to.
  • Jobs numbers in the US on Friday are the main focus this week — it will determine the timing of tapering. Expectations are that payroll growth has slowed to 125,000 from an already disappointing 3-month average of 150,000. Economists polled by Reuters are forecasting the unemployment rate to tick up to 7.3% from 7.2%.
  • Timing of tapering — On Friday Philadelphia Fed President Charles Plosser said the central bank “clearly missed” a chance to start tapering in September. Also on Friday, St. Louis Fed President James Bullard said the chances of Fed trimming its bond buys increase along with improvements in the labour market. The central bank wants “reassurance that any progress made in labour markets will stick,” he added. So the US employment data out on Friday will be a significant event.
  • RBA Meeting tomorrow — not expected to do much more than cut and paste the last two RBA statements.
  • In Europe this week both the Bank of England and the ECB hold meetings on Thursday. No changes to rates are expected.
  • Domestic economic releases include house prices and retail sales today and labour force numbers on Thursday. The RBA Statement on Monetary Policy is out Friday.
  • There are a few AGMS: It’s also a big week for the banks. We have the Westpac financial year result (which looks good) this morning, Wednesday we have CBA’s first quarter trading update and then its AGM Friday.
  • Another profit warning from Coca-Cola (CCL). It says it is not seeing the expected post-election uplift in consumer spending … consumer demand has been more subdued than expected and aggressive competitor pricing activity has continued. It now expects earnings 5-7% below the previous year.
  • Bradken (BKN) has fallen on an earnings update this morning.
  • Melbourne Cup holiday tomorrow. The market is still open but it is a no settlement day on the ASX.
  • Whitehaven Coal (WHC) — Down on its AGM today.

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Peter Fray
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