Daily Market Update 16 October 2013 - 'Tremendous progress' postponed..
After hearing that ‘tremendous progress’ on US budget negotiations had been made yesterday, it appears that we’re back to square one this morning with squabbling amongst House Republicans seeing negotiations between Democrats and Republicans in the Senate break down overnight. Given the fluid nature of these developments, along with the belief the US treasury will likely exhaust temporary measures to avoid hitting the debt ceiling as soon as tomorrow, it is clear that the mantra of a budget deal ‘being done’ is perhaps more than a little premature. For those with an interest, we’ll be updating our Twitter feed with the latest developments over the course of today’s trading session.
Manufacturing activity across New York and surrounds expanded in October, albeit at a sharply slower pace, with the Empire State manufacturing index falling to 1.52. The reading was well below both the 6.29 figure of September and expectations for a rise to 7.0.
Canada existing home sales inched higher during September with an increase of 0.8% reported. Despite coming in well below the 2.8% advance of August, the increase was the seventh-consecutive month that turnover had improved.
German investor sentiment rose to a 4-year high in October with the closely-watched ZEW index rising to 52.8. The reading was above both the 49.6 reading of September, subsequently the same figure forecast by economists, and was the highest level seen since April 2010. While expectations rose, demonstrating the impact that the current US budget impasse is having on investors globally, the current conditions subindex fell unexpectedly with a decline to 29.7 reported. The result was below the 30.6 reading of September and expectations for an increase to 31.3.
German import prices remained subdued in August with an increase of 0.1% reported. While above the flat reading expected by economists, the result left the year-on-year contraction sharply lower at -3.4%.
French CPI fell less than first estimated in September with a decline of 0.2% reported. The figure was above the -0.3% preliminary estimate released earlier in the month and left the year-on-year increase at a benign 1.0%.
UK CPI rose more-than-expected in September with an increase of 0.4% reported. The figure was ahead of estimates for a rise of 0.3% and left the year-on-year increase unchanged, and still above the Bank of England target, at 2.7%. While consumer costs remained elevated, it was a different story with upstream prices with producer price inflation declining 0.1% over the month. The figure was below the 0.1% increase that had been expected by the markets and left the annualised rate some 0.4% lower at +1.3%.
The Day Ahead (All times AEDT)
The seismic shifts in the ASX 200 look set to intensify today, this time to the downside, with SPI futures pointing to a decline of 16 points on the open. In what will be a simple outcome, should we not get any positive news out of Washington early in the session, like Wall St, the losses will likely accelerate towards the close.
The AUDUSD has eased back from multi-week peaks overnight with the pair currently buying .9526. With no major data out to dictate direction, as is the case with equities, the longer it takes to hear that a budget deal in Washington will be struck, the greater the losses in the pair are likely to be. Support starts at .9515, .9500 and again at .9479 with resistance kicking in between .9540-48 and again at .9574.
Australia’s Leading Index will be released at 10.30am. On the regional front we’ll also receive South Korean unemployment along with Q3 CPI from New Zealand.
Data releases this evening include the latest Beige Book of economic conditions from the Federal Reserve, MBA mortgage market index and NAHB home builder survey in the States, manufacturing sales from Canada, trade and CPI figures from the Eurozone along with UK unemployment. Rounding off what is a busy economic calendar, ECB President Mario Draghi is also scheduled to speak from Frankfurt.