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Morning Market Update: US Pain

US markets extended their swoon into a second session overnight, with the Dow suffering its first back to back triple digit loss since June. The blue chip index slumped 226 points (-1.5%) to 15112. The Nasdaq slid 1.7% to 3606 and the S&P500 dropped 1.5% 1661.

The sell-off was sparked by a raft of disappointing economic data. Manufacturing activity in the Philadelphia and New York regions grew less than expected this month, overshadowing another fall in weekly jobless claims.

Whilst the macroeconomic data disappointed, the numbers weren’t bad enough to alter expectations about the Fed’s stimulus plans.

Investors still anticipate the Fed will begin tapering its monthly bond purchases next month, sending US Treasury yields soaring to 2011 highs and effectively increasing financing costs for US borrowers.

The news wasn’t much better in Europe, with the UK FTSE tumbling 1.6%, the German DAX letting go of 0.7% and the French CAC declining 0.5%.

Gold and silver were the big movers in commodity markets, finding strength from investors looking for a safe haven alternative to equities. Gold for December delivery soared 2.1% to US$1361 an ounce whilst September silver futures flew 5.2% to US$22.93 an ounce.

Oil also managed a small gain as the deadly outbreak of violence in Egypt heightened concerns of supply disruptions in the Middle East. Front month oil futures rose 0.5% to US$107.33 a barrel.

The weak US data saw the greenback sustain widespread losses against its main counterparts, shedding at least half a percent versus the euro and yen.

In company news, ANZ has reported an 11% rise in 3Q13 cash profit to $4.8 billion. The bank also warned of a further fall in its net interest margin by the end of its fiscal year.

Morning Market Update: US Pain is a post from: Australian Stock Report Market Pulse Blog