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Wall St ends mixed as industrial gains offset by tech losses

Thursday, 24 Nov 2016 05:47:18 | Rebecca Hyam

US shares finished mixed as industrials continued to hit fresh records. (Inside Business)

A deluge of economic reports including the minutes from the Federal Reserve's latest meeting were released overnight and US markets finished mixed, as investors digested the data.

Markets at 8:15am (AEDT):

  • ASX SPI 200 futures +2pts at 5,498
  • AUD: 73.83 US cents, 59.36 British pence, 83.12 Japanese yen, 70 eurocents, $NZ1.0538
  • US: S&P 500 +0.08pc to 2,204, Dow Jones +0.31pc to 19,083, Nasdaq -0.11pc to 5,380
  • Europe: Euro Stoxx -0.32pc to 325.33, FTSE -0.03pc to 6,817 DAX -0.48pc to 10,662
  • Commodities: Gold -1.92pc to $US1,188.86/ounce, Brent crude oil -0.24pc to $US49/barrel, iron ore +0.6pc to $US76.10/tonne

The minutes supported the widespread view that official interest rates would be increased next month.

Policy makers noted the steady increase in new jobs and a tighter labour market, which was boosting wage inflation, as well as "somewhat higher" broader inflation in recent months.

The Fed minutes reported that, in light of those developments, "most participants expressed a view that it could well become appropriate to raise the target range for the federal funds rate relatively soon".

A number of officials even expressed concern that the US economic recovery could be at risk if the central bank waited too long to raise rates.

That tone represented a marked change compared with only a few months ago.

Westpac's senior market strategist Imre Speizer wrote in some economic analysis that a rate rise next month was almost a dead certainty.

"The Federal Open Market Committee's minutes noted a hike was seen as appropriate 'relatively soon', with some policy-makers saying a December tightening was important to 'preserve credibility," he wrote.

"That has been signalled by recent Fed-speak, and merely confirms the 25 basis point hike in December which the market has fully priced in."

The CME Group's FedWatch tool revealed market expectations for a rate rise in December had edged up to 95 per cent, after the release of the minutes.

US consumer appears to shrug off any Trump concerns

In economic news, the Commerce Department reported US durable goods orders increased 4.8 per cent in October, which smashed the market forecast for a 1.5 per cent rise in the month.

The IHS Markit manufacturing index for November rose to 53.9 from 53.4 in October, with readings above 50 signalling expansion.

It was the highest level for the index since October last year and reflected robust output and new business growth.

Elsewhere, new home sales for October fell 1.9 per cent, while consumer sentiment rose to a higher-than-expected 93.8.

NAB's global co-head of FX Strategy Ray Attrill wrote in an economic note that the consumer data was of particular interest.

"The final readings of 93.8 will have been based on survey responses received after news of Donald Trump's election victory," he wrote.

"So being up on the 91.6 preliminary reading, it signifies either that US consumers collectively view Trump's election as good news for them, or perhaps it just means that the removal of uncertainty about the election outcome has seen confidence pick up.

"Either way, it looks to be good news for personal consumption in the rest of the December quarter and into early 2017."

Farm equipment giant Deere Inc. rose to a record high after reporting a much smaller-than-expected decline in quarterly profits.

That offered some support to construction and mining equipment manufacturer Caterpillar, which saw its shares hit their highest level in almost two years.

Trading volumes were relatively subdued ahead of the Thanksgiving public holiday in the United States.

The major European markets ended relatively flat, with mining and energy stocks reversing their recent run of gains.

It was a choppy session in London, as the chancellor of the Exchequer Philip Hammond outlined his policies, in what constituted the biggest economic update since Britain voted to leave the European Union.

Australian shares are set to open flat, with the ASX SPI 200 up two points to 5,498.

The dollar also eased overnight and at 8:15am (AEDT), it was buying 73.83 US cents.

West Texas crude oil had fallen to $US46.47 a barrel, the price of a barrel of Tapis was also lower at $US48.63 and spot gold had lost almost 2 per cent to $US1,188.86 an ounce.

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