Global markets were slammed overnight, with US bond yields spiking amid heightened fears over the US debt ceiling.
The losses followed a press conference from President Obama, who warned there will be a cloud over US credibility until the budget standoff is resolved, and that he would not be held to ransom over the debt ceiling.
Investors received another kick in the guts from an IMF report downgrading 2013 growth forecasts for emerging market economies.
Short term bonds were also sold off heavily amid fears a failure to raise the debt ceiling will damage the creditworthiness of the United States. The Dow slumped 159 points (-1.1%) to 14777, the S&P500 shed 21 points (-1.3%) to 1655 and the Nasdaq tumbled 75 points (-2%) to 3695.
The losses weren’t as severe in commodity markets. Oil managed a modest gain ahead of tonight’s supply report, which is expected to reveal only a small gain in weekly US crude inventories.
Bullion futures slipped 0.1% to US$1325 an ounce.
The US dollar rebounded slightly versus its main counterparts, although the greenback is looking decidedly shaky against the yen as the US shutdown entered an eighth day.
In economic news, the Westpac Consumer Sentiment Survey is due for release at 10:30am, AEDT.
Morning Market Update: Selloff Continues is a post from: Australian Stock Report Market Pulse Blog
US markets opened the new trading week with sharp declines overnight, weighed down by the ongoing budget standoff in Washington.
Amid a lack of economic news, equities remained under pressure from the get go, with the S&P500 shedding 15 points (-0.9%) to settle at 1676 – a four week low for the index.
The other two major US indices didn’t fare much better. The Dow slumped 137 points (-0.9%) to 14936 and the Nasdaq let go of 38 points (-1%) to 3770.
Hopes for a speedy resolution to the budget crisis were dashed by weekend comments from Republican leader, John Boehner, who warned his party would not raise the debt ceiling without concessions from Obama.
In the commodities complex, gold rebounded amid growing fears US politicians will fail to reach an agreement to raise the debt ceiling by the middle of next week, potentially triggering a default.
Bullion futures rose 1.2% to US$1325 an ounce.
The same fears weighed on oil, which faced added pressure from a World Bank report that lowered the growth forecast for East Asian countries. Oil shed 0.8% to US$103.03 a barrel.
The yen continued its upward climb versus the greenback, with safe haven flows propelling the Japanese currency to its strongest level since early August, at 96.71.
In economic news, the ANZ Job Ads Survey and NAB Business Confidence Survey are both due for release at 11:30am, AEDT.
Morning Market Update: Budget Blues is a post from: Australian Stock Report Market Pulse Blog
The downbeat mood on global markets continued overnight, with US stocks extending their slide as the government shutdown rolled into a third day.
Stocks spiralled lower in the early moments of trading after President Obama reiterated that he would not meet Republican demands in exchange for operating the government.
The ongoing standoff has spooked investors, who fear that US politicians will struggle to hammer out a deal that will avert a calamitous default in two weeks time.
It wasn’t all bad news, however, with stocks recovering from their lows after a measure of services activity missed expectations, raising hopes the Fed will delay the start date of stimulus tapering.
The Dow slumped 137 points (-0.9%) to 14996, the S&P500 fell 15 points (-0.9%) to 1679 and the Nasdaq shed 41 points (-1.1%) to 3774.
Commodities were mostly weaker, with oil marking its fourth losing session in five on concerns the US budget standoff will deal a blow to economic growth and hurt energy demand.
Oil futures dropped 0.8% to US$103.31 a barrel whilst gold slipped 0.2% to US$1318 an ounce.
US dollar weakness was again the theme in currency markets. The greenback fell against most of its major rivals due to the shutdown and weak services activity data for September.
There is no major economic due for release today.
Morning Market Update: Global Markets Slide Further is a post from: Australian Stock Report Market Pulse Blog
There was more weakness on global markets overnight, with US stocks climbing off the session lows as the government shutdown entered a second day.
Expectations for a quick resolution to the budget crisis were low amid concerns the government shutdown will last until the US is scheduled to hit its debt ceiling in two weeks.
However in a small glimmer of hope, President Obama and top Congressional leaders were scheduled to meet today for discussions on ending the standoff.
On the economic front, investors had to contend with data showing private payrolls rose less than expected last month, magnifying concerns over the state of the jobs market.
The Dow fell 59 points (-0.4%) to 15133, the Nasdaq dropped three points (-0.1%) to 3815 and the S&P500 slipped one point (-0.1%) to 1694.
It was a different story in commodity markets, with gold and oil enjoying strong gains after their recent sell-off.
Gold clawed back almost all of yesterday’s losses, finding support from renewed safe haven flows. Bullion soared 2.7% to US$1321 an ounce and oil jumped 2% to US$104.10 a barrel.
Greenback weakness was again the theme in currency markets, as traders speculated the Fed may delay the start date of stimulus tapering in light of the US budget uncertainty.
There is no major economic data due for release today.
Morning Market Update: More Worries For Wall Street is a post from: Australian Stock Report Market Pulse Blog
International markets arrested their declines overnight amid hopes the US government shutdown will not last as long as initially feared.
The US government entered a shutdown for the first time in 17 years yesterday, but investors held out hopes the budget standoff between Obama and his Republican opponents will be resolved within a week.
Also fuelling the positive vibe was a bigger than expected rise in US manufacturing activity last month – the highest pace of factory expansion since April 2011.
The Dow rose 62 points (+0.4%) to 15192, the S&P500 climbed 13 points (+0.8%) to 1695 and the Nasdaq jumped 47 points (+1.2%) to 3818.
Across the Atlantic, European equities enjoyed outsized gains. Italy led the charge on reports Silvio Berlusconi’s party may rebel against him, allowing the leading party to govern and removing a key source of uncertainty.
The UK FTSE slipped two points, the German DAX put on 1.1% and the French CAC soared 1.3% whilst Italy’s main index leapt 3.1%.
Gold was the big mover in currency markets, plunging 3.1% to US$1286 an ounce – its lowest levels in almost two months.
The yellow metal was battered by a lack of safe haven demand, with investors cautiously optimistic the shutdown may be short-lived.
The Aussie was one of the best performing currencies, rallying back to 94 US cents after the RBA signalled yesterday that the next rate cut may be a while off.
In economic developments, building approvals and the trade balance are both due out at 11:30am, AEST. HIA New Home Sales data is also due for release today.
Morning Market Update: Markets Defy Shutdown Gloom is a post from: Australian Stock Report Market Pulse Blog
Global markets opened the new trading week with more losses overnight as the US government hurtled towards a historic shutdown.
The declines on Wall Street came amid fears Congress will be unable to reach a deal on the budget by midnight tonight, precipitating the first government shutdown in 17 years.
The budget uncertainty overshadowed a bigger than expected rise in Chicago area manufacturing activity last month, with investors fearful a shutdown will hamper an already wobbly US economy.
The Dow Jones slumped 128 points (-0.8%) to 15130, the Nasdaq fell 11 points (-0.3%) and the S&P500 shed 10 points (-0.6%) to 1682.
There was mostly red in commodity markets, with crude settling near its lowest levels in almost three months amid fears a US government shutdown will lead to weaker energy demand.
Front month crude oil futures declined 0.5% to US$102.33 a barrel.
The US dollar fell slightly versus its major counterparts, with traders reassessing the likelihood of an October start date for stimulus tapering in light of a shutdown.
In economic news, retail sales data is due for release at 11:30am, AEST. That will be followed by the RBA interest rate decision, scheduled for 2:30pm, AEST.
Morning Market Update: Wobbly Wall Street is a post from: Australian Stock Report Market Pulse Blog