Daily Market Update 11 September 2013 - Syrian risk subsides, risk asset surge
Positive news from Syria overnight with the government of Bashar al-Assad agreeing<http://www.reuters.com/article/2013/09/10/us-syria-crisis-idUSBRE9880HY20130910> to hand over control of their chemical weapons stockpiles to international monitors. While there is still a degree of scepticism to the Russian-led deal from the US and their allies, it looks increasingly likely that a diplomatic solution may be found to help avert the use of military force.
Canadian housing starts fell more-than-expected in the year to August with a rate of 180.3k reported<http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2013/2013-09-10-0816.cfm>. The figure was below both the 192.9k pace of July and expectations for a decline to 189.5k and was the slowest pace seen since February this year.
Italy Q2 GDP<http://www.istat.it/en/archive/98492> was revised down to -0.3% overnight. The reading was below the -0.2% preliminary estimate released in August and left the year-on-year contraction at 2.1%.
French industrial output fell unexpectedly in July with a decrease of 0.6% reported<http://www.insee.fr/en/themes/info-rapide.asp?id=10&date=20130910>. While better than the upwardly-revised -1.2% contraction of June, the result fell short of expectations for an increase of 0.6%. As had been the case in June, manufacturing output was the chief catalyst behind the fall, declining 0.7% from a month earlier.
India’s trade deficit narrowed to the lowest level since March this year in August with the government reporting a decline to $10.9b. The figure was below the $12.27b level of July with a 13% annualised increase in exports to $26.14b, coupled with a 1% fall in imports to $37.05b, behind the monthly improvement.
The Day Ahead (All times AEST)
The ASX 200 looks set to test its 2013 high of 5249.60 today with SPI futures pointing to a rise of 29 points on the open. While this would fit with the gains seen in offshore markets, given falls in crude, base and precious metals overnight, it’s highly likely that the most of the heavy lifting today will be done by the financial and industrial sectors. Following the initial surge, as is usually the case when there’s little on the calendar to drive direction, we expect the index to mimic the movements in Chinese equities once their markets get underway at 11.30am.
Despite heavy losses in commodities, the AUDUSD continued to push higher overnight with the pair mirroring the movements in US equities throughout the course of trade. Despite the fact it’s now up 5% in less than two weeks, something that has triggered a few overbought signals on the momentum indicators we watch, it looks likely that the pair will continue to march higher today as global economic sentiment continues to improve. At time of writing, the pair is currently testing .9220, the high struck on July 24, with a break of that level targeting a move back to .9390 in the sessions ahead. On the downside, support is likely to kick in at .9290, .9260 and again at .9240.
Australia’s Westpac-MI consumer confidence survey for September will be released at 10.30am this morning. On the regional front, we’ll also receive the REINZ house price index from New Zealand, South Korean unemployment along with Japanese business confidence.
Data releases this evening include the MBA mortgage market index in the States, UK unemployment, the final read of German CPI along with revised Q2 non-farm payrolls and current account figures from France. On the monetary policy front, the RBNZ will announce their September monetary policy decision at 7am tomorrow morning.