US equities spent most of the session bouncing around zero and as I write are only up smalls (0.1 per cent to 0.3 per cent) with the S&P 500 at 1806 and the Dow at 16,105. Everyone must be waiting for Thanksgiving.
That’s not to say that records aren’t being broken or milestones reached. The Nasdaq for instance cracked the 4000 mark (currently at 4003) for the first time in 13 years. Only about 700 points to go before it breaks its all-time high made in 2000.
Otherwise the key underperforming sectors were energy and basic materials. Although having said that, there wasn’t really any notable move over on crude – although that in itself is probably notable I guess.
As readers will be aware a deal was struck with Iran to curb its nuclear program if sanctions were eased. It was thought by some that this would see crude prices drop but so far we’ve only seen West Texas Intermediate off 0.7 per cent to $94.09, while Brent is up 0.3 per cent or so to $110.04. Commodities otherwise were stronger with copper 0.5 per cent higher and even gold managed to put on another couple of dollars to $1246.
Outside of that there wasn’t too much of interest – the only economic data that was out was lower tier and soft. For instance, pending home sales fell 0.6 per cent in October after a 4.6 per cent fall the month prior. Similarly, the Dallas Fed manufacturing index fell to 1.9 in November, from 3.6 the month prior, which is the lowest reading since March.
Most of the action was actually over in Europe with stock markets there up 0.9 per cent on the Dax, 0.6 per cent on the CaC and 0.3 per cent on the FTSE100. The only causal factor being named is the deal with Iran, although given the price action elsewhere, that’s not a strong argument I would have thought. It’s probably more the case that that with Europe past the worst, money is just flowing in.
In the currency space, the Australian dollar is little changed from 1630 AEDT yesterday at 0.9160, while the euro only had a touch more action, down 30 pips to 1.3513. The yen hovers just above target at 101.70.
There wasn’t much more action in the rates space with the US 10-year yield down only smalls to 2.74 per cent. Supporting the bid for bonds (prices and yields move inversely) was that weaker economic data, and only an okay two-year Treasury note auction. The note went out at a higher than average bid ratio, but the yield at 0.3 per cent was the highest since May. More interest is being given to the ‘surge’ in Chinese bond yields – the highest in nine years, although it has to be said the yield now is around 4.65 per cent and the record high is 4.88 per cent, so not a cause for panic.
Finally then, and looking at the day ahead, the SPI suggests our market will be off a whole point in trading today, so not a lot expected to happen. Data-wise it’s very quiet for our region as well, although there is a speech from the deputy governor of the Reserve Bank of Australia, Phillip Lowe, on productivity and infrastructure at 0915 AEDT. Tonight the key data is from the US and includes housing starts, the S&P/Case-Shiller house price index, consumer confidence and the Richmond Fed manufacturing index.
Have a great day…
Adam Carr is a leading market economist.
Follow @AdamCarrEcon on Twitter.