SCOREBOARD: Google glitch

Markets were a little more disjointed overnight, with correlations braking down as markets effectively reacted to local news and events. Well their own market specific news flow. For the first few hours US stocks did little, brushing off that jump in jobless claims to 388,000 from 342,000 and also ignoring the solid improvement in the Philly Fed manufacturing index to 5.7 (average 7) from -1.9. Having said that both series have been so volatile they are worth ignoring for now. For what it's worth the four week moving average for claims has been little changed at 365,000 which is consistent with ongoing robust jobs growth. So no real change to the outlook and the data didn't have much of a market impact.

A couple of hours later the offer was on though and as far as I can tell, this is due to Google's disappointing Q3 earnings, which were down 20 per cent over the year. Tech stocks led the charge lower and coming into the close nothing has really changed there – the Nasdaq is down 0.95 per cent (3074), while the S&P is off 0.3 per cent (1457) and the Dow 0.1 per cent (13537).

Over in Europe two successful bond auctions actually buoyed markets, although fair to say they had closed up by the time the US offer had come on. So the Italians managed to sell of €18 billion in inflation-linked bonds to retail investors, which is a record and basically funds Italy for the rest of the year. Demand was strong. One of the key features of the issue is that citizens were able to buy the bonds directly from the treasury, via the internet, without having to go through brokers. Spain then sold about €4.6 billion in bonds all at lower yields. The 10-year bond went out at 5.458 per cent compared to 5.666 per cent previously, while the 3-years went out at 3.227 per cent. In the secondary market, Spain's 10-year fell about 13bp to 5.325, while Italy's was little changed at 4.65 per cent.

This news seemed to overshadow yet another violent anti-austerity protest in Greece, with some estimates suggesting 40,000 people were involved. Similarly reports over divisions at the European summit (which kicked off last night) didn't really seem to rattle markets. The Europeans are clearly going in the right direction at the moment, and although they may disagree about the particulars, there does seem to be an overall plan. A banking union appears to be the central discussion point at the summit, with mixed reports about how successful the Germans are going to be with their proposal to allow the EU to veto national budgets. But markets were generally upbeat. More so than in the US, and the Dax rose 0.6 per cent, the CaC was up 0.2 per cent, while the FTSE was 0.1 per cent higher.

For commodity markets there was nothing in Europe or the US to really provide much guidance. Certainly the Chinese GDP figures didn't really swing things around either way. The Chinese economy is slower, sure, but Chinese growth cannot possibly be described as weak. I've highlighted this before, but to put the Chinese growth slowdown in context, their slowdown is the equivalent of Australian growth slowing from 4 per cent to 3 per cent. Slower but hardly a bad outcome. So what's a poor commodity trader to so? Not a lot it seems – Crude was off about 0.2 per cent ($US91.98), gold fell $US11 to $US1741, while copper was off 0.5 per cent.

Some of this commodity weakness was no doubt US dollar related, as the unit saw a modest bid. The price action more generally wasn't that exciting overall, although the Australian did push through the 1.04 mark briefly. Currently the unit is at 1.0372 which is down about 40pips from 1630 AEDT yesterday. Euro was down about the same (30 pips) to 1.3071, while Sterling dropped about 70pips to 1.6057 and Yen is at 79.27.

On the rates side, and despite a sluggish session for equities, US treasuries sold off again the 10-year yield rising a couple of bp to 1.83 per cent, while the 5-year was at 0.78 per cent (also about 2bp higher). The 2-year did little and sits at 0.29 per cent. Aussie futures did nothing really with 3s at 97.46 and 10s at 96.865.

Looking at the day ahead, the SPI suggests the Aussie market won't do much today (down 0.1 per cent to 4543). Then, as for the calendar today, it's light for our region – not much out. Tonight, the key European data includes producer prices and the current account. The Brits release public sector financing data while in the US, we get existing home sales – expected to fall 1.7 per cent after a strong gain of almost 8 per cent the month prior.

That's about the lot, have a great day and a great weekend…