Gold saw a $10 drop at the European open, but regained much of that in early New York trading. The DXY dollar index is up a quarter-point from recent lows, while crude oil softened slightly. The euro is off two-year highs on a technical correction.
Expect volumes to be light today and tomorrow, as the Federal Reserve Open Market Committee (FOMC) meeting runs today through noon Wednesday. Fed Chairman Ben Bernanke will not be holding a press conference tomorrow afternoon, leaving traders on their own to nit-pick and interpret the official written meeting statement.
In Asia, the People’s Bank of China began increasing market liquidity very slightly, after a clampdown on the money supply. The action helped stabilize industrial metals prices. The Hang Seng reacted favorably, but the Nikkei was down on some profit-taking after its recent run. India raised benchmark interest rates to 7.75%, after raising them to 7.50% just last month, in a fight against high inflation that refuses to go down after the rupee hit all-time lows. Food inflation hit 18.4% last month, and the consumer price index was 9.84%. (One wonders if perhaps the government isn’t contributing to the problem, by shutting down gold imports and causing the prices to rise $130/oz over the rest of the world on the only thing most Indians can use to hedge against inflation?)
European stocks were up as oil companies reported robust earnings, counteracting the drag on the market by under-performing bank stocks. Banks are scrubbing non-performing loans off their asset sheets in preparation of audits and “stress tests” by the European Central Bank ahead of financial integration in the Eurozone.
Wall St. opened slightly higher, but sagged right after the bell. Disappointing auto sales drug retail sales in the U.S. down 0.1% in September, before the government shutdown furloughed 800,000 federal employees and caused many temporary layoffs in the private sector. Core retail sales minus autos were up 0.4%. The producer price index rose a tiny 0.1%, down from 0.3% the previous month, mainly on a drop in food costs. In another sign of how the government shutdown hurt the economy, U.S. consumer confidence in October plunged from 80.2 to 71.2. However, home prices accelerated in August 12.8% over the same time last year.