Solid effort from Australia and Japan fails to lift markets

Share Markets:

After solid sessions in Australia and Japan yesterday, US and European markets failed to 'kick on'.

Despite this, the US S&P500 edged higher to set another record level. The earnings of US companies continue to grow and in many cases have exceeded market expectations.

Cheap money, via US Fed policies, is also of benefit to the market. 

Bonds:

The lack of movement in the equity market was reflected in similarly modest moves in bond markets.

US ten year bond yields crept up one basis point to 2.52% while two year bond yields were steady at 0.30%.

In Australia, ten year government yields rose four basis points to 4.01% while three year paper rose two basis points to 3.03%.

Foreign Exchange:

The USD was firmer early in the overnight session but drifted lower as US statistics generally disappointed the market. The AUD begins today a little weaker against the USD, yen, NZD and the euro.

Commodities:

Oil prices rose on the expectation that the pace of US bond purchase will be maintained until at least March next year.

The very accommodative US monetary is expected to stimulate global economic activity and the demand for both oil and copper.

The modest US economic figures released overnight (see below) encouraged buyers of gold who are concerned about the potentially inflationary impact of current US monetary policy.

Australia:

No data released. RBA Governor, Glenn Stevens will be speaking at 9.30 am this morning.

United Kingdom:

House prices in the UK continue to rise amid low supply.

The Hometrack house price index rose 0.5% in October to be up 3.1% over the year. The number of new properties listed fell for a second consecutive month.

United States:

US pending home sales fell 5.6% to 101.6 in September, the largest drop in over three years.

This extends a string of monthly declines to four. Housing activity appears to have been hit by rising interest rates, rising house prices and uncertainty surrounding the debt ceiling and a government shutdown.

The firm 0.6% rise in US September industrial production was partly due to a 4.4% rise in activity by utilities, plus a 3.5% vehicle assembly rise.

Manufacturing and mining posted only modest gains of 0.1% and 0.2% respectively.

Capacity utilization rose to a cycle-high 78.3% to leave the highest figure since July of 2008.

The outlook for factory production in Texas rose for the sixth successive month in October while general business activity also rose according to the Dallas Federal Reserve's survey of manufacturing.



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