* US stock markets sold down for a third session, as traders took profits after economic data continues to improve, raising concerns caution ahead of the next FOMC meeting will be held on 17-18 December.
* European stock markets ended down for a third session and are now trading at two month lows.
* Asian stock markets ended lower again, as traders continued to sell stocks ahead of the US Fed meeting and the Aussie market continued its slide.
* Commodities prices lower, Gold prices are now trading around $US1,226, while crude-oil traded around $US97.
The ASX market is looking to open lower again today, with the 5000 level now key near-term, as markets were sold-off across Europe and the US markets ended lower again. Traders are struggling to come to terms with the prospect of the US Federal Reserve changing its stimulus policy into the new year.
The Aussie share market sold off yet again yesterday, down for a sixth straight session. Selling accelerated after the jobs report that confirmed an increase in unemployment up to 5.8% (up from 5.7%) as expected, with 21,000 new jobs created. The ASX200 index (XJO) has fallen nearly -7% from its October peak and is down around -5% for December. For the session the selling was broad based, as the banks joins into the selling spree.
The SPI 200 futures were down -0.3% at 5,040, giving another negative lead for the ASX market today. The Australian dollar plunged overnight ending down at four month lows at US89.4c.
The US Dollar Index has run into resistance, which caused Gold prices to surge earlier this week. However the US dollar rebounded from its lowest level since the beginning of November overnight, surging on better US economic data.
US stock markets sold down for a third session, as traders took profits after economic data continues to improve, raising concerns caution ahead of the next FOMC meeting will be held on 17-18 December.
The three benchmark indexes all sold down around -0.4%, down around -2% in the past three session and ending at monthly lows and recording their biggest three day decline in two months. Traders continued to digested the the prospects of a Fed taper, which could begin as early as next week. Volatility held around six week highs. The S&P500 index is still nearly 25% for the year and is on track for its best annual performance since 1999.
Eight of the ten S&P500 sectors ended in the red, with the falls dominated by the Consumer Discretionary sector down -1.4%, with Tech and Healthcare down -0.7%, while the Energy sector rose 0.4% and the Industrials sector edged 0.1% higher.
A Bloomberg survey revealed a third of the 35 economists surveyed now expect the Fed to begin to tape in the December meeting. The performance of all asset classes in 2013 has been heavily influenced by the stimulus package delivered by the US Federal Reserve with its $US85 billion in monthly bond purchases fuelling financial market gains and helping restore confidence in US dollar denominated assets. It is evident the interest rates are creeping higher higher near-term, even though fixed income managers cannot agree on when exactly the Fed will start reducing its bond purchases. Gold prices have sold off as the UD dollar bounced strongly overnight, after earlier in the week advancing the most in seven weeks, rebounding from a five-month lows, as there are signs of increased physical Chinese demand.
In economic news the Commerce Department reported retail sales rose 0.6 percent in November, the most since June, while a separate report showed applications for unemployment benefits jumped last week, up from a nearly three month low. The Congressional negotiators have agreed to a budget deal that would ease automatic spending cuts by $US60 billion over the next two years and will reduce the deficit by around $US20 billion. This deal does not increase the US debt ceiling and now needs to be passed by Congress.
For the session Dow Jones closed down -0.7% at 15,739, the S&P500 closed down -0.4% at 1,776, and the NASDAQ closed down -0.1% at 3,998, while on 10-year Treasury notes jumped again to 2.88%.
European stock markets ended down for a third session and are now trading at two month lows. In economic news the EU statistics office reported that eurozone industrial production contracted -1.1% in October, missing the forecasts of 0.3% expansion.
The Europe Stoxx 600 fell another -1.0% and is down -4.7% for the month so far at its lowest level since early October. Across the region nine of the ten sectors ended in the well in the red, with falls were dominated by the Energy sector down -2.6%, closely followed by the Telecoms, Consumer cyclicals, Financials and Tech all down over -1.2%, while there were gains in the Utilities sector up 0.3%. The index has now pared it gains to 11% for the year, but is still on track for its best annual gain since 2009.
The German market ended lower again overnight and is down over -3% this month, but is up nearly 20% for the year as valuations reached their highest levels since 2009. The London market sold down to six week lows again, as trading volumes picked up to be 10% above the monthly average, and is down -5% from its October peak.
