It’s the last full day of the trading week what with Thanksgiving tonight, so this is as good at it's going to get. Modest bids were the order of the day it seems and even crude managed to lift – 0.7 per cent to $87.27 despite a ceasefire between Hamas and Israel. The issue here was a surprise fall in crude stocks for the week according to the EIA, which is a surprise given the oil glut – there’s just so much of it you see. Regardless, the move did in turn provide support to equities, with energy stocks a key outperforming sector.
In addition to that, the macro news flow (of which there wasn’t much) also helped a bit, with jobless claims falling about 40,000 in the week to 410,000. Recall the spike the week prior due to the storm on the East Coast. It’s just normalising from that, so I guess in a sense it’s not so much that the data supported a bid, it just didn’t stand in the way of it. Throw in a rebound in Hewlett-Packard, which pushed tech stocks higher, and it wasn’t a bad session. So as I write, the S&P500 is up 0.2 per cent (1390), underperforming the Dow which is 53 points higher (12842) and the Nasdaq at 0.4 per cent higher (2926).
Over in Europe everyone is waiting for the word on Greece – a decision has been postponed until Monday, but the news isn’t all bad. Germany is apparently now open to providing more funds to Greece via the European Stability Mechanism so they can buy back their own bonds. The major issue remains unresolved however. The IMF can’t continue lending to Greece unless debt is put on a sustainable path, and debt won’t be put on a sustainable path without either writedowns or a new bailout package. The Germans reckon the ESM buyback and lower interest rates on current loans might help – if just to 2014. The euro whipped around but ended little changed at 1.2826 (from a low of 1.274) while European stocks were modestly higher, with the Dax up 0.016 per cent and CaC up 0.4 per cent, while the FTS was 0.07 per cent higher.
In the good old days such indecision would have seen stocks belted and yields on Spanish and Italian debt soar. Not anymore – the Spanish 10-year yield fell about 8bps to 5.69 per cent while the Italian equivalent was off almost 5bps to 4.78 per cent. The mood seems much more sanguine – I guess because no one is talking about Greece leaving the eurozone anymore – we’ll find out on the 26th. Anyway rates elsewhere sold off but moves were tiny – the US 10-year is at 1.69 per cent, the 5-year is at 0.68 per cent and the 2-year is at 0.28 per cent. Boring, and Aussie debt futures were only marginally more exciting with moves 2-3 ticks on the downside – the 3s at 97.35 and the 10s at 96.865.
As for other news and data, the Australian dollar eased a little to 1.0364 while the yen pushed higher – to 82.50 from 81.64, following political commentary from Japan’s main opposition that if elected it would weaken the yen and tackle deflation. Gold was up about $4 to $1727. As for that data, the final estimate of Michigan Uni’s consumer confidence index shows confidence was weaker at 82.7, from 84.9 and compared to a forecast of 84.5.
So to the day ahead, the SPI suggests the All Ords will be up 0.6 per cent but then looking at the calendar today there isn’t much. We see a ‘flash’ estimate of China’s PMI and there are more PMIs for Europe tonight – that’s it.
Have a good one…