Daily Market Update 20 August 2013 - No news is bad news in these markets
As our headline yesterday alluded to, with nothing on the economic radar overnight, markets were again left fretting over the prospect of near-term tapering from the Fed with stocks, bonds and commodities all continuing to slide as markets pre-positioned themselves before the release of the August FOMC minutes tomorrow evening. All of the major US stock indices fell by 0.38% to 0.59% with the benchmark S&P 500 index declining for a fourth-consecutive session, something that hasn’t been seen so far in 2013. As had been the case in previous stock selloffs, rising bond yields were largely to blame with the benchmark US 10-year treasury yield rising to as high as 2.90%, the highest level seen since July 29, 2011. With higher yields likely to weigh on growth prospects, commodities were hit with base and precious metals, along with crude oil, all off in the vicinity of 0.3% to 1.5%. While the moves elsewhere were symptomatic of tapering fears, the USD bucked the overall trend with the USD index closing -0.06% lower from when we arrived in the office yesterday. While there were some large falls witnessed, namely in commodity-linked and deficit-running emerging market names, it was interesting to note that against the bigger pairs, the JPY, EUR and GBP, the USD was largely static for the session.
The Day Ahead (All times AEST)
Ansell, Arrium, BHP Billiton, Coca-Cola Amatil, MacMahon Holdings, Monadelphous Group, Oil Search, QBE, Sonic Healthcare and Webjet all report earnings today.
The ASX 200 looks set to slide this morning with SPI futures pointing to a decline of 17 points on the open. While some technical-related buying will likely emerge at 5100 and again at 5088, with all bar iron ore falling across the materials complex, it’s likely that the market finish deep in the red in the absence of some positive market-moving news from China or an overly-dovish set of RBA meeting minutes.
The AUDUSD has been one of the chief casualties of the overnight selloff across the commodities complex with the pair falling from a high of .9207 to a low of .9104 in the space of a few short hours. While it has since found support ahead of .9100, a level that may encourage some to ‘buy-the-dip’ ahead of the release of likely less-dovish minutes from the RBA, given tapering concerns will continue to override all before the release of the FOMC minutes tomorrow evening, the pair looks likely to be a sell-on-rallies prospect for at least the next few sessions. Support is found at .9100, below .9085 and again at .9057 with resistance kicking in at .9125, .9150 and .9180.
The minutes of the RBA’s August 6 monetary policy meeting will be released today at 11.30am. Given the Board dropped their easing bias at this meeting, markets will be paying close attention to the usuals, the labour market, the inflation outlook and their language on the Australian Dollar, along with their outlook for the global economy, something that was upgraded within the monetary policy statement.
Very little on the economic calendar again this evening with German producer prices, Taiwan export orders and Canadian wholesale trade the only releases of note.