Cairns G20 meeting long on talk but not on detail

Share Markets:

Movement on global share markets was limited on Friday night. There was little news flow to drive markets in either direction.

The Dow eked out a 0.1% gain, the S&P500 was flat and the Nasdaq fell 0.3%.

Some intra-day volatility was created by the IPO of the Chinese internet sales company Alibaba, the largest ever offering in the US market. In Europe, the FTSE rose 0.3% but the Dax was flat.

Interest Rates:

In line with equity markets, interest rates were fairly stable. US 10 year long bond yields fell 2 basis points to 2.57% while 2 year rates were unchanged at 0.56%.

In Australia, 10 year government bond yields rose 2 basis points to 3.73% and 3 year yields rose 1 basis point to 2.90%.

Foreign Exchange:

The US dollar index rose throughout Friday evening as the EUR and GBP fell away. Weakness in the GBP was partly due to US dollar strength and possibly also due to profit-taking in the aftermath of the Scottish independence referendum.  

The USD index has risen since the end of June on the expectation of higher US interest rates. The AUD moved lower but remained in the US 89 cent range.

Commodities:

Iron ore prices continue to fall. Iron ore fell 1.6% to a five year low. Gold continues to weaken and appears to be heading for US$1200 per ounce. Copper prices were effectively steady but the price of West Texas Intermediate crude oil fell towards US$92 per barrel.

Australia:

No data of note was released in Australia on Friday or over the weekend. The G20 meeting in Cairns provided a communique long on rhetoric but short on detail.

The G20 is seeking ways to strengthen the global financial system as well as creating tax rules that will raise revenue, from multi-national companies, where income is earned.

Europe:

The Eurozone current account surplus was little changed at €18.7bn in July. In Germany, the PPI's annual pace of decline was unchanged at -0.8% for the year to August.

New Zealand:

The conservative National Party, led by Prime Minister, John Key was returned to power at the weekend elections with an improved majority.

ANZ Job Ads rose 1.4% in August partially recovering from a 2.4% fall in July.

In other data, the ANZ consumer confidence index for September rose 1.8% to 127.7, indicating consumers remain upbeat.

United States:

The US leading index rose 0.2% in August, after a revised 1.1% July gain. Over the past three months, the leading index has risen at an 8% annualised pace.

While the index was soft in August, the strong trend suggests US economic growth in excess of 4% is possible late in 2014.  If this were to occur, it would support the notion that US interest rates are set to rise during 2015.



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