Local Markets Commentary

The Australian market opens a new week’s trade on lacklustre US equities leads and lower prices for key commodities.

Over the weekend, China announced 17B yuan worth of support under a debt-for-equity policy announced last weekend. 5B yuan is going to Yunnan Tin Group and 12B yuan to Wuhan Iron & Steel Group.

In overnight Friday commodities trade, US gold futures and oil turned modestly lower. Copper continued to fall. Iron ore continued moderately higher.

The $A gained a little after approaching US76.0c early Friday evening.

Overseas Market Commentary

Major European equities markets rallied from outset overnight Friday, while choppy trade featured across US indices. Major financial stocks began to report earnings in the US and central bank heads on both sides of the Atlantic spoke publicly on inflation and policy.

Amid a flurry of data releases, a €18.4B euro zone August trade surplus contrasted with €25.3B for July but exceeded expectations by more than €3.

In the UK, August construction output rose 0.2% following a 1.5% fall in July.

US September retail sales were reported 0.6% higher, following a 0.2% pullback in August.

Producer prices rose 0.3% for the month and 0.7% year-on-year.

The preliminary University of Michigan October consumer sentiment estimate came in at 87.9, against forecasts of 91.9.

In an address at an economics conference, Federal Reserve chair Janet Yellen recommended more research into what influences inflation expectations, including monetary policy.

Ms Yellen also proferred more aggressive policies were needed in recessionary times. US sovereign bond yields appreciated, but gold hardly moved.

In the meantime, Bank of England governor Mark Carney spoke publicly about the tension between inflation targets and economic growth accommodation. Dr Carney’s overall remarks, including on currency and feeling comfortable with inflation that could exceed usual targets, also pushed UK government bond yields higher.

Tonight in the US, September industrial production and a New York region manufacturing index are due.

Bank of America, Netflix, Hasbro and IBM are among companies due to report results and/or provide trading updates.

Overnight Friday, a 7.6% profit drop for JPMorgan Chase pleased, as it was better-than-anticipated and accompanied by corporate and investment banking record revenues.

Citigroup’s profit did not fall as much as expected either, supported by bond trade, which reportedly grew 35%.

Wells Fargo also reported lower profit, together with virtually flat revenue.