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GLOBAL MARKET BRIEF OCT 5th Mid-Day GMT: Stocks, Commodities, Forex

Overview: Modestly risk on day, tempered by uncertainty ahead of numerous potent risk events in the coming days. Stocks lower US, mixed in Asia, opening higher in Europe as support around the 50 day SMA holds for many EU bourses after 6 losing sessions. The RBA kept rates steady, hurting the AUD, and the BoJ announced new stimulus, boosting the Nikkei and weakening the JPY. The remaining big event today is US services PMI, the jobs component of which is the best leading indicator of Friday’s monthly US jobs reports. Wednesday will have UK housing, US ADP NFP, and Canadian Ivey PMI.
 
STOCKS: US: Down – Stocks succumbed to some normal profit taking ahead of a risk – event packed week after stocks stalled last week at multi-month resistance levels and traded in tight, indecisive ranges.
 
US Bonds: Up- Benchmark 10 Year Note rose with falling stocks. Yield fell Monday to 2.4790% after it had closed Friday at 2.52%.
 
Asia Stock Outlook: Mixed - Virtually all major Asian indexes opened lower, but many managed to a late push to close modestly higher. The Nikkei closed positive on a late push after the BoJ announced new stimulus measures expected to help growth at least in the short term. Only Shanghai closed substantially higher (1.72%), as uncertainty ahead of major news releases this week and a lower US close weighed on Asian stocks. 
 
European Stock Outlook: Up–Nearly all major indices opening and remaining higher, breaking a 6 session losing streak as many indices like the DAX held at support levels around their 50 day simple moving averages. Better than expected UK and EU services PMI readings may have helped counter the below expectations reading for EU retail sales.
 
Commodities Outlook Monday-Midday Tuesday GMT: Oil, gold/silver all up, softs steady
 
Crude Oil Daily Outlook: Up- Support around $81 holding, helped by a holdup at the Houston port, stabilizing US housing data, and political unrest in oil-exporting Ecuador
 
Gold Daily Outlook: Up: Futures breaking to new highs around $1325 on combination of assumed coming additional USD and EUR weakness from new stimulus measures as Fed hints at more stimulus and PIIGS may need more help from the ECB.
 
NB: Both gold and US treasuries are in multi-month up trends. This does not make sense, as gold is a currency hedge against the USD (and other leading fx) while US treasuries are a partial bet on the USD. This divergence implies one of the up trends should break down in the near future.
 
Softs: Wheat, soybeans, sugar, coffee  – all essentially steady or making modest moves up after the prior day’s fall.
 
FOREX Daily Outlook Monday-Midday Tuesday GMT: Mixed risk picture despite a backdrop of risk aversion in stocks and commodities, and bonds. AUD, JPY and GBP strongest, CAD, CHF weakest. Hard to understand AUD strength today, as well as CHF weakness. Only JPY strength makes sense given the risk aversion day, though threat of intervention against it remains. No clear news of big drop in oil to explain CAD weakness.
 
US Dollar Daily Outlook: After recovery much of its Friday losses later Monday on risk aversion, flat vs. the EUR, up vs. the CHF, CAD, NZD down vs. the JPY, GBP, AUD
 
Euro Daily Outlook: Up vs. the USD, JPY, commodity dollars, down vs. the GBP, CHF, as USD, JPY suffer from official undermining, EU has some positive services PMI to counteract negative retail news.
 
Yen Daily Outlook: Down vs. USD, GBP, CHF, essentially flat vs. the CAD, NZD, up vs. the AUD after the RBA’s decision to hold rates steady early Tuesday disappoints markets, prompts AUD selloff
 
British Pound Daily Outlook: Up vs. the USD, JPY, EUR, all commodity dollars down vs. the CHF. Strong today after better than expected services PMI.
 
Australian Dollar Daily Outlook: Up vs. all (except flat vs. the GBP) since Friday for the second straight day benefitting from both last week’s hawkish RBA comments and relatively good data.
 
New Zealand Dollar Daily Outlook: flat vs. the EUR, up vs. the CHF, CAD down vs. the USD,GBP, JPY, AUD
 
Canadian Dollar Daily Outlook: Down vs. all, no specific news items other than mild retreat in oil prices, hardly enough of a drop to explain it.
 
Swiss Franc Daily Outlook: Down vs. all except for the CAD.
 
 
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