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Category: Stockmarket / Currency / Futures / Markets

US shares fall on banks, despite technology bounce

Thursday, 17 Nov 2016 05:57:17 | Rebecca Hyam

Last night's US trade saw some calm after a frenzied week of selling and buying. (Timothy A Clary, file photo: AFP)

Wall Street's week-long banking sector-led rally ran out of steam overnight, with investors pausing to reflect one week after the US presidential election.

Markets at 8:15am (AEDT):

  • ASX SPI 200 futures -0.2pc to 5,307
  • AUD: 74.72 US cents, 60.06 British pence, 81.57 Japanese yen, 69.92 eurocents, $NZ1.0564
  • US: S&P 500 -0.21pc to 2,175, Dow Jones -0.29pc to 18,868, Nasdaq +0.34pc to 5,293
  • Europe: Euro Stoxx -0.54pc to 324, FTSE -0.63pc to 6,749 DAX -0.66pc to 10,663
  • Commodities: Gold -0.26pc to $US1,224.81/ounce, Brent crude oil -1.02pc $US46.47/barrel

Interest rates came into focus, with an official increase by the Federal Reserve next month firming up as almost a dead certainty.

The CME Group's FedWatch tool shows market expectations for a December rate increase stood at more than 90 per cent.

During a speech in London overnight, the Federal Reserve Bank of St Louis President James Bullard said he was still leaning toward backing an interest rate rise in December.

Mr Bullard is a voting member of the rate setting Federal Open Market Committee.

He said the outlook for monetary policy in the short term was unchanged, following Donald Trump's victory in this month's presidential election.

"A single policy rate increase, possibly in December, may be sufficient to move monetary policy to a neutral setting," Mr Bullard said.

But in an economic note, NAB's director of economics, fixed income, currencies and commodities, David de Garis described Mr Bullard as the "one and done" man because, unlike some other Fed officials, he believes just one quarter-percentage-point rise was necessary over the next couple of years.

"He's been saying that you'd have to see a surprise to stop a December rate hike, even though he's still of the view that such a hike would move policy to a neutral setting," Mr de Garis wrote.

In official economic news, producer prices in the United States fell 0.2 per cent in October, taking the annual pace of growth to 0.8 per cent.

The volatile trade services component was largely responsible for the weaker-than-expected result, with market consensus centring on a 0.3 per cent rise for the month.

Industrial production was also flat, with a weather-related slump in utilities output driving the stagnation.

Mining output, however, saw its biggest rise in more than two years, while manufacturing also appeared to be gradually recovering.

In corporate news, department store retailer Target jumped in value after reporting a better-than-expected quarterly profit and increasing its full-year forecast.

A similar pull-back to the US among banking stocks weighed on the major European markets.

London's FTSE 100 index finished 0.6 per cent lower at 6,749.

The local share market is poised to follow suit, with losses of around 0.3 per cent expected at the open.

The Australian dollar fell quite sharply overnight and, at 8:15am (AEDT) it was buying 74.83 US cents.

West Texas crude oil eased to $US45.51 a barrel, the price of a barrel of Tapis was higher at $US47.06 and spot gold edged down to $US1,224.81 an ounce.

Today's agenda:

Australia:

  • Labour force – October (11:30am AEDT)
  • Car sales – October (11:30am AEDT)
  • James Hardie half-year results (8:30am AEDT)
  • BHP Billiton AGM (11:00am AEDT)
  • Goodman Group AGM (10:00am AEDT)
  • Sonic Health AGM (10:00am AEDT)
  • Telstra investor day (10:00am AEDT)

US:

  • Fed chair Yellen testifies to congress (2:00am AEDT)
  • Inflation – October (12:30am AEDT)
  • Housing starts – October (12:30am AEDT)
  • Building permits – October (12:30am AEDT)

EU:

  • Inflation (9:00pm AEDT)

AustraliaPlus


 

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