Local stocks edged higher on light volume on Monday as investors steeled themselves for a likely tapering of the US Federal Reserve's Q.E program.
Late last week the markets became animated at the prospect of Laurence Summers succeeding Mr Bernanke as the next Fed Chairman. The reason for the price reaction turned around the belief that Mr Summers would be more likely to push for a more aggressive winding back of Q.E. On Monday, markets reacted once more to news that Mr Summers had withdrawn himself for selection for the position. Janet Yellen, who is regarded as being a 'dove' and more likely to be supportive of Q.E a is now seen as the front runner for the position.
Traders work on the floor of the New York Stock Exchange December 3, 2010.
Following some disappointing US data (non-farm payrolls and retail sales) there is a risk, some suggestion point to a 20% chance, that the FOMC does not taper its asset purchases this week. This would cause the USD to fall and be quite supportive for commodity prices.
Stocks going ex-dividend on Monday included Primary Health Care (PRY) and Flight Centre. Volumes were quite low over the session reflecting a lack of economic and corporate news. The overarching atmosphere in local terms remains quite positive, helped by a continued moderation of energy prices. The dissipation of Middle East tensions has seen a drop in oil prices. Although prices remain elevated nonetheless reflecting continued supply constraints as a result production disruptions throughout the region in general
As the prospect of a military exchange between Syria and a coalition led by the US retreats so too does the price of gold. The yellow metal has plumbed the lowest levels in 5 years. Resolute Gold (RSG) fell by 2.8% to 68 cents.
In the REIT space, Westfield announced the sale of stakes in seven of its U.S. shopping malls for US$1.6 billion. The Starwood Capital Group has agreed to purchase 90% of each of the properties, which are located in Ohio, California, Indiana and Washington State. Westfield will maintain a 10% stake in each property, adding that the assets were being sold for the same prices as the June 30 book value. WDC rose 1.1% to $10.96.
US releases tonight include Empire Manufacturing, Industrial Production and Capacity Utilization
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