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Morning Market Update: Euphoria Wears Off

Global shares and bonds rallied overnight after it emerged Larry Summers withdrew his name from the race to succeed Ben Bernanke as chairman of the U.S. Federal Reserve.

Summers was a known policy hawk, and investors feared he would speed up the pace of the Fed’s stimulus withdrawal, potentially destabilising the US economy and markets.

News of his withdrawal from the Fed Chairmanship post saw European stocks close at five-year highs, with the S&P500 also coming within a whisker of reaching a new all time high.

The Dow climbed 119 points (+0.8%) to 15495, the S&P500 added 10 points (+0.6%) to 1698 whilst the Nasdaq shed four points (-0.1%) to 3718.

There were gains all round in Europe. The UK FTSE put on 0.6% to 6623, the German DAX soared 1.2% to 8613 and the French CAC jumped 0.9% to 4152.

Among the major commodities, crude oil sank 1.5% to US$106.59 a barrel – its lowest in three weeks – as concerns of a strike against Syria eased, lowering the threat of supply disruptions from the Middle East.

Elsewhere, gold arrested a five session losing streak, rising 0.7% to US$1318 an ounce on hopes the next Fed Chairman nominee will adopt a more dovish stance than Summers when it comes to monetary easing.

In currency markets, the US dollar came under pressure after data revealed the pace of growth in New York-area manufacturing unexpectedly slowed in September.

The Aussie dollar continued its run higher against the greenback, appreciating 0.8% to 0.9318 US cents.

The Aussie is likely take its cues today from the RBA’s September meeting minutes, scheduled for release at 11:30am, AEST. New motor vehicles are also due for release at 11:30am, AEST


Morning Market Update: Euphoria Wears Off is a post from: Australian Stock Report Market Pulse Blog