Oil Weakens to New Low; US Stocks Hover at Unchanged
Today's financial recap and tomorrow's financial outlook.
The main catalyst that dragged down risk assets late in the day was the 2.53% drop in crude oil. The drop was associated with a considerable jump in October oil production from Alaskan sources, which caused near-term prices to decline. Earlier in the day Saudi Arabia announced that it was lowering the price of a barrel of oil that it sells to US customers and raised prices for Asian customers. Overnight the Malaysian state oil company dropped its crude prices by 10%.
The ISM manufacturing index for October showed a large jump and is now near one of its highest readings in the past twenty years. The index jumped to 59 from 56.6 in the month prior, better than the 56.1 expected. This is in spite of a substantial drop in the prices paid component to 53.5 from 59.5 in the month prior, which likely reflects the large drop in oil prices for the month. However, the leading new orders component showed a substantial increase and the production gauge was at its highest level since May 2004.
Overall today's market action had a lot less volatility than what we were used to seeing during the month of October. Treasury yields were originally higher overnight and staged a substantial reversal intraday following the stronger ISM report, but ended up settling only slightly weaker for the day.
Tomorrow's Financial Outlook
Tomorrow in the US is the mid-term Congressional elections. At the very least, market participants are expecting Republicans to gain a net four seats in the Senate and continue to hold a majority in the House. Anything less will be considered a negative disappointment for risk assets. On the economic data front, the US will release its September trade balance data, which will contribute to the third quarter GDP report. Net exports are expected to remain little changed from the month prior at -$40.2 billion. Also scheduled for release is September factory orders.
Overnight the major event will be the Reserve Bank of Australia's rate decision. Market participants expect because of the poor spate of Australian and Chinese economic data that the central bank will have the proper cover to drop its interest rates to boost both the economy and lower the exchange rate of its currency. Also scheduled to be reported is Australia's trade balance retail sales from October.
Earnings season is still rocking and there are 62 companies reporting tomorrow. Notables include Archer-Daniels Midland (ADM), International Paper (IP), AK Steel (AKS), Intercontinental Exchange (ICE), Burger King Worldwide (BKW), Discovery Communications (DISCA), FireEye (FEYE), EOG Resources (EOG), Twenty-First Century Fox (FOX), Office Depot (ODP), and Liberty Media (LMCA).
Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter