Originally published by AxiTrader
Quick Recap
- Stocks in the US liked Hillary Clinton’s performance in the debate but oil traders are not so keen on OPEC’s shenanigans with WTI down around 3%.
- Forex traders are observing their charts, gold fell, as did copper, but nickel is higher as the Philippines shut more mines.
What You Need To Know
Here’s what I picked up
International
- Markets have voted that Donald Trump lost the debate lifting stocks higher overnight across the US even though Europe was lower again. At the close the Dow Jones Industrial Average is up 0.74%, the Nasdaq 100 has risen 0.92%, and the S&P 500 is up 14 points to 0.64%.
- Of course US markets have just been running on the spot over the past few days as investors try to figure what the outlook for the economy and corporate America really is. On that front consumer confidence leapt to 104.1 in September from 101.80 last month. That’s good news for the US economy.
- Also good news for economic growth were comments from Fed vice-chair Stan Fischer who said “the U.S. is "beginning to see the fruits of a higher pressure labor market." That is really good news for workers and as a result consumption. But Fischer did question low rate policy and said rates need to rise – but not “too much”.
- Interestingly Fischer’s comment that “I think there's also a problem in going to a zero interest rate in the sense that it says that capital isn't very productive, there's not much going on in the economy…we would be better off if there was a price for using money" echoed similar comments from German finance minister Wolfgang Schaeuble overnight. Of course Schaeuble is after Mario Draghi but he is the most high profile economic political leader on the planet to both attack these central bank policies and also say that th government needs to do more. Here’s comes the fiscal bus – it’s about time.
- Rates continue to rally with the US 10 year bond now trading just under 1.55%. German 10’s are now at -0.14% and Japanese 10’s closed yesterday around -0.08%.
- Germany banking woes continue with Deutsche Bank (DE:DBKGn) remaining under pressure and state-backed lender NordLB having to scrap plans for a 500 million euro bond sale overnight.
- The WTO says growth this year in the global economy and trade is going to be the worst since 2009
Australia
- Stocks on the ASX fell 25 pints yesterday but the S&P/ASX 200 still managed to close above the psychologically important 5400 with a close at 5405. But that level is expected to give way in trade this morning if the SPI 200 overnight futures trade is any guide. The December SPI 200 contract is 6 points lower this morning suggesting early pressure. But it was down around 16 at 5am.
- The banks were under the pump yesterday as global concerns about financial firms hit our shores. That and some profit taking after a strong recovery in the past couple of weeks knocked the big 4 lower. We’ll see what happens today but there were plenty of comment and chatter yesterday that while the local banks are well managed and well capitalised given the outlook here in Australia for credit and the economy their ability to grow earnings was limited.
- The Miners were also under selling pressure yesterday and that is likely to continue today although any listed nickel miners are likely to have a good day.
- Again it’s a quiet day on the economic front here in Australia but there is a speech by Malcolm Edey, assistant governor at the RBA.
Forex
- A number of really interesting moves in forex over the past 24 hours. Of course the Mexican peso’s strength (+2.2%), which has seen USD/MXN pu which might ll back to support around 19.40/45 in the wake of the market’s view that Hillary Clinton won yesterday’s US presidential debate is noteworthy. Technically its breaking back inside, and below, the recent break out level.
- But so too is the rally, and then pullback of the USD/JPY which hit a high of 100.98 but is back to where it was this time yesterday around 100.30. It’s still the case everyman and his dog wants to sell USDJPY and price action like this supports their outlook. For me it’s reasonable that is USDJPY is trying to build a base that it tests, or retests, the post-Brexit move under 100 – what matters is if it breaks 99.50. That would suggest a move toward 96.00/20.
- Elsewhere on forex its still the case that technical are still drive most of the big pairs. The AUD/USD is one of the better performers in the past 24 hours up 0.34% at 0.7662 but it ran into over head trend line resistance and pullback from a high of 0.7696. Likewise Euro rallied initially but pulled back of resistance and is at 1.1216 this morning while Sterling respected trendline support and is at 1.3014.
- Markets trading so nicely on the charts tells you that traders are being opportunistic and short term and also that they are still waiting for the next shoe to drop.
Commodities
- Oil is down again with Crude Oil off 3.11% and Brent Oil down 3.27% overnight. What’s driving he fall is that it’s crystal clear OPEC is not on the road to a deal at this week’s meeting. The Saudis still ha e the olive branch out but the Iranians, relatively fresh back from sanctions, are still saying that they won’t be cutting production and are on their way to 4 million barrels a day from the current run rate of 3.6 million bpd.
- Saudi Energy Minister Khalid al-Falih said "The gap (in views) between OPEC countries is narrowing. I don't expect that an agreement will come out of the consultations tomorrow,". His Iranian counterpart, Bijan Zanganeh noted this week "is not the time for decision-making”. Rather “We will try to reach agreement for November" he said. oT add to the downward pressure from disappointment the head of the IEA said the market won’t be back in balance until late 2017.
- WTI needs to hold $42.80 on any pullback to avoid a dip to $39
- Nickel was up another 1% as it’s rally continues. The driver of the move higher has been the Philippine government suspended another 20 mines for environmental violations. Reuters reports “"I am not against mining but I am definitely against the adverse effects that may happen, that are happening in some of the situations," Environment and Natural Resources Secretary Regina Lopez told a briefing”.
- Copper was 1.1% lower to $2.166 a pound and Gold collapsed $11 an ounce to $1326. Lower rates, stocks rallying, and traders judging less chance of a Trump victory all contributed to golds fall. Like so many markets gold is respecting trendline support and resistance and just like so many markets gold looks poised for a break out. If I had to bet right now it would be lower, back toward support at $1300.
Today's key data and events (all times AEDT)
- Australia - RBA Assist Gov Edey Speech (10.20am)
- New Zealand - Nil
- China - MNI Business Sentiment Indicator (Sep) (11.45am)
- Japan - Nil
- Germany - Gfk Consumer Confidence Survey (Oct) (4pm)
- EU - ECB President Draghi's Speech (11.30pm)
- UK - Nil
- Canada - Nil
- US - MBA Mortgage Applications (Sep 23) (9pm); Durable Goods Orders (Aug), Durable Goods Orders ex Transportation (Aug) (10.30pm); Fed's Yellen testifies (12am); Fed's Bullard speech (12.10am); EIA Crude Oil Stocks change (Sep 23) (12.30am); 5-Year Note Auction, 7-Year Note Auction (3am); Fed's Evans Speech 93.30am); FOMC Member Mester speech (6.35am);
Have a great day's trading