Stocks were off last night (mixed around zero in Europe) although we can’t read too much into it. The truth is nothing much happened overnight – well nothing to match last week’s shenanigans – and of course we’ve got the US payrolls report tonight. So punters are biding their time. About the only data we saw was the existing home sales report, which fell 1.9 per cent in September. Now this wasn’t as bad as expected (-3.3 per cent) but it comes after a flat outcome in August. Still, at just under 5.3 million, sales are only a touch below average.
Anyway, everyone is waiting for payrolls tonight and trying to discern what, if anything, that might mean for a taper. I don’t think a taper is on for the foreseeable future, but some are still talking as if the October and December meetings are live. This would surprise me and I think the Chicago Federal Reserve President captures the view of the whole voting committee in an interview he gave overnight. In that he said that in order to be confident of a taper, the Fed would need to see “a couple of good labour reports, and evidence of increasing growth, GDP growth, and that’s probably going to take a few months to sort that one out”.
So at the time of writing (a little less than 30 minutes to go) the major US indices were little different from 0, with the S&P500 and the Dow off 0.1 per cent each to 1742 and 15,385 respectively. The Nasdaq, also hovering around zero was up 0.1 per cent (3918). By sector, energy, healthcare and utilities were the worst underperformers, energy stocks hit by a 1.7 per cent fall in the crude (WTI) price to $99.12. Crude in turn was hit by a government report showing crude oil stocks rose by 4 million barrels in the week to October 11, confirming earlier data also showing a lift in stocks. Demand from refineries also fell which weighed on sentiment.
Elsewhere, price action was subdued with the US 10-year Treasury yield unchanged for the session at 2.6 per cent. Then in forex, the Australian dollar is at 0.9657, down only a little from 1630 at 0.9670. Euro is then little changed at 1.3681 (1.3651 at the low) and yen sits at 98.19 from 98.02 at 1630. Indeed with gold and copper little different from 0 ( 0.1 per cent a piece with gold at $1315) the only decent price action was found in the silver market with that previous metal up 1.4 per cent.
So, then for our market today. The SPI points to a modest gain for our market – 9 points. Outside of that there is little though. No data as such for Australia and elsewhere in the region we really only see Chinese property prices. Tonight of course is payrolls and the market looks for an increase of 180,000 with the unemployment rate expected to remain unchanged at 7.3 per cent. Other than that, we see the Richmond Fed manufacturing index and the UK release their public sector finance requirement.
Have a great day…
Adam Carr is a leading market economist.