Daily Market Update 28 October 2013 - ASX 200 set to scale fresh multi-year peaks
US durable goods orders exceeded expectations in September with an increase of 3.7% reported<http://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf>. The reading was above both the upwardly-revised 0.2% increase of August and expectations for a rise of 2.3% and was the largest month-on-month increase seen since June 2013. While the headline figure was impressive, after drilling down into the report it was clear that all of the increase came from military and aircraft orders with the core reading, that which excludes those lumpy items, declining by 1.1%. The decrease was over double the downwardly-revised 0.4% increase of August and well below expectations for an increase of 1.0%.
US consumer confidence fell more than what was first estimated in October with the final reading of the Thomson Reuters/University of Michigan consumer survey<http://press.sca.isr.umich.edu/press/press_release> falling to 73.2. The reading was below the preliminary estimate of 75.2 and expectations for a decline to 75.0 and was the lowest level seen since December 2012. As you would expect with the fall in the headline rate, both the current conditions and expectations indices fell during the month, coming in at 89.9 and 62.5 from 92.6 and 67.8 in September.
While the other US data releases were weak, there was finally some good economic news delivered during the session with wholesale sales and inventories growing strongly<http://www2.census.gov/wholesale/pdf/mwts/currentwhl.pdf> in August. Sales increased by 0.6%, double expectations, after coming in flat for July while inventories also rose, coming in at +0.5% against expectations for a rise of 0.3%.
The UK economy grew at the fastest pace since Q2 2010 during the third quarter with an increase of +0.8% reported<http://www.ons.gov.uk/ons/dcp171778_331535.pdf>. The figure was in line with market expectations but above the +0.7% pace of Q2 and left the annualised rate of growth at +1.5%, the highest level seen since Q1 2011.
German business confidence slipped fractionally in October with the IFO business climate index<http://www.cesifo-group.de/ifoHome/facts/Survey-Results/Business-Climate/Geschaeftsklima-Archiv/2013/Geschaeftsklima-20131025.html> falling to 107.4. The reading was below September’s 107.7 figure and expectations for an increase to 108.0 with conditions and expectations, 111.3 and 103.6 respectively, coming in below those levels seen in September.
Italian retail sales held steady in August, an outcome that was in line with expectations. Despite no change being recorded during the month, with stronger figures rolling off the data series, the year-on-year change turned positive, printing at +0.2% from -0.8% in July.
The Day Ahead (All times AEDT)
The juggernaut that is the ASX 200 looks set to continue this morning with SPI futures pointing to a rise of 33pts on the open. While it’s almost a certainty that the index will climb above 5402.40 today, a level that it has not surpassed since June 19, 2008, any advance beyond that level is likely to be thwarted at 5426.373, the 61.8% Fibonacci retracement level from the indices 2007 high and 2009 low. On an individual sector basis, similar gains are likely to occur as what was seen on Wall St on Friday with most of the heavy lifting to come from financials, telecoms, utilities and health-care sectors.
Continuing its struggles seen over the past two sessions, the AUDUSD has opened below .9600 this morning with the pair currently buying .9585. While there may be a temptation to have a third crack at buying support at .9572 today, with little on the data radar and reasons to hold USD continuing to vanish, it’s highly likely that the pair will range trade throughout today’s Asian session. Support is found between .9572-76, .9548 and at .9519 with resistance kicking in at .9600, .9624 and again above .9665.
South Korean consumer confidence for September will be released at 8am this morning.
Data releases this evening include industrial production, pending home sales and Dallas Fed manufacturing survey in the US, business confidence and economic sentiment from Italy along with the CBI retail survey from the UK.