No chance of the local market being ‘saved’ today as it was yesterday by the better than expected ‘flash’ report on the health of Chinese manufacturing.
The local market opened down yesterday, but better than expected news on the state of Chinese manufacturing saw investors recover their nerve and push higher over the rest of the day for a 1% gain by the close.
That won’t repeat itself today with the local market poised for another nasty day with the share price futures pointing to a loss of 33 points at the start.
The Aussie dollar hit a new seven month low of 88.31 US cents in trading and could dip lower during the day. It was around 88.40 cents in early Asian trading.
With the Reserve Bank releasing its second Financial Stability report of the year later today, bank and other finance stocks will come under the spotlight, especially with concerns about the current housing boom and the role of the banks in it, expected to feature heavily.
And the local market will have to deal with yet another dip in the iron ore price.
On top of that there’s also the lingering impact of the bombing in Syria and Iraq and concerns about the health of the eurozone economy, all of which helped send markets in Europe and the US lower overnight Tuesday.
Gold and sliver rose (but not by much), oil in Europe ended lower, but higher in the US and the value of the Aussie dollar bounced around and was under 89 US cents again this morning in Asian markets.
Wall Street lost ground for the third straight session.
The S&P 500 closed 11.5 points, or 0.6%, lower at 1,982.77. The Dow dropped 116.68 points, or 0.7%, to end on 17,056.00 and the Nasdaq Composite fell 19 points, or 0.4%, to 4,508.69.
Iron ore with 62% content delivered to Qingdao in northern China, fell 0.5% to $US79.40 a tonne, the lowest level since September 16, 2009, according to Bloomberg. The commodity is now down 41% so far this year.
Gold rose $US6 a to $US1,224 an ounce, the second daily rise in a row. Silver ended a cent higher on $US17.77 an ounce after hitting a four year low on Monday.
Copper remained flat on $US3.04 a pound on Comex in New York and didn’t get any benefit from the better news from the Chinese manufacturing survey.
Oil inched lower as ample global supplies outweighed tensions in the Middle East, while US oil ended higher after four sessions of losses.
Brent oil for November delivery rose, then fell to end the day down 12 cents at $US96.85 a barrel. US crude rose 73 cents to close after hours trading on $US91.56 a barrel.
The ASX 200 closed 53 points higher at 5415.7yesterday, while the All Ords finished 48 points up at 5416.1.
After the early sell-off, the big banks drove the market higher into the late morning before some better than expected economic data out of China sparked a rally among miners.
The big four banks all finished between 1.1% 1.4% higher, while Telstra surged 1.7 %.
Major mining companies also rose with BHP and Fortescue ending 0.1% higher and Rio Tinto ended up 0.2%.
The “flash” version of HSBC’s August manufacturing Purchasing Managers’ Index rose to 50.5, up from August’s final figure of 50.2, and beat forecasts for a drop to 50.0. That means Chinese manufacturing is still expanding, albiet slowly, but it is growing.
We get the final report on September 30, along with the official survey of manufacturing from the Chinese Logistics Federation.
But as usual the message was more nuanced about the health of the economy. The survey’s subindexes painted more of a mixed picture, however, with new export orders and overall new orders both showing gains at a faster rate than in August, but with the employment subindex falling at a faster rate.
Surveys for Europe and the US pointed to a slowing pace of activity.
