US Markets Finish Best Month Since February

The major US stock indices finished October on a positive note, with the S&P 500 finishing up 2.2% for the month while the Dow Jones climbed 4.3%, its best month since February. The ASX 200 is still in a consolidation phase after the strong gains of early October and is currently hovering just above 5,900.

While bond yields were up for October, the US 10-year yield has retreated back from its recent highs of 2.46% and is now trading at 2.37%. Nevertheless, the uptrend that started in early September appears to still be in place. The recent decline in yield may be related to the imminent announcement of the next Fed Chair which the market currently believes will be Jerome Powell.

The American Petroleum Institute released its estimates of crude stockpiles which showed large inventory declines for crude and crude products. This pushed oil a little higher although there appears to be significant resistance around this US$44.50 – $45 area. The strong performance of oil over the last two months has put the WTI price very close to a year to date high. A break above $45 could signal more upside.

The Aussie dollar continues to be weak, currently trading at a multi month low of 0.7658 against the US dollar. This decline will be welcome news for the Reserve Bank which was becoming concerned that the rise above 0.8 would put the brakes on economic growth. The weak dollar has also improved the AUD price of gold which has helped support the share prices of ASX gold miners despite falls in the US dollar price of gold.     

Data Releases:

–    China Manufacturing PMI 12:45pm AEDT

–    US ISM Manufacturing PMI 1:00am AEDT

–    US Interest Rate Decision 5:00am AEDT

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This article was written by William O’Loughlin – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via william.oloughlin@rivkin.com.au or by phoning +612 8302 3633.