Scoreboard: US dilly-dally

Global markets went sideways, despite industrial production data that augured well for the US recovery.

It doesn’t look like it’s going to be the most exciting session, as at the time of writing US stocks are only just hovering around 0 per cent, with the S&P500 up 0.1 per cent at 1762, the Dow down 0.1 per cent to 15,551 and the Nasdaq down around 0.3 per cent (3933).

This follows a similar session in Europe where the Dax ended 0.1 per cent weaker and the FTSE100 0.1 per cent higher, although the CaC fell 0.5 per cent. Not a lot to say about the price action, although it was interesting that consumer goods stocks had a solid session, while basic materials were the key underperformer.

Data-wise there was only one release out – well, one tier-one release – but it contained valuable information about the US economy. That’s especially for a Fed that seems to be confused about the US economic expansion. Specifically, industrial production figures for September suggest the expansion is solid enough, with growth of 0.6 per cent for September and at a faster pace than August’s 0.4 per cent.

Annual growth of 3.2 per cent is also decent, and the figures remain consistent with the ISM index (showing a solid expansion underway) and the strong payrolls result we saw recently. True enough that not all the data was rock solid, with the pending home sales index falling 5.6 per cent in September, which was the biggest fall in three years.

Otherwise there was a bit of news flow on gold. Russia reported that its central bank sold gold in September for the first time in a year, although it remains a net buyer overall in 2013, as do central banks more broadly. Also interesting to note was that a large gold fund has suggested that the supply and demand statistics calculated by the World Gold Council are misleading and don’t reflect the full extent of demand, especially throughout Asia. According to the fund, demand is much greater than the World Gold Council estimates. The price action for gold itself was subdued overnight, the metal little changed at $1353. Copper was otherwise flat and crude (WTI) rose 0.8 per cent to $98.6.

Price action elsewhere was a little more interesting. The Australian dollar, for instance, initially pushed high through the European session, hitting a high of 0.9621. Three hours later the unit was at its low of 0.9558, following the euro and British pound lower (the pound dropped about 80 pips from its high). From 1630 AEDT the euro was only down smalls, while the Australian dollar was off 33 pips. The yen was little changed at 97.72, while the 10-year bond did little, yielding 2.517 per cent.

Bits and pieces otherwise – ahead of a visit from the ‘Troika’ over the next week, Greek Prime Minister Antonis Samaras suggested his country can’t handle any more austerity and won’t be blackmailed. He suggested the country deserves some credit for delivering the biggest budget deficit reduction in eurozone history. The Greek bond market certainly agrees, with those bonds the best-performing this year, apparently, and funds invested in them giving returns of over 100 per cent.

Looking at the day ahead there isn’t much. There’s no data for Australia and while Reserve Bank governor Glenn Stevens will give opening remarks at a conference this morning (0930 AEDT), there’s no Q&A session, so I’m not sure he can say much on policy, really (anything new or different, that is).

Otherwise there’s some Japanese data on retail sales and unemployment figures, and tonight we see US retail sales, producer prices, the S&P Case-Shiller house price index, business inventories and consumer confidence.

Have a great day…

Adam Carr is a leading market economist.

Follow @AdamCarrEcon on Twitter.

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