The Australian equity market are expected to open up lower after the US market fell on statement made by the Federal Reserve. The Fed announced yesterday said it would increase its share of longer term Treasury’s by $400 billion in an effort to make credit cheaper and encourage spending.

The drop in the US markets are a clear sign investors are questioning the effectiveness of the Federal Reserve’s latest unconventional attempt to bolster the US economy. The announced change essentially changes the makeup of the securities in the Fed’s portfolio and is designed to keep mortgage rates low. In addition, the Fed also said it would reinvest the proceeds from maturing agency debt and mortgage-backed securities into mortgage-related debt.

Although the market had largely expected the news, it was the Fed’s poor outlook on the US economy that discouraged markets.  The Fed also notably darkened its view of the possible effects of the sovereign-debt crisis in Europe. Unlike last go-round, the Fed specifically cited “strains in global financial markets.”

The news from the Fed came as Greece’s cabinet considered demands for additional budget cuts to gain the release of an aid tranche needed to avoid default. The government said it made progress in two days of conference-call talks between Finance Minister Evangelos Venizelos and officials of the so-called troika of international lenders, the European Union, the European Central Bank and the International Monetary Fund. The Finance Ministry said talks would continue over the weekend in Washington, where Venizelos will attend an annual IMF meeting.

Gold eased after the Fed’s announcement, which curbed demand for the metal as a safe place to park cash. Spot gold was last quoted at $1,779.29. Gold  futures slipped $16.70 (0.92%) to $1,792.40. Spot silver was last quoted at $39.56.

Crude fell in choppy trading after the Federal Reserve announced plans to boost the listless US economy by purchasing longer-dated government debt. West Texas Intermediate was last quoted at US$85.75 per barrel.

Source
Bloomberg, Dow Jones News

The Australian equity market is expected to open up higher despite a mixed night on overseas markets. Most markets were up over night and it wasn’t until the final hour of trade in the US until the markets gains were erased. The SPI futures are currently up 33 points to 4078.

Once again it was the Greek debt fears that caused the late selloff, the Dow finished 7.65 points or 0.07% higher to close at 11408.66. Both the S&P500 and the Nasdaq closed the day lower falling 0.17% and 0.86% respectively.

The US markets, in absence of any other major announcements most likely will tread water until the much anticipated Fed policy statement late tonight. The late sell off was on the back of reports that that the International Monetary Fund, European Commission and European Central Bank were expected to return to Athens in October, suggesting no immediate help to stave off the country’s debt crisis.

The EURUSD traded stabilised and appears to have found some short term support around the 1.36 region. It failed to breach the 1.36 market yesterday after the news of the downgrade of Italy’s debt.

Oil futures halted a two-session slide on Tuesday that had erased more than 5% of their value on optimism that US central bankers will soon announce steps to stimulate the US economy. West Texas Intermediate was last quoted at US$86.89 per barrel.

Gold futures rose back above $1,800 an ounce as investors returned back to the safe haven asset. Gold continued to draw support as investors remain cautious on the outlook for Europe’s debt crisis and the Federal Reserve’s policy committee meeting. Spot gold was last quoted at $1,803.25. Comex gold futures improved $30.20 (1.70%) to $1,809.10.

Source
Bloomberg, Dow Jones News

EURUSD Weak After Data

The Australian equity market is pointed to a weaker open in the final day of the week after US stocks fell overnight to get the start of the month of to a poor start, snapping a four-day winning streak as financials were weak as investors look to exit positions prior to the government’s monthly jobs report out tonight.

The Dow fell 119.96 points to finish the session at 11493.57 in a volatile session where the index swung over 100 points from initial lows. The S&P500 index fell 14.47 points to finish the day at 1204.42 led lower by financials.

The EURUSD (see above chart) fell from highs of 1.4375 to as low as 1.4226 Thursday night after all the European manufacturing  contracted in August more than expected coupled with the US manufacturing activity beating analyst’s expectations. The Institute for Supply Management purchasing managers’ index came in at 50.6 for August.

The Swiss franc rose against all of its major counterparts overnight on signs that the European economies are slowing as policy makers struggle to stem the sovereign debt crisis. USDCHF traded down from highs of 0.8088 to as low as 0.7928.

WTI crude oil rose from lows of 88.25 to a four week high of just below the 90.00 per barrel level overnight as low pressure systems in the Gulf of Mexico look to develop into a large storm which has led to the energy companies that are producing oil is evacuate the rigs in the surrounding area.

Gold finished the day reasonably flat at 1824.5 after trading as low as 1815.50 after the better than expected manufacturing numbers.

Source

Bloomberg, Dow Jones News

WTI Crude

The Australian equity market is expected to start the month in the green after US stocks continued to rally for the fourth session running session pushing the Dow back into positive territory for 2011.

The Dow finished with a gain of 53.58 points to close the month at 11613.53 while the S&P500 index gained 5.97 points to finish at 1218.89, led by financial and utility stocks.

Economic data really helped the equity markets stay in green territory overnight with the weak Chicago area manufacturing managed to beat expectations and then data showed U.S. factory orders for July rose more than economists had forecast.

USDCHF traded down from highs at the beginning of the European session of0.8177 to as low as 0.7995. The Swiss is seeing some strength as expectations declined that the Swiss National Bank will intervene to restrict its currency.

The EURUSD traded down from highs 1.4470 overnight to trade as low as 1.4358 ahead of the eagerly awaited nonfarm payroll numbers out tomorrow night as investors search for clues about the health of the U.S. economy.

WTI Oil futures (see above chart) traded near a two day low overnight after the biggest monthly drop since after the impact of a sharp rise in oil inventories in the Energy Department weekly report was blunted by a drop in gasoline stockpiles.

Gold futures rose in US trade as the view that further monetary easing would boost precious metals outweighed the drag from stronger equities markets.

Source

Bloomberg, Dow Jones News