Midday Market Update Sept 11: Calm Before The Storm?

September 11th, 2013 by

Gold touched a two-week low overnight before recovering to yesterday’s levels in New York, as the likelihood of a US strike against Syria recedes. German and U.S. bonds are also seeing weaker demand, with the 10-yr Treasury yield at 2.96%. In a nationally televised speech last night, President Obama agreed to give a Russian-led diplomatic solution to the Syrian problem a chance, but reaffirmed that military action “was still on the table.”

Gold is also seeing some long liquidation after it couldn’t break the $1,400 mark, and some speculators are going short ahead of the Federal Reserve Open Market Committee meeting next Tuesday and Wednesday.

In the U.S., Wall St. is covering from an early slump caused by disappointment over Apple’s unveiling of its new iPhone lineup. The dollar is weaker, in part due to a surge in the British pound caused by surprisingly good employment numbers.

European stocks edged upwards, 0.1%, with the blue chip FSTE50 briefly touching a two-year high. Stocks rose on recovering utilities now that oil prices are edging down on a calmer Middle East, and chipmaker ARM, who supplies the “brains” for Apple’s iPhones.

In Asia, the Nikkei was flat on profit-taking, after the big rally sparked by Japan’s winning the competition to host the 2020 Olympics. The Hang Seng closed down for the first time in five sessions, losing .17%. Mainland Chinese shares on the Shanghai Exchange touched a three-month high in heavy volume, before closing up .15%. Improving economic news, and recent bank forecasts that the nation will hit the government’s GDP growth targets this year are helping stocks, as well as heavy industry getting a boost from announced military expansions.

We’re edging ever closer to an early Halloween next week, as the markets will start getting increasingly nervous over the Fed’s quantitative easing policies. Will they reduce bond purchases or not? If so, by how much? With Syria receding into the background, the Fed will be the biggest market mover, at least until next Wednesday afternoon.

 

 

by David Peterson