One of the more valuable aspects of the current market atmospherics is to see how the market performs when dealing with the headwinds being generated by US politics. Today, and not for the first time, the local index showed some mettle. Have been handed a poor finish on Wall St, the market started under duress, losing as much as 30 points in the first hour of trade. From that point however buyers slowly began to reel in the deficit. By the early part of the afternoon the market peaked at its best level when it was up by about 9 points. For a second day, it's reasonable to suggest that opportunistic buyers are exploiting the uncertainty that's being created by the political inertia in Washington. Dovetailing with this theme today was the underperformance of the defensive sectors which largely ended lower
The Consumer Discretionary group wasn't helped by the latest reading on consumer confidence. Consumer sentiment fell by 2.1% in October to be 9.2% higher than a year ago. Confidence is at an elevated level, but concerns remain around household finances. Low interest rates, a strong AUD and some lingering positivity from September's election outcome are keeping confidence buoyant. Rising property prices are a double edged sword to consumer sentiment which will be impacted positively or negatively depending upon the side of the fence the respondent is sitting (i.e. home owner or prospective buyer). The Westpac Melbourne Institute unemployment expectations index rose by 0.6% and is at a high level overall which indicates a continuation of labour market softness.
Worley Parsons (WOR) said the flow pattern of work awarded will see its earnings in 2014 being more heavily biased to the second half of the year compared to recent years. In other words it expects earnings in the first half of 2014 to be lower than same time last year (1H13 $155m). Investors marked the stock down, although it finished off its lows closing down by 2.9%
FOMC minutes will be published tonight in the US. They will provide valuable colour on the decision not to taper at the September 18th meeting, although they are unlikely to drive any lasting change in market sentiment. Washington still centre stage. The US government remains partially closed for a 9th day.
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