CMC Markets Weekly Report
Stocks in the US finished broadly lower Monday, with the Dow hitting a one-month low, as the government shutdown dragged for a second week and as investors grew worried that lawmakers may not be able to increase the debt ceiling, potentially leading to a default.
Stocks in the US finished broadly lower Monday, with the Dow hitting a one-month low, as the government shutdown dragged for a second week and as investors grew worried that lawmakers may not be able to increase the debt ceiling, potentially leading to a default.
The Dow Jones Industrial Average slumped 136.34 points to finish at 14,936.24. The S&P500 dropped 14.38 points to close at 1,676.12, And the Nasdaq fell 37.38 points to end at 3,770.38.
This week, the shutdown is likely to continue to disrupt the flow of official economic data, meaning third-quarter earnings may garner extra attention as a means of gauging the state of the recovery.
On the economic front, consumer credit rose by $13.63 billion in August to $3.04 trillion, according to Federal Reserve data. Economists polled by Reuters had expected consumer credit to rise $12 billion after a previously reported $10.44 billion increase in July.
In commodity markets, Oil prices fell following continued pressure form the political paralysis over the budget in Washington, as the partial government shutdown entered the second week. US crude benchmark West Texas Intermediate for November delivery fell 81 US cents to $US103.03 a barrel on the New York Mercantile Exchange. European benchmark Brent oil for November delivery rose 22 US cents to $US109.68 a barrel.
Gold prices climbed as jitters over the continued US budget stalemate fanned interest in the haven asset. The most actively traded contract, for December delivery, on Monday rose $US15.20, or 1.2 per cent, to settle at $US1,325.10 a troy ounce on the Comex division of the New York Mercantile Exchange. In base metals Copper futures closed slightly lower on the London Metal Exchange (LME) as investors were kept on edge by the drawn-out US federal government shutdown. At the PM kerb close on Monday, LME three-month copper was down 0.2 per cent at $US7,245 a metric tonne. Aluminium was up 0.5 per cent at $US1,853 a tonne.
The Aussie dollar rose from lows near US93.85c to end the session at US94.25c
Locally, the market closed almost one per cent lower in thin trade. The benchmark S&P/ASX200 index was 46.9 points, or 0.90 per cent, lower at 5,161.1. The broader All Ordinaries index was down 45.3 points, or 0.87 per cent, at 5,160.6.
Ahead in Australia, The Australian Bureau of Statistics (ABS) releases figures for August overseas arrivals and departures as well as internet activity data for June quarter 2013. In the US, trade data may be released while chain store data is issued.
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US stocks fell as the partial government shutdown entered its second week and investors grew worried lawmakers might not raise the debt ceiling, raising fears of a possible default. The Dow slipped 136.34 points to 14,936.24, the S&P 500 dropped 14.38 points to 1,676.12 and the Nasdaq fell 37.38 points to 3,770.38.
A prolonged shutdown can disrupt the flow of official economic data, making scheduled releases unreliable or delayed. As a result, investors often pay closer attention to third‑quarter corporate earnings as an alternative gauge of the economy and market health.
Federal Reserve data showed US consumer credit rose by $13.63 billion in August to $3.04 trillion, versus economists' expectations of about $12 billion and after a $10.44 billion increase in July. Rising consumer credit can signal stronger household borrowing and spending, which matters for economic growth and corporate earnings.
Oil prices moved on political uncertainty: US crude (WTI) for November fell $0.81 to $103.03 a barrel, while Brent for November rose $0.22 to $109.68 a barrel. The partial government shutdown and related political paralysis in Washington put pressure on energy markets.
Gold rose as investors sought a safe‑haven amid jitters about the US budget stalemate. The most active December contract gained $15.20, or about 1.2%, settling at $1,325.10 per troy ounce on the Comex.
Base metals were mixed as investors stayed on edge. LME three‑month copper closed slightly lower, down 0.2% at $7,245 a metric tonne, while aluminium was up about 0.5% at $1,853 a tonne.
The Australian dollar recovered from lows near US$0.9385 to finish around US$0.9425. Locally, the market closed almost 1% lower in thin trade: the S&P/ASX 200 fell 46.9 points (0.90%) to 5,161.1 and the All Ordinaries dropped 45.3 points (0.87%) to 5,160.6.
In Australia the ABS is scheduled to release August overseas arrivals and departures and internet activity data for the June quarter 2013. In the US, investors may see trade data and chain store sales data, which can help fill gaps if other official releases are delayed by the shutdown.
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