For the session the German DAX 30 closed down -0.7% at 9,017, the UK the FTSE 100 closed down -1.0% at 6,445, the French CAC 40 closed down -0.4% at 4,069, while the Spanish market closed down -0.9% 9,272.
Asian stock markets ended lower again, as traders sold stocks ahead of the US Fed meeting and the Aussie market continued its slide.
The MSCI Pacific Index fell another -0.9%, falling around -2.5% in the past few sessions to a two month low. The index has pared its gains now up 7% for the year. Three stocks fell for every gainer, as all ten sectors ended in the red, led by the Materials and Healthcare sectors. Sentiment was weighed by concerns that the Chinese economy is slowing.
The Chinese market eased, the Tech sector up 1.5% supported the market. Shanghai companies rallied on speculation the local government is speeding up state owned enterprise reform to boost profitability. Stocks have been under pressure this week due to fears that the Chinese government will cut its growth targets for 2014 at this week’s economic policy meeting (due to end today). Recent CPI figures have show inflation pressures remain manageable, with the economy stabilising, which should allow policymakers to continue focusing on policies to support growth while implementing structural reform measures into 2014.
The Hong Kong market ended lower again, on the fears over slowing growth in China. The Japanese market fell the most in a month, after profit takers stepped in as the yen strengthened.
For the session the Chinese Shanghai Composite closed down -0.1% at 2,202, the Hong Kong Hang Seng closed down -0.5% at 23,218, and the Japanese Nikkei closed down -1.1% at 15,341, while the South Korean KOSPI closed down -0.5% at 1,967.
The Dollar Index was higher 80.21 on a lower Euro, and the Aussie Dollar closed higher at US90.6c. Commodities prices were generally lower.
Overnight the COMEX WTI Crude for DEC13 delivery closed up 0.1% at $US97.53, the COMEX Copper for DEC13 delivery closed down -0.1% at 3.294, the COMEX Gold for DEC13 delivery closed down -2.4% at $US1,226.90.
ASX News Today
APA – APA Group the gas infrastructure provider has lifted its guidance for the 2014 financial year on the back of the strong performance of its assets and investments.
BHP – BHP Billiton expects its US shale oil business to become one of its major sources of revenue by the end of the decade, generating almost $US3 billion a year in free cash flow by 2020 and expects its US shale business to be profitable by 2016.
DXS – Dexus Property Group and a Canadian pension fund have increased their takeover offer for Commonwealth Property Office Fund to almost $3 billion, trumping a rival bid by GPT Group.
GNC – GrainCorp the grains marketer, wants less regulation at its Carrington grain terminal in Newcastle, NSW, because there are now two other bulk wheat export terminals competing against it.
HTA – Vodafone Australia boss Bill Morrow will take over as chief executive of NBN Co in 2014, Mr Morrow, halfway through a three year program to turn around the telco’s disappointing performance.
OZL – Oz Minerals’ shares have been have recovered from their -25% smashing this week, after it forecast disappointing production levels next year and said there had been no increase to resources at its ageing and only operating mine.
SAO – Sino Australia Oil & Gas Limited debuted on the ASX closing 2% higher.
QHL – Quickstep the Australian firm, has signed a $75 million agreement with US aerospace giant Lockheed Martin to supply wing flaps for C-130J Hercules transport aircraft.
SVW – Seven Group Holdings announced a plan to buyback just under 12 million shares, approximately 3.9 per cent of the company, commencing on 13 January 2014. Seven Group Holdings subsidiary WesTrac China will pay $US130 million ($A143 million) to acquire Caterpillar Global Mining’s distribution and support business in north-east China.
TTS – Former Queensland Liberal Party leader Dr David Watson has been appointed to the board of directors of gambling business Tatts Group.
WPL – Woodside Petroleum have risen after it halved its spending forecasts and narrowed its production targets.
WBC – Bega Cheese has extended the offer period for its takeover bid for Warrnambool Cheese and Butter.
VAH – Singapore Airlines, Etihad Airways and Air New Zealand will increase their stakes in Virgin Australia to nearly 70 percent as part of a $351.5 million capital raising.
ASX – to open lower
US & UK/Europe – lower again
US ADRs – Broadly Lower!!…
ANZ -1.4%, NAB -0.9%, NWS -0.7%
AWC -3.3%, BHP -2.0%, RIO -0.1%, NEM -0.8%
By Michael Hevern
D2MX Investment Advisor
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