I'll start it from a wrap up by Greg McKenna...................
Good morning and goodbye QE.
- With no press conference after the FOMC meeting scheduled there was little chance that the Fed was going to do anything other than stick to the pre-published timetable to end QE this morning. So the impact on stocks overnight has been fairly benign.
- But the reaction on Forex and Bond markets, where the US dollar strengthened and bonds rose sharply, suggests traders were living in a parallel universe expecting, or hoping, that the Fed would not end QE or would signal some other deviation from their stated plans.
- In the end though, QE is over and the market needs to find its own levels without the help of billions of dollars of free money being ladled out each month by the Fed.
- So in the end, the Dow was down just 0.22% to 16,972, the Nasdaq dipped 0.34% to 4,549 and the S&P 500 lost just 3 points or 0.15% to 1,983. A pretty solid performance all things considered.
- Europe went to bed pre-FOMC when US markets were in the black, so the DAX was up 0.16% and the FTSE was 0.81% higher. Interestingly, the periphery of Italy and Spain saw heavy selling with stocks in Milan down 1.64% while in Madrid they dipped 1.41%.
- Locally, SPI 200 traders have done what the physical market did yesterday and remained non-committal toward the end of the overnight session. The December contract is down 1 point to 5426 bid.
- In Asia yesterday, it was a day of boom-tish-boom with solid gains across the board as Asian traders felt the afterglow of the previous strength in US stocks. The Nikkei was up 1.46% to 15,554 and traders may like the fact that the yen was smashed overnight as USDJPY has moved up to 108.88. The Hang Seng rose 1.27% and in Shanghai stocks rose 1.5%. Yesterday’s Westpac MNI Chinese consumer sentiment indexwas weak, hitting a 3-year low prompting Westpac’s senior international economist Huw McKay to say the time for easing is now. It’s a data drought today except for Japanese foreign bond data.
- On Currency markets, it was a night of ignorance to the facts and then over-reaction to reality. The Aussie dollar, which traded to a high of 0.8911 is now trading 0.8781 – seriously folks! Likewise, the euro is down at 1.2635 and the pound is tanking at 1.6006.
- On Commodity markets, iron ore for December delivery rose 62 cents to $78.75 a tonne while Newcastle coal for the same month dipped 10 cents a tonne to $64.85. Elsewhere, Nymex crude rose 1% to $82.30 but gold has pulled back again under the US dollar’s weight to $1,211. On the Ags, the October recovery continues with soy beans up an insane 6% for a gain in the last three sessions of around 12%. Wheat rose 1.43% and corn is 3% higher.
- On the data front today, it is very quiet as we await some monster releases from the US and Europe tonight. Locally though, we do get HIA new home sales and import and export prices which will tell us something about Australia’s terms of trade. Tonight it’s US GDP and German CPI as the key reports. These are massive numbers in the context of the Fed, the ECB and markets generally.
